NeuroPace Inc
For the period ended Mar 31, 2025. Filed May 13, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 13, 2025
NPCE$12.50-1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001528287-24-000020
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-13.
0001528287-25-000013
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 113 previous paragraphs and 111 current paragraphs.
67 unchanged; 27 reworded; 17 added; 15 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Our RNS System is currently indicated in the United States for use in adult epilepsy patients, meaning patients who are 18 years of age or older, with drug-resistant focal epilepsy. We recently announced our primary effectiveness endpoint data in our Post-approval Study in this patient population. The data showed that the RNS System efficacy improved over time, with a 62.5% median seizure reduction at six months after implant (n=314) and an 82.0% median seizure reduction at 36 months after implant (n=255). Additionally, 42.5% of patients experienced a period of seizure-freedom for at least six months, and 22% of patients were seizure free for at least one year. Results were presented at the American Academy of Neurology Annual Meeting in April 2025.
Current report
We are conducting studies to expand our indication for use to patients with drug-resistant generalized epilepsy and patients with drug-resistant focal epilepsy under the age of 18. In March 2024, we completed implanting patients in our NAUTILUS study for generalized epilepsy. In March 2025, the last patient completed one year of follow up and we are currently analyzing the data. To support our RESPONSE study for label expansion in focal epilepsy patients under the age of 18, we are collaborating with the National Evaluation System for health Technology, or NEST, and the FDA to pursue the use of real-world data from the Pediatric Epilepsy Research Consortium, or PERC. We are planning to file the expanded label submissions to the FDA for both of these indications in the second half of 2025.
Current report
Our commercial efforts have historically been focused on growing adoption and utilization across Level 4 comprehensive epilepsy centers, or CECs, in the United States that facilitate appropriate care for drug-resistant epilepsy patients. In 2023, we received FDA approval of a Premarket Approval Supplement, or PMA-S, which updated the qualification criteria for centers and clinicians that may prescribe and implant the RNS System. We initiated a pilot program to begin our outreach to these centers and clinicians in 2024 and intend to expand these efforts through 2025. We plan to address this opportunity in a targeted manner with incremental expansion of our sales force.
Current report
Nearly all of our revenue results from sales in the United States, but we also have limited sales of our RNS System in Canada pursuant to a special program that involves case-by-case approvals of the use of our RNS System in adult patients with drug-resistant focal epilepsy.
Current report
Cost of Goods Sold and Gross Margin
Current report
Research and Development Expenses
Current report
Selling, General and Administrative Expenses
Current report
Interest Expense and Income
Current report
Cost of Goods Sold and Gross Margin
Current report
Research and Development Expenses
Current report
Selling, General and Administrative Expenses
Current report
Interest Expense and Income
Current report
2025 Follow-on Offering
Current report
In February 2025, we completed a follow-on offering and received $69.7 million in net proceeds after deducting underwriting discounts and commissions and offering expenses from the sale of 7,475,000 shares of our common stock, including 975,000 shares from the exercise of the underwriters’ option to purchase additional shares, at a public offering price of $10.00 per share. We used $49.5 million of the net proceeds from the offering to repurchase all of the shares held by our significant stockholder, KCK Ltd. We intend to use the remaining net proceeds from the offering for general corporate purposes, which may include clinical trial and other research and development expenses, selling, general and administrative expenses, debt reduction and working capital.
Current report
Net cash used in investing activities was less than $0.1 million for the three months ended March 31, 2025, and primarily consisted of purchases of property and equipment.
Current report
We will cease to be an emerging growth company on the date that is the earliest of (i) December 31, 2026, (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years, or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission.
Current report
Further, even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.
Removed paragraphs (15)
Previous report
Our RNS System is currently indicated in the United States for use in adult epilepsy patients, meaning patients who are 18 years of age or older, with drug-resistant focal epilepsy. As of September 30, 2024, over 6,000 patients have received our RNS System. We believe our compelling body of long-term clinical data, demonstrating continuous improvement in outcomes over time, will support the continued adoption of our RNS System among the approximately 575,000 adults in the United States with drug-resistant focal epilepsy. We continue seeking indication expansion to, over time, cover the entire approximately 1.2 million drug-resistant epilepsy patients in the United States and may additionally seek to expand our operations to reach the approximately 16.5 million drug-resistant epilepsy patients globally.
