axnx-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________________

FORM 10-Q

_________________________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-38721

_________________________________________________________________

Axonics, Inc.

(Exact name of registrant as specified in its charter)

_________________________________________________________________

Delaware

45-4744083

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

26 Technology Drive

Irvine,

California

92618

(Address of principal executive offices)

(Zip Code)

(949)

396-6322

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of class	Trading symbol	Name of exchange on which registered
Common stock, par value $0.0001 per share	AXNX	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 3, 2021, 41,903,986 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.

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		Page

	Special Note Regarding Forward-Looking Statements

	PART I—FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Comprehensive Loss	2

	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
	Signatures	38

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Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve risks and uncertainties, including statements based on our current expectations, assumptions, estimates and projections about future events, our business, financial condition, results of operations and prospects, our industry and the regulatory environment in which we operate. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, or other comparable terms intended to identify statements about the future. Forward-looking statements include, but are not limited to, statements about:

•unanticipated safety concerns related to the use of our products;

•U.S. Food and Drug Administration (FDA) or other U.S. or foreign regulatory or legal actions or changes affecting us or our industry;

•the results of any ongoing or future legal proceedings, including but not limited to intellectual property, product liability or other litigation against us, our third-party manufacturers or other parties on which we rely or litigation against our general industry;

•any termination or loss of intellectual property rights;

•any voluntary or regulatory mandated product recalls;

•adverse developments concerning our manufacturers or suppliers or any future strategic partnerships;

•introductions and announcements of new technologies by us, any commercialization partners or our competitors, and the timing of these introductions and announcements;

•successful integration of acquired operations into out ongoing business;

•announcements of regulatory approval or disapproval of our products and any future enhancements to our products;

•adverse results from or delays in clinical studies of our products;

•variations in our financial results or those of companies that are perceived to be similar to us;

•success or failure of competitive products or therapies in the markets in which we do business;

•changes in the structure of healthcare payment of our products;

•announcements by us or our competitors of significant acquisitions, licenses, strategic partnerships, joint ventures or capital commitments;

•economic and market conditions in general and in the medical technology industry, specifically, including the size and growth, if any, of the market, and issuance of securities analysts’ reports or recommendations;

•rumors and market speculation involving us or other companies in our industry;

•sales of substantial amounts of our stock by directors, officers or significant stockholders, or the expectation that such sales might occur;

•additions or departures of key personnel;

•changes in our capital structure, such as future issuances of securities and the incurrence of additional debt; and

•the continued impact of the novel coronavirus (COVID-19) pandemic, and the related responses of the government and consumers on our business, financial condition and results of operations.

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The forward-looking statements included herein are based on current expectations of our management based on available information and involve a number of risks and uncertainties, all of which are difficult or impossible to predict accurately and many of which are beyond our control. As such, our actual results may differ significantly from those expressed in any forward-looking statements. Factors that may cause or contribute to such differences include, but are not limited to, those discussed in more detail in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part I and Item 1A “Risk Factors” of Part II of this Quarterly Report on Form 10-Q. Readers should carefully review these risks, as well as the additional risks described in other documents we file from time to time with the Securities and Exchange Commission (SEC). In light of the significant risks and uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking statements. Except as required by law, we undertake no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. You should read this Quarterly Report on Form 10-Q and the documents we file with the SEC, with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Unless the context indicates otherwise, as used in this Quarterly Report on Form 10-Q, the terms “Axonics,” “our company,” “we,” “us” and “our” refer to Axonics, Inc. and our consolidated subsidiaries.

This Quarterly Report on Form 10-Q includes our trademarks and trade names, including, without limitation, r-SNM®, Axonics SNM System® and Bulkamid®, which are our property and are protected under applicable intellectual property laws. This Quarterly Report on Form 10-Q also includes trademarks and trade names that are the property of other organizations. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q appear without the ® and ™ symbols, but those references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and trade names. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

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Part I—Financial Information

Item 1. Condensed Consolidated Financial Statements (unaudited)

Axonics, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	March 31,		December 31,
	2021		2020
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	130,962	$	241,181

Accounts receivable, net of allowance for doubtful accounts of $412 and $465 at March 31, 2021 and December 31, 2020, respectively	21,509		18,270
Inventory, net	71,243		63,060
Prepaid expenses and other current assets	4,658		5,435
Total current assets	228,372		327,946
Property and equipment, net	6,048		6,328
Intangible assets, net	115,023		196
Other assets	8,145		7,736
Goodwill	87,382		—
Total assets	$	444,970	$	342,206

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	11,446	$	10,660
Accrued liabilities	5,868		6,684
Accrued compensation and benefits	5,348		5,948
Operating lease liability, current portion	1,362		1,280
Debt, net of unamortized debt issuance costs, current portion	22		21,110
Total current liabilities	24,046		45,682
Operating lease liability, net of current portion	8,849		9,154
Debt, net of unamortized debt issuance costs, net of current portion	75,171		—
Other long-term liabilities	6,750		—
Total liabilities	114,816		54,836
Stockholders’ equity
Preferred stock, par value $0.0001 per share; 10,000,000 shares authorized, no shares issued and outstanding at March 31, 2021 and December 31, 2020	—		—
Common stock, par value $0.0001, 50,000,000 shares authorized at March 31, 2021 and December 31, 2020; 41,827,068 and 39,931,030 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	4		4
Additional paid-in capital	589,785		522,296
Accumulated deficit	(257,002)		(234,499)
Accumulated other comprehensive loss	(2,633)		(431)
Total stockholders’ equity	330,154		287,370
Total liabilities and stockholders’ equity	$	444,970	$	342,206

See accompanying notes to unaudited condensed consolidated financial statements.

