xent-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

FORM 10-Q

___________________________

(Mark One)


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

For the quarterly period ended March 31, 2021


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

Commission file number: 001-36545

___________________________

INTERSECT ENT, INC.

(Exact name of registrant as specified in its charter)

___________________________

Delaware

(State or other jurisdiction of

incorporation or organization)

1555 Adams Drive

Menlo Park, California

(Address of principal executive offices)

20-0280837

(I.R.S. Employer

Identification Number)

94025

(Zip Code)

Registrant’s telephone number, including area code: (650) 641-2100

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

Title of Each Class:

Trading symbol(s)

Name of Exchange on Which registered:

Common Stock, 0.001 par value

XENT

The Nasdaq Global Market

___________________________

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

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

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


Large accelerated filer	¨	Accelerated filer	x

Non-accelerated filer	¨	Smaller reporting company	☐

		Emerging growth company	☐

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

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

Shares of common stock outstanding as of May 3, 2021 were 33,140,573.

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INTERSECT ENT, INC.

Form 10-Q – QUARTERLY REPORT

For the Quarter Ended March 31, 2021

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION			4
Item 1. Financial Statements			4
Condensed Consolidated Balance Sheets as of March 31, 202 1 (unaudited) and December 31, 2020			4
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three m onths ended March 3 1 , 202 1 and 20 20 (unaudited)			5
Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 202 1 and 2020 (unaudited)			6
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)			7
Notes to Condensed Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			29
Item 4. Controls and Procedures			29

PART II. OTHER INFORMATION			30
Item 1. Legal Proceedings			30
Item 1A. Risk Factors			30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			59
Item 3. Defaults Upon Senior Securities			59
Item 4. Mine Safety Disclosures			59
Item 5. Other Information			59
Item 6. Exhibits			60

SIGNATURES			61

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTERSECT ENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)


	March 31, 2021		December 31, 2020
	(unaudited)		(1)
Assets
Current assets:
Cash and cash equivalents	$	14,365	$	13,521
Short-term investments	56,159		74,506
Accounts receivable, net	14,581		14,592
Inventories, net	13,217		12,054
Prepaid expenses and other current assets	3,965		3,494
Total current assets	102,287		118,167
Property and equipment, net	5,242		5,624
Operating lease right-of-use assets	16,813		17,151
Intangible assets, net	20,312		21,193
Goodwill	46,639		46,639
Restricted cash	18,345		17,500
Other non-current assets	801		1,107
Total assets	$	210,439	$	227,381
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	6,943	$	6,042
Accrued compensation	10,917		13,559
Deferred acquisition related consideration, current	20,149		21,071
Other current liabilities	5,529		3,575
Total current liabilities	43,538		44,247
Operating lease liabilities	15,913		17,736
Convertible notes, net	64,216		63,650
Deferred acquisition related consideration, non-current	32,206		33,167
Deferred tax liability	1,367		1,569
Other non-current liabilities	942		—
Total liabilities	158,182		160,369
Commitments and contingencies (note 10)
Stockholders’ equity:
Preferred stock, $0.001 par value; Authorized shares: 9,994; Issued and outstanding shares: none	—		—
Series DF-1 convertible preferred stock, $0.001 par value; Authorized shares: 6; Issued and outstanding shares: none	—		—
Common stock, $0.001 par value; Authorized shares: 150,000; Issued and outstanding shares: 33,136 at March 31, 2021 and 32,936 at December 31, 2020	33		33
Additional paid-in capital	375,315		370,053
Accumulated other comprehensive income	15		1
Accumulated deficit	(323,106)		(303,075)
Total stockholders’ equity	52,257		67,012
Total liabilities and stockholders’ equity	$	210,439	$	227,381

(1)Amounts have been derived from the December 31, 2020 audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

See accompanying notes to condensed consolidated financial statements.

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INTERSECT ENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
		2021		2020
Revenue		$	24,328	$	19,826
Cost of sales		8,455		6,410
Gross profit		15,873		13,416
Operating expenses:
Selling, general and administrative		28,077		26,200
Research and development		6,370		5,146
Total operating expenses		34,447		31,346
Loss from operations		(18,574)		(17,930)
Interest expense		(1,375)		—
Other income (expense), net		(504)		397
Loss before income taxes		(20,453)		(17,533)
Provision for income tax (benefit)		(422)		—
Net loss		(20,031)		(17,533)
Other comprehensive income (loss):
Unrealized gain (loss) on short-term investments, net		14		(19)
Comprehensive loss		$	(20,017)	$	(17,552)
Net loss per share, basic and diluted		$	(0.61)	$	(0.54)

Weighted average common shares used to compute net loss per share, basic and diluted		33,022		32,365

See accompanying notes to condensed consolidated financial statements.

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INTERSECT ENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2020	32,936	$	33	$	370,053	$	1	$	(303,075)	$	67,012
Issuance of common stock and exercise of stock options	200	—		1,121		—		—		1,121
Stock-based compensation expense	—	—		4,141		—		—		4,141
Unrealized gain on short-term investments	—	—		—		14		—		14
Net loss	—	—		—		—		(20,031)		(20,031)
Balance at March 31, 2021	33,136	$	33	$	375,315	$	15	$	(323,106)	$	52,257


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2019	32,235	$	32	$	348,729	$	53	$	(230,756)	$	118,058
Issuance of common stock and exercise of stock options	302	1		3,100		—		—		3,101
Stock-based compensation expense	—	—		4,253		—		—		4,253
Unrealized loss on short-term investments	—	—		—		(19)		—		(19)
Net loss	—	—		—		—		(17,533)		(17,533)
Balance at March 31, 2020	32,537	$	33	$	356,082	$	34	$	(248,289)	$	107,860

SEC Form 10-Q filed by Intersect ENT, Inc.