Previous report
Our commercial efforts have historically been focused on growing adoption and utilization across Level 4 comprehensive epilepsy centers, or CECs, in the United States that facilitate appropriate care for drug-resistant epilepsy patients, which may include implantation of epilepsy neuromodulation devices such as our RNS System or the ongoing treatment of patients with neuromodulation devices. While most drug-resistant epilepsy patients begin their care at physician offices or community hospitals, we estimate that approximately 24,000 adult drug-resistant focal epilepsy patients are treated in Level 4 CECs in the United States each year. We estimate that this patient pool represents an annual core market opportunity of approximately $1.1 billion for initial RNS System implants, and we expect that it will continue to grow as the number of CECs, including Level 4 CECs, and epileptologists increases, and as more patients are referred to these CECs.
Previous report
In 2023, we received FDA approval of a Premarket Approval Supplement, or PMA-S, which updated the qualification criteria for centers and clinicians that may prescribe and implant the RNS System. This PMA-S approval allows us to expand our commercial efforts to target and qualify approximately 1,800 additional epileptologists outside of Level 4 CECs and the entire population of functional neurosurgeons, empowering them to provide the RNS System as a much-needed treatment option for their patients and expanding our current annual core market opportunity to all 575,000 adults in the United States with drug-resistant focal epilepsy, representing a total addressable market opportunity of approximately $27 billion for initial RNS System implants.
Previous report
The implant procedure for our RNS System and the ongoing patient treatment provided by clinicians, including monitoring and programming, are reimbursed under well-established physician and hospital codes. In addition, we believe that our RNS System is currently the only neuromodulation system for epilepsy with reimbursement available for periodic in-person or remote review of brain activity data. Given the relatively young average age of our patient population, our payor mix has historically been more heavily weighted towards commercial payors. As of September 30, 2024, commercial payors have written positive coverage policies that address over 200 million covered lives in the United States. Medicare and Medicaid also routinely provide coverage for implantation of our RNS System and follow-up care. Based on our experience, less than 1% of potential RNS System patients have been unable to undergo an implant procedure with our RNS System due to lack of payor coverage. We believe the established, differentiated, and favorable reimbursement paradigm for our RNS System will continue to support its broad commercial adoption.
Previous report
Our RNS System has an estimated average battery life of nearly eleven years, an increase from the previous model of the device. The sale of replacement neuromodulation devices provides a recurring revenue stream that is additive to the market opportunity for initial implants.
Previous report
We currently manufacture our RNS System at and distribute our products from our approximately 53,000 square foot facility in Mountain View, California. This facility provides approximately 20,000 square feet of space for our production and distribution operations, including manufacturing, quality control and storage. We believe our existing facility will be sufficient to meet our current and near-term manufacturing needs.
Previous report
DIXI Medical is a subsidiary of a European company that pioneered the development of Stereo EEG electrodes and related products. These products are used in the epilepsy monitoring units, or EMUs, of comprehensive epilepsy centers to determine where epileptic seizures originate. In addition to providing us with an incremental revenue stream, the DIXI Medical partnership provides us with improved visibility of patients moving through the EMUs, many of whom may be candidates for our RNS System. This synergistic partnership leverages our field organization that is already calling on the same customers and supports our objective to engage earlier in the diagnostic and therapy selection process. DIXI Medical provides us with ongoing commercial support and supplies the DIXI Medical products we order.
Previous report
Research and development expenses increased by $1.0 million, or 20%, to $5.8 million during the three months ended September 30, 2024, compared to $4.8 million during the three months ended September 30, 2023, primarily due to an increase of $0.5 million in expenses for product development, including AI software and next generation device platform projects, and clinical trials, and an increase of $0.5 million in personnel-related expenses.
Previous report
Selling, general and administrative expenses increased by $0.5 million, or 4%, to $13.9 million during the three months ended September 30, 2024, compared to $13.4 million during the three months ended September 30, 2023. This increase was primarily due to an increase of $0.6 million in sales and marketing personnel-related expenses, partially offset by a decrease of $0.2 million in general and administrative expenses.
Previous report
Other income (expense), net was $0.2 million during the three months ended September 30, 2024, compared to $0.1 million during the three months ended September 30, 2023, and primarily consists of unrealized gain, net on short-term investments in the three months ended September 30, 2024 and 2023.
Previous report
Comparison of the Nine Months Ended September 30, 2024 and 2023
Previous report
Revenue
Previous report
Interest expense increased to $6.6 million for the nine months ended September 30, 2024, compared to $6.3 million for the nine months ended September 30, 2023, due to an increase in the average balance of our Term Loan as a result of using the PIK interest option for the payment dates from January 2023 through June 2024. Interest income increased by $0.1 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to higher interest yields in the nine months ended September 30, 2024, partially offset by a decrease in average balances of our money market funds and short-term marketable securities.
