NeuroPace Inc
For the period ended Jun 30, 2025. Filed Aug 12, 2025.
View on SEC.govAbout this filing
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.
Jun 30, 2025 · Filed Aug 12, 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 2025-03-31; filed 2025-05-13.
0001528287-25-000013
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-12.
0001528287-25-000022
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 111 previous paragraphs and 121 current paragraphs.
73 unchanged; 29 reworded; 15 added; 9 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 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 (15)
Current report
We are conducting studies to expand our indication for use in patients with drug-resistant generalized epilepsy and patients with drug-resistant focal epilepsy under the age of 18. In March 2025, the last patient in our NAUTILUS study for generalized epilepsy completed one year of follow up. On May 27, 2025, we announced the preliminary results from the NAUTILUS study based on analysis of the one-year data. The study met the 12-week post-implant primary safety endpoint, demonstrating excellent safety outcomes and confirming the favorable safety profile of the RNS System. The primary effectiveness endpoint did not reach statistical significance in the overall study, but there was a statistically significant response in a subset of the study cohort, which represented the majority of participants. Preliminary data illustrates the overall value of the RNS System to individualize patient treatment over time, showing statistically significant and clinically meaningful, prespecified secondary endpoints. Patients in the NAUTILUS trial continue to participate in the study through the completion of two years after the device implant, with prespecified collection of safety and effectiveness data occurring upon completion of the two years post-implant. We are actively engaging with the FDA to finalize a pathway to submitting an application seeking the expanded indication for patients with generalized epilepsy. There are no changes in the Company’s plan to file the expanded label submission to the FDA in the second half of 2025.
Current report
General and administrative expenses increased by $1.5 million, or 34%, to $6.1 million during the three months ended June 30, 2025, compared to $4.5 million during the three months ended June 30, 2024. This increase was primarily due to an increase of $1.6 million in personnel-related expenses resulting from one-time severance and transition costs during the three months ended June 30, 2025, compared to the three months ended June 30, 2024.
Current report
Revenue
Current report
Revenue increased by $8.7 million, or 23%, to $46.0 million during the six months ended June 30, 2025, compared to $37.4 million during the six months ended June 30, 2024. 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 $0.4 million in the six months ended June 30, 2025 and $0.1 million in the six months ended June 30, 2024, was generated from sales in the United States.
Current report
Sales and marketing expenses increased by $3.3 million, or 16%, to $23.0 million during the six months ended June 30, 2025, compared to $19.8 million during the six months ended June 30, 2024, primarily due to an increase of $1.9 million in personnel-related expenses resulting from increases in sales and field support personnel costs and one-time severance costs during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, an increase of $1.0 million in sales, field support and marketing costs, including travel, and an increase of $0.3 million in expenses related to commercial operations.
Current report
General and administrative expenses increased by $0.5 million, or 5%, to $10.1 million during the six months ended June 30, 2025, compared to $9.6 million during the six months ended June 30, 2024. This increase was primarily due to an increase of $0.6 million in personnel-related expenses resulting from one-time severance and transition costs during the six months ended June 30, 2025, compared to the six months ended June 30, 2024.
Current report
Interest expense decreased to $4.2 million for the six months ended June 30, 2025, compared to $4.4 million for the six months ended June 30, 2024, due to repayment of the CRG Term Loan and the lower annual effective interest rate pursuant to the MidCap Term Loan compared to the CRG Term Loan. Interest income decreased by $0.1 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to lower interest yields in the six months ended June 30, 2025.
Current report
Other Income (Expense), net
Current report
Other income (expense), net decreased by $0.7 million to $(0.6) million during the six months ended June 30, 2025, compared to $0.2 million during the six months ended June 30, 2024, primarily due to a loss on extinguishment of the CRG Term Loan of $0.5 million and unrealized loss, net on short-term investments in the six months ended June 30, 2025.
Current report
CRG Term Loan
Current report
In June 2025, we repaid the entire obligation under the CRG Term Loan using the proceeds received from the MidCap Term Loan. At the time of repayment, the lender agreed to decrease the exit fee from 10% to 8% of the aggregate principal amount being prepaid or repaid.
Current report
MidCap Term Loan
Current report
In June 2025, we entered into a credit, security and guaranty agreement, or Credit Agreement, by and among the Company, MidCap Funding IV Trust, as agent, MidCap Financial Trust, as term loan servicer and the financial institutions and other entities from time to time party thereto, and borrowed $60.0 million, or MidCap Term Loan. The Credit Agreement also provided for a revolving credit facility in an aggregate principal amount not to exceed $15.0 million, or the Revolver and together with the MidCap Term Loan, the Loans.