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Axonics, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended March 31,
		2021		2020
Sacral neuromodulation net revenue		$	32,903	$	26,296
Bulkamid net revenue		1,470		—
Total net revenue		34,373		26,296
Cost of goods sold		13,974		9,895
Gross profit		20,399		16,401
Operating Expenses
Research and development		9,369		6,855
General and administrative		6,626		7,653
Sales and marketing		20,928		16,569
Amortization of intangible assets		678		29
Acquisition-related costs		4,414		—
Total operating expenses		42,015		31,106
Loss from operations		(21,616)		(14,705)
Other Income (Expense)
Interest income		8		642

Interest and other expense		(1,450)		(552)
Other (expense) income, net		(1,442)		90
Loss before income tax (benefit) expense		(23,058)		(14,615)
Income tax (benefit) expense		(555)		1
Net loss		(22,503)		(14,616)
Foreign currency translation adjustment		(2,202)		(177)
Comprehensive loss		$	(24,705)	$	(14,793)

Net loss per share, basic and diluted (see Note 1)		$	(0.57)	$	(0.43)
Weighted-average shares used to compute basic and diluted net loss per share (see Note 1)		39,613,964		33,637,646

See accompanying notes to unaudited condensed consolidated financial statements.

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Axonics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share and per share data)

(unaudited)


								Accumulated
				Additional				Other
	Common Stock			Paid-in		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Loss		Total
Balance at December 31, 2020	39,931,030	$	4	$	522,296	$	(234,499)	$	(431)	$	287,370
Issuance of common stock for employee stock option exercises for cash	206,507	—		2,821		—		—		2,821
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation	358,300	—		3,809		—		—		3,809
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation	169,054	—		1,494		—		—		1,494
Issuance of common stock for acquisition of Contura Holdings Limited	1,096,583	—		55,728		—		—		55,728
Issuance of common stock for exclusive license asset	65,594	—		3,637		—		—		3,637
Foreign currency translation adjustment	—	—		—		—		(2,202)		(2,202)
Net loss	—	—		—		(22,503)		—		(22,503)
Balance at March 31, 2021	41,827,068	$	4	$	589,785	$	(257,002)	$	(2,633)	$	330,154


								Accumulated
				Additional				Other
	Common Stock			Paid-in		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Loss		Total
Balance at December 31, 2019	34,110,995	$	3	$	363,012	$	(179,584)	$	(428)	$	183,003
Issuance of common stock for employee stock option exercises for cash	181,456	—		344		—		—		344
RSA issuances and forfeitures for terminations, net and stock-based compensation	171,875	—		3,039		—		—		3,039
Issuance of common stock for vesting of RSU and stock-based compensation	46,336	—		883		—		—		883
Foreign currency translation adjustment	—	—		—		—		(177)		(177)
Net loss	—	—		—		(14,616)		—		(14,616)
Balance at March 31, 2020	34,510,662	$	3	$	367,278	$	(194,200)	$	(605)	$	172,476

See accompanying notes to unaudited condensed consolidated financial statements.

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Axonics, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2021		2020
Cash Flows from Operating Activities
Net loss	$	(22,503)	$	(14,616)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	1,133		380
Stock-based compensation	5,303		3,922
Amortization of debt issuance costs	567		235
Provision for doubtful accounts	(65)		514
Other items, net	(577)		—
Changes in operating assets and liabilities, net of business acquisition
Accounts receivable	(1,480)		(13,405)
Inventory	(7,193)		(3,571)
Prepaid expenses and other current assets	860		223
Other assets	(100)		228
Accounts payable	914		1,558
Accrued liabilities	(1,569)		936
Accrued compensation and benefits	(915)		128
Lease liability	42		161
Net cash used in operating activities	(25,583)		(23,307)
Cash Flows from Investing Activities
Purchases of property and equipment	(123)		(714)
Acquisition of a business, net of cash acquired	(140,741)		—
Proceeds from sales and maturities of short-term investments	—		12,592
Net cash (used in) provided by investing activities	(140,864)		11,878
Cash Flows from Financing Activities
Payment of debt issuance costs	(106)		—
Proceeds from debt	75,000		—
Repayment of debt	(21,500)		—


Proceeds from exercise of stock options	2,821		344


Net cash provided by financing activities	56,215		344
Effect of exchange rate changes on cash and cash equivalents	13		(177)
Net decrease in cash and cash equivalents	(110,219)		(11,262)
Cash and cash equivalents, beginning of year	241,181		171,082
Cash and cash equivalents, end of period	$	130,962	$	159,820
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	$	170	$	329
Cash paid for taxes	$	—	$	—
Noncash Investing and Financing Activities
Common stock issuance for business acquisition	$	55,728	$	—
Contingent consideration for business acquisition	$	6,750	$	—

SEC Form 10-Q filed by Axonics Modulation Technologies, Inc.