Previous report
Other Income (Expense), net
Previous report
•our revenue and costs related to the DIXI Medical distribution agreement;
Reworded paragraphs (27)
Previous wording
Since our inception, we have generated significant losses. We have financed our operations primarily through sales of our products, issuance of equity securities, and debt financing. As of September 30, 2024, we had an accumulated deficit of $525.7 million, cash, cash equivalents and short-term investments of $56.8 million, and $59.3 million of outstanding debt under a term loan, net of debt discount and issuance costs.
Current wording
Since our inception, we have generated significant losses. We have financed our operations primarily through sales of our products, issuance of equity securities, and debt financing. As of March 31, 2025, we had an accumulated deficit of $537.5 million, cash, cash equivalents and short-term investments of $66.3 million, and $59.8 million of outstanding debt under a term loan, net of debt discount and issuance costs.
Previous wording
We have invested heavily and expect to continue to invest in research and development and commercial activities. Our research and development activities include clinical studies to demonstrate the safety and efficacy of our RNS System, including in expanded indications, and to obtain, as well as retain, FDA approval. We intend to continue making significant investments in research and development, clinical studies and regulatory affairs to support ongoing and future regulatory submissions for retaining and expanding indications of our RNS System, including to patients with drug-resistant generalized epilepsy and adolescent patients, ages 12-17, support continuous improvements to our RNS System, and develop future products that address neurological disorders. We have also made significant investments in building our field commercial team and intend to make significant investments in sales and marketing efforts in the future, including initiatives to drive awareness and expand our referral channel to increase the number of drug-resistant epilepsy patients referred to CECs. We may in the future seek to acquire or invest in additional businesses, products, or technologies that we believe could complement or enhance our products, enhance our technical capabilities or otherwise offer growth opportunities, although we currently have no agreements or understandings with respect to any such acquisitions or investments. Because of these and other factors, we expect to continue to incur net losses and negative cash flows for the next several years. We may require additional funding to support operations and pay our obligations or may opportunistically seek to raise additional capital, which may include future equity or debt financings.
Current wording
We have invested heavily and expect to continue to invest in research and development and commercial activities. Our research and development activities include clinical studies to demonstrate the safety and effectiveness of our RNS System, including in expanded indications, and to obtain, as well as retain, FDA approval. We intend to continue making significant investments in research and development, clinical studies and regulatory affairs to support ongoing and future regulatory submissions for retaining and expanding indications of our RNS System, including to patients with drug-resistant generalized epilepsy and patients under the age of 18, support continuous improvements to our RNS System, and develop future products that address neurological disorders. We have also made significant investments in building our field commercial team and intend to make significant investments in sales and marketing efforts in the future, including initiatives to drive awareness and expand our referral channel to increase the number of drug-resistant epilepsy patients referred to CECs. We may in the future seek to acquire or invest in additional businesses, products, or technologies that we believe could complement or enhance our products, enhance our technical capabilities or otherwise offer growth opportunities, although we currently have no agreements or understandings with respect to any such acquisitions or investments. Because of these and other factors, we expect to continue to incur net losses and negative cash flows for the next several years. We may require additional funding to support operations and pay our obligations or may opportunistically seek to raise additional capital, which may include future equity or debt financings.
Previous wording
In August 2022, we entered into an exclusive distribution agreement, or the Distribution Agreement, with DIXI Medical USA Corp., or DIXI Medical, pursuant to which we became the exclusive U.S. distributor of DIXI Medical’s stereo electroencephalography, or Stereo EEG, product line beginning in October 2022. The Distribution Agreement has an initial term of three years, which expires September 30, 2025, and which may be automatically renewed for additional one-year terms, unless either party provides written notice to the other party of its intention to not renew at least 180 days prior to the expiration of the then-current term.
Current wording
In August 2022, we entered into an exclusive distribution agreement, or the Distribution Agreement, with DIXI Medical USA Corp., or DIXI Medical, pursuant to which we became the exclusive U.S. distributor of DIXI Medical’s stereo electroencephalography, or Stereo EEG, product line beginning in October 2022. These products are used in the epilepsy monitoring units, or EMUs, of comprehensive epilepsy centers to determine where epileptic seizures originate. The Distribution Agreement has an initial term of three years, which expires September 30, 2025, and which may be automatically renewed for additional one-year terms. In March 2025, we notified DIXI Medical of our intent to not renew the Distribution Agreement upon its expiration in September 2025. During the six-month wind-down period following expiration of the Distribution Agreement, we have the right to sell any DIXI product inventory that we hold on the date of expiration. At the end of this wind-down period, DIXI Medical will buy back, at cost, any DIXI product inventory held by us that has at least six months of remaining shelf life.