Current report
The Loans mature on June 4, 2030, and is due in one installment on June 4, 2030. The MidCap Term Loan bears interest at an annual rate of 30-day forward-looking term Secured Overnight Financing Rate, or SOFR, plus 5.5%, subject to a SOFR floor of 2.0%. Borrowing under the Revolver will accrue interest at an annual rate of 30-day forward-looking term SOFR plus 3.75%, subject to a SOFR floor of 2.0%. Following the initial borrowing of the Revolver, we will pay an unused line fee equal to 0.25% per annum of the average unused portion of the Revolver. Interest and unused line fee, if any, are payable monthly in arrears.
Current report
We may voluntarily prepay the Loans in whole or in part and terminate the respective commitments thereunder prior to the maturity date. Each of the MidCap Term Loan and the Revolver is subject to a prepayment premium equal to 3.0% of the amount terminated during the first year, 2.0% in the second year, 1.0% in the third year, and 0% thereafter. In addition, we will pay an exit fee of 2% of the amount borrowed under the MidCap Term Loan upon prepayment or repayment.
Removed paragraphs (9)
Previous report
Cost of Goods Sold and Gross Margin
Previous report
Research and Development Expenses
Previous report
Selling, General and Administrative Expenses
Previous report
Interest Expense and Income
Previous report
Cost of Goods Sold and Gross Margin
Previous report
Research and Development Expenses
Previous report
Selling, General and Administrative Expenses
Previous report
Interest Expense and Income
Reworded paragraphs (29)
Previous wording
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 wording
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. Primary effectiveness endpoint data from our Post-approval Study in this patient population demonstrated 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.
Previous wording
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 wording
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.
Previous wording
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 wording
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 are expanding these efforts through 2025. We are actively addressing this opportunity in a targeted manner with incremental expansion of our sales force.
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 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.
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 June 30, 2025, we had an accumulated deficit of $546.2 million, cash, cash equivalents and short-term investments of $62.1 million, and $58.6 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 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.
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 near term. 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 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.
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. In June 2025, we executed an agreement to extend our collaboration with Rapport and to continue providing differentiated data, monitoring and data analysis services for the next phase of Rapport’s clinical trial of its product candidate. We expect this work to continue through the end of 2027.
Previous wording
Our operating expenses consist of research and development costs and selling, general and administrative costs.
Current wording
Our operating expenses consist of sales and marketing costs, research and development costs, and general and administrative costs.
Previous wording
Our selling, general and administrative expenses consist primarily of personnel-related costs for our sales and marketing employees, including stock-based compensation and sales-based variable compensation, travel expenses, consulting, public relations costs, direct marketing, customer training, trade show and promotional expenses and allocated facility and information technology expenses, and for administrative personnel that support our general operations such as executive management and information technology, finance, accounting, customer services, human resources and legal personnel. We expense sales variable compensation when revenue related to the underlying sale is recognized. Selling, general and administrative expenses also include costs attributable to professional fees for legal, accounting and tax services, insurance and recruiting fees.
Current wording
Our sales and marketing expenses consist primarily of personnel-related costs for our sales and marketing employees, including stock-based compensation and sales-based variable compensation, travel expenses, consulting, public relations costs, direct marketing, customer training, trade show and promotional expenses and allocated facility and information technology expenses. We expense sales variable compensation when revenue related to the underlying sale is recognized. We intend to continue to increase our sales and marketing spending to support increased adoption of our RNS System. We expect our sales and marketing expenses will increase in absolute dollars as we hire additional personnel and add programs in order to more fully penetrate the market opportunity.
Previous wording
We intend to continue to increase our sales and marketing spending to support increased adoption of our RNS System. We expect our sales and marketing expenses will increase in absolute dollars as we hire additional personnel and add programs in order to more fully penetrate the market opportunity. We expect our administrative expenses, including stock-based compensation expense, will increase as we increase our headcount to support our growth. Additionally, we may incur increased expenses related to audit, legal, regulatory and tax-related services, compliance with exchange listing and Securities and Exchange Commission, or SEC, requirements, and director and officer insurance premiums. Our selling, general and administrative expenses may fluctuate from period to period as we continue to grow.
Current wording
Our general and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for administrative personnel that support our general operations such as executive management and information technology, finance, accounting, customer services, human resources and legal personnel. General and administrative expenses also include costs attributable to professional fees for legal, accounting and tax services, insurance and recruiting fees. We expect our administrative expenses will increase as we increase our headcount to support our growth. Additionally, we may incur increased expenses related to audit, legal, regulatory and tax-related services, compliance with exchange listing and Securities and Exchange Commission, or SEC, requirements, and director and officer insurance premiums. Our general and administrative expenses may fluctuate from period to period as we continue to grow.