Previous wording
In November 2023, we entered into a collaboration agreement with Rapport Therapeutics, Inc., or Rapport, a clinical-stage biotechnology company, to leverage our data as well as our RNS System’s unique biomarker monitoring and data analysis capabilities. The collaboration evaluates biomarker changes in currently implanted RNS System patients that enroll in Rapport’s Phase 2a clinical trial of its product candidate. Pursuant to this agreement, we will provide information to Rapport that will help evaluate the impact of their product candidate on certain biomarkers of patients with focal onset seizures.
Current wording
In November 2023, we entered into a collaboration agreement with Rapport Therapeutics, Inc., or Rapport, a clinical-stage biotechnology company, to leverage our data as well as our RNS System’s unique biomarker monitoring and data analysis capabilities. The collaboration evaluates biomarker changes in currently implanted RNS System patients that enroll in Rapport’s Phase 2a clinical trial of its product candidate. Pursuant to this agreement, we provide information to Rapport that will help evaluate the impact of their product candidate on certain biomarkers of patients with focal onset seizures.
Previous wording
We intend to continue investing in clinical studies and existing and next generation technologies to further improve our RNS System and clinical outcomes, enhance the patient and provider experience and broaden the patient population that can be treated with our RNS System. In addition, we are continuing to leverage our extensive database of intracranial electroencephalogram, or iEEG, data and our advanced data analysis capabilities to equip clinicians with the data they need to establish optimal program settings for each patient.
Current wording
We intend to continue investing in clinical studies and existing and next generation technologies to further improve our RNS System and clinical outcomes, enhance the patient and provider experience and broaden the patient population that can be treated with our RNS System. In addition, we are continuing to develop AI-enabled software tools, leveraging our extensive database of intracranial electroencephalogram, or iEEG, data and our advanced data analysis capabilities to equip clinicians with the data they need to establish optimal program settings for each patient.
Previous wording
While research and development and clinical studies are time consuming and costly, we believe that a pipeline of product enhancements and new products that improve efficacy, safety and ease of use is important for supporting increased adoption of our RNS System.
Current wording
While research and development and clinical studies are time consuming and costly, we believe that a pipeline of product enhancements and new products that improve effectiveness, safety and ease of use is important for supporting increased adoption of our RNS System.
Previous wording
We derive revenue from sales of our RNS System to hospital facilities both for initial RNS System implant procedures and for replacement procedures when our implanted devices reach end of service. We launched our current neurostimulator model in 2018. This device has an average battery life of nearly eleven years, an increase from the previous model of the device. We may experience changes in the percentage of our revenue from replacement procedures over the next few years as a result of the extended replacement cycle of the newer device, which may cause variability in our gross margin. We also derive revenue from sales of DIXI Medical products. A change in product mix between sales of our RNS System and DIXI Medical products would cause variability in our gross margin.
Current wording
We derive revenue from sales of our RNS System to hospital facilities both for initial RNS System implant procedures and for replacement procedures when our implanted devices reach end of service. We launched our current neurostimulator model in 2018. This device has an average battery life of nearly eleven years, an increase from the previous model of the device. We have experienced and may continue to experience changes in the percentage of our revenue from replacement procedures over the next few years as a result of the extended replacement cycle of the newer device, which may cause variability in our gross margin. We also derive revenue from sales of DIXI Medical products. A change in product mix between sales of our RNS System and DIXI Medical products would cause variability in our gross margin.
Previous wording
We derive most of our revenue from sales of our RNS System to the hospital facilities that implant our RNS System. Our revenue fluctuates primarily based on the volume of procedures performed and the procedure mix between initial and replacement implants. Our revenue also has fluctuated and will continue to fluctuate in the future from quarter-to-quarter due to a variety of factors, including the success of our sales force in expanding adoption of our RNS System in new accounts and the number of physicians who are aware of and prescribe our RNS System.
Current wording
We derive most of our revenue from sales of our RNS System to the hospital facilities that implant our RNS System. Our revenue fluctuates primarily based on the volume of procedures performed and the procedure mix between initial and replacement implants. Our revenue has also fluctuated and will continue to fluctuate in the future from quarter-to-quarter due to a variety of factors, including the success of our sales force in expanding adoption of our RNS System in new accounts and the number of physicians who are aware of and prescribe our RNS System.
Previous wording
We also derive revenue from sales of DIXI Medical products, primarily to our current customer base. Our revenue from the sale of DIXI Medical products will fluctuate in the future due to a variety of factors, including our ability to take market share from competitive Stereo EEG products.
Current wording
We also derive revenue from sales of DIXI Medical products, primarily to our current customer base. Our revenue from the sale of DIXI Medical products will fluctuate in the future due to a variety of factors, including our ability to take market share from competitive Stereo EEG products. The Distribution Agreement expires on September 30, 2025, after which we may sell DIXI product inventory that we hold on the expiration date for the next six months.
Previous wording
Cost of goods sold consists primarily of costs related to materials, components and subassemblies, personnel-related expenses for our manufacturing and quality assurance employees, including stock-based compensation, manufacturing overhead and charges for excess, obsolete and non-sellable inventories. Overhead costs include the cost of quality assurance, testing, material procurement, inventory control, operations supervision and management personnel, an allocation of facilities and information technology expenses, including rent and utilities, and equipment depreciation. Cost of goods sold also includes certain direct costs such as those incurred for shipping our RNS System. We record adjustments to our inventory valuation for estimated excess, obsolete and non-sellable inventories based on assumptions about future demand, past usage, changes to manufacturing processes and overall market conditions. Cost of goods sold also includes costs of procuring DIXI Medical products. We expect cost of goods sold to increase in absolute dollars as more of our RNS Systems and DIXI Medical products are sold.
Current wording
Cost of goods sold consists primarily of costs related to materials, components and subassemblies, personnel-related expenses for our manufacturing and quality assurance employees, including stock-based compensation, manufacturing overhead and charges for excess, obsolete and non-sellable inventories. Overhead costs include the cost of quality assurance, testing, material procurement, inventory control, operations supervision and management personnel, an allocation of facilities and information technology expenses, including rent and utilities, and equipment depreciation. Cost of goods sold also includes certain direct costs such as those incurred for shipping our RNS System. We record adjustments to our inventory valuation for estimated excess, obsolete and non-sellable inventories based on assumptions about future demand, past usage, changes to manufacturing processes and overall market conditions. Cost of goods sold also includes costs of procuring and shipping DIXI Medical products. We expect cost of goods sold to increase in absolute dollars as more of our RNS Systems and DIXI Medical products are sold.
Previous wording
Revenue increased by $4.6 million, or 28%, to $21.1 million during the three months ended September 30, 2024, compared to $16.4 million during the three months ended September 30, 2023. The increase in revenue was primarily due to an increase in the number of RNS System units sold and an increase in sales of DIXI Medical products. All of our revenue, with the exception of less than $0.1 million in both of the three months ended September 30, 2024 and 2023, was generated from sales in the United States.
Current wording
Revenue increased by $4.4 million, or 24%, to $22.5 million during the three months ended March 31, 2025, compared to $18.1 million during the three months ended March 31, 2024. The increase in revenue was primarily due to an increase in the number of RNS System units sold. All of our revenue, with the exception of $0.1 million in the three months ended March 31, 2025 and less than $0.1 million in the three months ended March 31, 2024, was generated from sales in the United States.
Previous wording
Cost of goods sold increased by $2.7 million, or 21%, to $15.5 million during the nine months ended September 30, 2024, compared to $12.8 million during the nine months ended September 30, 2023. The increase was primarily due to the increase in sales volume. Our gross margin increased from 72.9% for the nine months ended September 30, 2023, to 73.4% for the nine months ended September 30, 2024 primarily due to lower fixed costs per unit as a result of increased production volume of the RNS System, partially offset by the lower gross margin from distribution of DIXI Medical products.
Current wording
Cost of goods sold increased by $0.4 million, or 8%, to $5.2 million during the three months ended March 31, 2025, compared to $4.8 million during the three months ended March 31, 2024. The increase was primarily due to the increase in sales volume. Our gross margin increased from 73.6% for the three months ended March 31, 2024, to 77.0% for the three months ended March 31, 2025 primarily due to lower fixed costs per unit as a result of increased production volume of the RNS System, partially offset by the lower gross margin from distribution of DIXI Medical products.