Previous wording
Other income (expense), net primarily consists of gain and loss from short-term investments.
Current wording
Other income (expense), net primarily consists of gain and loss from short-term investments, and loss on debt extinguishment.
Previous 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.
Current wording
Revenue increased by $4.3 million, or 22%, to $23.5 million during the three months ended June 30, 2025, compared to $19.3 million during the three months ended June 30, 2024. 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 $0.4 million in the three months ended June 30, 2025 and $0.1 million in the three months ended June 30, 2024, was generated from sales in the United States.
Previous 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.
Current wording
Cost of goods sold increased by $0.3 million, or 5%, to $5.4 million during the three months ended June 30, 2025, compared to $5.1 million during the three months ended June 30, 2024. The increase was primarily due to the increase in sales volume. Our gross margin increased from 73.4% for the three months ended June 30, 2024, to 77.1% for the three months ended June 30, 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
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.
Current wording
Sales and marketing expenses increased by $2.3 million, or 23%, to $12.0 million during the three months ended June 30, 2025, compared to $9.8 million during the three months ended June 30, 2024, primarily due to an increase of $1.3 million in personnel-related expenses resulting from increases in sales and field support personnel costs and one-time severance costs during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and an increase of $0.9 million in sales, field support and marketing costs, including travel.
Previous 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.
Current wording
Research and development expenses increased by $0.7 million, or 13%, to $6.8 million during the three months ended June 30, 2025, compared to $6.1 million during the three months ended June 30, 2024, primarily due to an increase of $0.6 million in personnel-related expenses, a decrease 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 partially offset by a decrease of $0.4 million in product development and clinical trial expenses.
Previous 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.
Current wording
Interest expense decreased to $2.1 million for the three months ended June 30, 2025, compared to $2.2 million for the three months ended June 30, 2024, due to repayment of the CRG Term Loan and the lower annual effective interest rate pursuant to the MidCap Term Loan compared to the CRG Term Loan. Interest income decreased by less than $0.1 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily due to lower interest yields in the three months ended June 30, 2025.
Previous 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.
Current wording
Other income (expense), net decreased by $0.6 million to $(0.5) million during the three months ended June 30, 2025, compared to $0.1 million during the three months ended June 30, 2024, primarily due to a loss on extinguishment of the CRG Term Loan of $0.5 million in the three months ended June 30, 2025.
Previous 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.
Current wording
We have financed our operations primarily through sales of our products, issuance of equity securities and debt financing. As of June 30, 2025, we had cash, cash equivalents and short-term investments of $62.1 million and $58.6 million outstanding under the MidCap Term Loan, net of debt discount and issuance costs.
Previous wording
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 wording
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 sales and marketing, research and development, and general and administrative expenses, debt reduction and working capital.
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 $10.0 million expired without being drawn.
Current wording
In September 2020, we entered into the CRG 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
The Term Loan currently bears interest at a rate of 13.5% per year. Payments under the loan are made quarterly with payment dates fixed at the end of each calendar quarter. From January 2024 through June 2025, we had the option to pay interest as follows: 8.5% per annum in cash and 5.0% per annum PIK by increasing the principal of the Term Loan. For each payment date from January 2024 through June 2024, we elected the PIK option.
Current wording
The CRG Term Loan bore interest at a rate of 13.5% per year. Payments under the loan were made quarterly with payment dates fixed at the end of each calendar quarter. From March 2023 through June 2024, we had the option to pay interest as follows: 8.5% per annum in cash and 5.0% per annum PIK by increasing the principal of the CRG Term Loan. For each payment date from March 2023 through June 2024, we elected the PIK option.
Previous wording
The Term Loan was interest-only through its original final maturity of September 30, 2025. Following the interest-only period, principal payment would have been due in one installment on September 30, 2025. In May 2024, we amended the Term Loan to extend the final maturity by one year to September 30, 2026 and eliminate the PIK interest option after June 30, 2024. The Term Loan includes a fee upon repayment of the loan equal to 10% of the aggregate principal amount being prepaid or repaid.
Current wording
The CRG Term Loan was interest-only through its original final maturity of September 30, 2025. Following the interest-only period, principal payment would have been due in one installment on September 30, 2025. In May 2024, we amended the CRG Term Loan to extend the final maturity by one year to September 30, 2026 and eliminate the PIK interest option after June 30, 2024. The CRG Term Loan included an exit fee upon repayment of the loan equal to 10% of the aggregate principal amount being prepaid or repaid.