Previous wording
Research and development expenses increased by $2.2 million, or 14%, to $17.6 million during the nine months ended September 30, 2024, compared to $15.4 million during the nine months ended September 30, 2023, primarily due to an increase of $1.9 million in personnel-related expenses, including stock-based compensation, and an increase of $1.0 million in product development and clinical trial expenses. The increases were offset in part by an increase of $0.7 million in grant funds received primarily under the NIH funding agreement which are recognized as a reduction in research and development expenses.
Current wording
Research and development expenses increased by $1.7 million, or 29%, to $7.4 million during the three months ended March 31, 2025, compared to $5.8 million during the three months ended March 31, 2024, primarily due to an increase of $0.6 million in personnel-related expenses, an increase of $0.7 million in product development and clinical trial expenses, and a decrease of $0.4 million in grant funds received primarily under the NIH funding agreement which are recognized as a reduction in research and development expenses.
Previous wording
Selling, general and administrative expenses increased by $2.0 million, or 5%, to $43.3 million during the nine months ended September 30, 2024, compared to $41.3 million during the nine months ended September 30, 2023. This increase was primarily due to an increase of $1.8 million in personnel-related expenses driven by an increase in our sales and field support personnel during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, an increase of $0.4 million in sales, field support and marketing costs, including travel, and an increase of $0.2 million in expenses related to commercial operations. These increases were partially offset by a decrease of $0.4 million in general and administrative expenses, including insurance.
Current wording
Selling, general and administrative expenses decreased by $0.1 million to $15.0 million during the three months ended March 31, 2025, compared to $15.1 million during the three months ended March 31, 2024. This decrease was primarily due to a decrease of $0.3 million in personnel-related expenses resulting from a decrease in general and administrative severance costs partially offset by an increase in sales and field support personnel costs during the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease in personnel-related expenses was partially offset by an increase of $0.3 million in sales, field support and commercial operations costs.
Previous wording
Interest expense was $2.2 million for both of the three months ended September 30, 2024 and 2023, due to an increase in the average balance of our Term Loan as a result of using the PIK interest option for the payment dates from January 2023 through June 2024, offset by the lower effective interest rate during the three months ended September 30, 2024. Interest income decreased by less than $0.1 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to a decrease in average balances of our money market funds and short-term marketable securities, partially offset by higher interest yields in the three months ended September 30, 2024.
Current wording
Interest expense decreased to $2.2 million for the three months ended March 31, 2025, compared to $2.3 million for the three months ended March 31, 2024, due to a decrease in the annual effective interest rate as a result of the amendment of our Term Loan in May 2024. Interest income decreased by less than $0.1 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to lower interest yields in the three months ended March 31, 2025.
Previous wording
Other income (expense), net increased by $1.0 million to $0.4 million during the nine months ended September 30, 2024, compared to $(0.6) million during the nine months ended September 30, 2023, primarily due to unrealized gain, net on short-term investments in the nine months ended September 30, 2024.
Current wording
Other income (expense), net decreased by $0.1 million to $(0.1) million during the three months ended March 31, 2025, compared to $0.1 million during the three months ended March 31, 2024, primarily due to unrealized loss, net on short-term investments in the three months ended March 31, 2025.
Previous wording
We have financed our operations primarily through sales of our products, issuance of equity securities and debt financing. As of September 30, 2024, we had cash, cash equivalents and short-term investments of $56.8 million and $59.3 million outstanding under the Term Loan, net of debt discount and issuance costs.
Current wording
We have financed our operations primarily through sales of our products, issuance of equity securities and debt financing. As of March 31, 2025, we had cash, cash equivalents and short-term investments of $66.3 million and $59.8 million outstanding under the Term Loan, net of debt discount and issuance costs.
Previous wording
In November 2022, we entered into a Sales Agreement with Leerink Partners LLC, or Leerink, to sell shares of our common stock, from time to time, through an at-the-market, or ATM, equity offering program under which Leerink will act as our sales agent and pursuant to which we may sell common stock for aggregate gross sales proceeds of up to $50.0 million. In November 2023, we received net proceeds of approximately $7.6 million from the sale of shares of common stock pursuant to our ATM offering program, after deducting sales commission and offering expenses. During the three months ended September 30, 2024, we received net proceeds of approximately $2.8 million after deducting sales commissions and offering expenses. As of September 30, 2024, we have $38.8 million remaining under our ATM program.
Current wording
In November 2022, we entered into a Sales Agreement with Leerink Partners LLC, or Leerink, to sell shares of our common stock, from time to time, through an at-the-market, or ATM, equity offering program under which Leerink would act as our sales agent and pursuant to which we could sell common stock for aggregate gross proceeds of up to $50.0 million. During the year ended December 31, 2024, we received net proceeds of approximately $3.2 million after deducting sales commissions and offering expenses. In January 2025, we received net proceeds of approximately $0.2 million after deducting sales commissions and offering expenses. In February 2025, we terminated the Sales Agreement and the ATM program. On the date of termination, we had $38.3 million remaining under our ATM program.
Previous wording
In September 2020, we entered into the Term Loan with CRG Partners IV L.P. and its affiliates for total borrowings of up to $60 million and borrowed $50 million. The remaining $10 million expired without being drawn.
Current wording
In September 2020, we entered into the Term Loan with CRG Partners IV L.P. and its affiliates for total borrowings of up to $60 million and borrowed $50 million. The remaining $10.0 million expired without being drawn.
Previous wording
We have future minimum payments for the Term Loan totaling $76.9 million, with $7.7 million due within twelve months. In addition, we lease our office and manufacturing facilities in Mountain View, California under a non-cancelable operating lease which expires in June 2030. Future minimum lease payments under non-cancelable operating leases were $18.0 million as of September 30, 2024. See Note 5 to our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Current wording
We have future minimum payments for the Term Loan totaling $73.1 million, with $7.7 million due within twelve months. In addition, we lease our office and manufacturing facilities in Mountain View, California under a non-cancelable operating lease which expires in June 2030. Future minimum lease payments under non-cancelable operating leases were $16.6 million as of March 31, 2025. See Note 5 to our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Previous wording
Net cash used in operating activities was $16.4 million for the nine months ended September 30, 2023. Cash used in operating activities was primarily a result of the net loss of $26.8 million, adjusted for non-cash charges of $12.1 million and change in operating assets and liabilities of $1.7 million. The non-cash charges primarily consisted of $7.2 million of stock-based compensation, $2.0 million of interest incurred but paid-in-kind, $1.1 million of amortization of right-of-use assets, $0.8 million of non-cash interest expense related to our term loan and $0.6 million of loss from short-term investments. The change in operating assets and liabilities was due to an increase in accounts receivable of $3.8 million primarily due to an increase in sales of our products including our RNS System and DIXI Medical products, an increase in inventories of $0.2 million largely due to an increase in raw materials partially offset by a reduction in work-in-process inventory, a decrease in operating lease liabilities of $1.1 million, and a decrease in accounts payable of $0.8 million, primarily due to the timing of payments to our vendors, offset in part by a decrease in prepaid expenses and other assets of $1.5 million, and an increase in accrued liabilities of $2.6 million primarily due to an increase in personnel-related expenses.
Current wording
Net cash used in operating activities was $7.5 million for the three months ended March 31, 2025. Cash used in operating activities was primarily a result of the net loss of $6.6 million, adjusted for non-cash charges of $3.5 million and change in operating assets and liabilities of $4.4 million. The non-cash charges primarily consisted of $2.6 million of stock-based compensation, $0.4 million of amortization of right-of-use assets, and $0.2 million of non-cash interest expense related to our Term Loan. The change in operating assets and liabilities was due to an increase in accounts receivable of $2.6 million primarily due to an increase in sales of our products including our RNS System and DIXI Medical products, an increase in inventories of $0.2 million largely due to an increase in work-in-process inventory, a decrease in accrued liabilities of $2.3 million largely due to accrued payroll and related expenses, and a decrease in operating lease liabilities of $0.5 million, offset in part by an increase in accounts payable of $1.0 million primarily due to the timing of payments to our vendors, and a decrease in in prepaid expenses and other assets of $0.2 million.
Previous wording
Net cash used in operating activities was $13.2 million for the nine months ended September 30, 2024. Cash used in operating activities was primarily a result of the net loss of $21.9 million, adjusted for non-cash charges of $11.2 million and change in operating assets and liabilities of $2.5 million. The non-cash charges primarily consisted of $7.7 million of stock-based compensation, $1.4 million of interest incurred but paid-in-kind, $1.2 million of amortization of right-of-use assets, $0.7 million of non-cash interest expense related to our Term Loan, offset in part by a gain on short-term investments of $0.3 million. The change in operating assets and liabilities was due to a decrease in operating lease liabilities of $1.2 million, a decrease in accrued liabilities of $1.1 million largely due to accrued payroll and related expenses, an increase in inventories of $1.1 million largely due to an increase in work-in-process inventory and raw materials, and a decrease in deferred revenue of $0.3 million, offset in part by a decrease in accounts receivable of $0.8 million, and a decrease in in prepaid expenses and other assets of $0.6 million.