Previous wording
The Term Loan is collateralized by substantially all of our assets. The loan agreement contains customary representations and warranties, covenants, events of default and termination provisions. The financial covenants require that we achieve minimum annual revenue thresholds and maintain a minimum balance of cash and cash equivalents. See Notes 1 and 6 to our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Current wording
The Loans are collateralized by substantially all of our assets. The Credit Agreement contains customary representations and warranties, covenants, events of default and termination provisions. See Notes 1 and 6 to our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Previous 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.
Current wording
We have future minimum payments for the MidCap Term Loan totaling $91.7 million, with $6.1 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 $15.9 million as of June 30, 2025. See Note 5 to our unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information about our facility lease.
Previous 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.
Current wording
Net cash used in operating activities was $9.6 million for the six months ended June 30, 2025. Cash used in operating activities was primarily a result of the net loss of $15.2 million, adjusted for non-cash charges of $7.9 million and change in operating assets and liabilities of $2.3 million. The non-cash charges primarily consisted of $5.9 million of stock-based compensation, $0.8 million of amortization of right-of-use assets, $0.5 million of loss on extinguishment of the CRG Term Loan, and $0.4 million of non-cash interest expense related to our term loans. The change in operating assets and liabilities was due to an increase in accounts receivable of $0.7 million primarily due to an increase in sales of our products including our RNS System and DIXI Medical products, an increase in inventories of $3.1 million largely due to an increase in raw materials and finished goods, and a decrease in operating lease liabilities of $0.9 million, offset in part by an increase in accounts payable of $1.7 million primarily due to the timing of payments to our vendors, and a decrease in in prepaid expenses and other assets of $0.7 million.
Previous 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.
Current wording
Net cash used in operating activities was $11.4 million for the six months ended June 30, 2024. Cash used in operating activities was primarily a result of the net loss of $16.4 million, adjusted for non-cash charges of $8.0 million and change in operating assets and liabilities of $3.0 million. The non-cash charges primarily consisted of $5.1 million of stock-based compensation, $1.4 million of interest incurred but paid-in-kind, $0.8 million of amortization of right-of-use assets and $0.5 million of non-cash interest expense related to our term loans. The change in operating assets and liabilities was due to a decrease in accrued liabilities of $3.4 million largely due to accrued payroll and related expenses, a decrease in operating lease liabilities of $0.8 million, 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, and a decrease in deferred revenue of $0.3 million, offset in part by a decrease in accounts receivable of $1.1 million, and a decrease in in prepaid expenses and other assets of $0.7 million.
Previous wording
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 wording
Net cash used in investing activities was $0.2 million for the six months ended June 30, 2025, and primarily consisted of purchases of property and equipment.
Previous 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.
Current wording
Net cash provided by investing activities was $5.6 million for the six months ended June 30, 2024, which primarily consisted of sales of short-term investments of $5.8 million, partially offset by purchases of property and equipment of $0.2 million.
Previous 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.
Current wording
Net cash provided by financing activities was $19.2 million for the six months ended June 30, 2025, which primarily consisted of $69.7 million in proceeds, net of underwriting discounts and commissions, from our February 2025 follow-on offering of common stock, proceeds of $58.6 million from the MidCap Term Loan, net of discounts and issuance costs, proceeds from the issuance of common stock under employee plans of $1.2 million and $0.2 million of net cash proceeds from our at-the-market offering, partially offset by repayment of the CRG Term Loan of $60.5 million, a repurchase of common stock of $49.5 million, and taxes withheld and paid related to net share settlement of equity awards of $0.4 million.
Previous 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.
Current wording
Net cash provided by financing activities was $0.6 million for the six months ended June 30, 2024, which primarily consisted of 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 $0.7 million.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Comparison of the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
The following table summarizes our results of operations for the periods indicated (in thousands):
Current report — wording carried from elsewhere
Cost of goods sold increased by $0.7 million, or 7%, to $10.6 million during the six months ended June 30, 2025, compared to $9.9 million during the six months ended June 30, 2024. The increase was primarily due to the increase in sales volume. Our gross margin increased from 73.5% for the six months ended June 30, 2024, to 77.0% for the six months ended June 30, 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.
Current report — wording carried from elsewhere
Research and development expenses increased by $2.4 million, or 21%, to $14.3 million during the six months ended June 30, 2025, compared to $11.8 million during the six months ended June 30, 2024, primarily due to an increase of $1.2 million in personnel-related expenses, an increase of $0.3 million in product development and clinical trial expenses, and a decrease of $1.0 million in grant funds received primarily under the NIH funding agreement which are recognized as a reduction in research and development expenses.