Current wording
Net cash used in operating activities was $7.5 million for the three months ended March 31, 2024. Cash used in operating activities was primarily a result of the net loss of $8.9 million, adjusted for non-cash charges of $4.0 million and change in operating assets and liabilities of $2.6 million. The non-cash charges primarily consisted of $2.5 million of stock-based compensation, $0.7 million of interest incurred but paid-in-kind, $0.4 million of amortization of right-of-use assets and $0.3 million of non-cash interest expense related to our Term Loan. The change in operating assets and liabilities was due to an increase in inventories of $0.2 million largely due to an increase in work-in-process inventory partially offset by a reduction in raw materials and finished goods, a decrease in accrued liabilities of $3.9 million largely due to accrued payroll and related expenses, a decrease in operating lease liabilities of $0.4 million, and a decrease in deferred revenue of $0.2 million, offset in part by an increase in accounts payable of $1.0 million primarily due to the timing of payments to our vendors, a decrease in accounts receivable of $0.7 million, and a decrease in in prepaid expenses and other assets of $0.5 million.
Previous wording
Cash Flows Provided by (Used in) Financing Activities
Current wording
Cash Flows Provided by (Used in) Investing Activities
Previous wording
Net cash provided by investing activities was $19.6 million for the nine months ended September 30, 2023, which primarily consisted of sales of short-term investments of $19.7 million, partially offset by purchases of property and equipment of $0.1 million.
Current wording
Net cash provided by investing activities was $2.4 million for the three months ended March 31, 2024, which primarily consisted of sales of short-term investments of $2.5 million, partially offset by purchases of property and equipment of $0.1 million.
Previous wording
Cash Flows Provided by Investing Activities
Current wording
Cash Flows Provided by Financing Activities
Previous wording
Net cash provided by financing activities was $3.5 million for the nine months ended September 30, 2024, which primarily consisted of $2.9 million of net cash proceeds from our At-the-Market offering and proceeds from the issuance of common stock under employee plans of $1.3 million, partially offset by taxes withheld and paid related to net share settlement of equity awards of $0.8 million.
Current wording
Net cash provided by financing activities was $21.1 million for the three months ended March 31, 2025, which primarily consisted of $70.3 million in proceeds, net of underwriting discounts and commissions, from our February 2025 follow-on offering of common stock, proceeds from the issuance of common stock under employee plans of $0.4 million and $0.2 million of net cash proceeds from our at-the-market offering, partially offset by a repurchase of our common stock of $49.5 million, and taxes withheld and paid related to net share settlement of equity awards of $0.2 million.
Previous wording
Net cash used in financing activities was $0.1 million for the nine months ended September 30, 2023, which primarily consisted of taxes withheld and paid related to net share settlement of equity awards of $0.2 million and payment of deferred offering costs of $0.1 million, partially offset by proceeds from the issuance of common stock under employee plans of $0.2 million.
Current wording
Net cash provided by financing activities was $0.1 million for the three months ended March 31, 2024, which primarily consisted of proceeds from the issuance of common stock under employee plans of $0.7 million, partially offset by taxes withheld and paid related to net share settlement of equity awards of $0.6 million.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Cost of goods sold increased by $1.4 million, or 34%, to $5.6 million during the three months ended September 30, 2024, compared to $4.2 million during the three months ended September 30, 2023. The increase was primarily due to the increase in sales volume. Our gross margin decreased from 74.5% for the three months ended September 30, 2023, to 73.2% for the three months ended September 30, 2024, primarily due to lower gross margin from distribution of DIXI Medical products.
Previous report — wording carried elsewhere
The following table summarizes our results of operations for the periods indicated (in thousands):
Previous report — wording carried elsewhere
Revenue increased by $11.0 million, or 23%, to $58.4 million during the nine months ended September 30, 2024, compared to $47.4 million during the nine months ended September 30, 2023. The increase in revenue was primarily due to an increase in the number of RNS System units sold and an increase in sales of DIXI Medical products. All of our revenue, with the exception of $0.2 million in the nine months ended September 30, 2024 and less than $0.1 million in the nine months ended September 30, 2023, was generated from sales in the United States.
Previous report — wording carried elsewhere
Net cash provided by investing activities was $7.0 million for the nine months ended September 30, 2024, which primarily consisted of sales of short-term investments of $7.3 million, partially offset by purchases of property and equipment of $0.3 million.