axnx-20230930

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 September 30, 2023

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

For the transition period from ___________ to ___________

Commission File Number: 001-38721

_________________________________________________________________

Axonics, Inc.

(Exact name of registrant as specified in its charter)

_________________________________________________________________

Delaware

45-4744083

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

26 Technology Drive

Irvine,

California

92618

(Address of principal executive offices)

(Zip Code)

(949)

396-6322

(Registrant’s telephone number, including area code)

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


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

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

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

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


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

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

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

As of October 27, 2023, 50,662,028 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.

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		Page

	Special Note Regarding Forward-Looking Statements

	PART I—FINANCIAL INFORMATION

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

	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	40
	Signatures	41

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Special Note Regarding Forward-Looking Statements

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

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

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

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

•any termination or loss of intellectual property rights;

•any voluntary or regulatory mandated product recalls;

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

•reduction or interruption in our supply chain and other possible inventory constraints or challenges;

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

•successful integration of acquired operations into our ongoing business;

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

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

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

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

•changes in the structure of healthcare payments for our products;

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

•changes in macroeconomic and market conditions and volatility, including impacts related to the continued impact of the COVID-19 pandemic, risk of recession, inflation, supply chain constraints or disruptions and rising interest rates;

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

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

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

•additions or departures of key personnel; and

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

The forward-looking statements included herein are based on current expectations of our management based on available information and involve a number of risks and uncertainties, all of which are difficult or impossible to predict accurately and many of which are beyond our control. As such, our actual results may differ significantly from those expressed in any forward-looking statements. Factors that may cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and discussed more detail in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part I and Item 1A “Risk Factors” of Part II of this Quarterly Report on Form 10-Q. Readers should carefully review these risks, as well as the additional risks described in other documents we file from time to time with the Securities and Exchange Commission (SEC). In light of the significant risks and uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking statements. Except as required by law, we undertake no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. You should read this Quarterly Report on Form 10-Q and the documents we file with the SEC, with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

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

This Quarterly Report on Form 10-Q includes our trademarks and trade names, including, without limitation, Axonics®, Axonics R20™, Axonics F15™ and Bulkamid®, which are our property and are protected under applicable intellectual property laws. This Quarterly Report on Form 10-Q also includes trademarks and trade names that are the property of other organizations. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q appear without the ® and ™ symbols, but those references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and trade names. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

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Part I—Financial Information

Item 1. Condensed Consolidated Financial Statements (unaudited)

Axonics, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	September 30,		December 31,
	2023		2022
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	147,323	$	238,846
Short-term investments	197,393		118,365
Accounts receivable, net of allowance for credit losses of $380 and $321 at September 30, 2023 and December 31, 2022, respectively	48,944		44,817
Inventory, net	74,909		55,765
Prepaid expenses and other current assets	6,816		7,282
Total current assets	475,385		465,075
Property and equipment, net	6,556		6,798
Intangible assets, net	80,274		86,253
Other assets	3,245		6,813
Goodwill	95,287		94,414
Total assets	$	660,747	$	659,353

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	14,666	$	9,070
Accrued liabilities	5,962		6,520
Accrued compensation and benefits	12,994		15,495
Operating lease liabilities, current portion	1,971		1,562

Other current liabilities	—		32,600
Total current liabilities	35,593		65,247
Operating lease liabilities, net of current portion	876		7,555

Deferred tax liabilities, net	13,658		16,412

Total liabilities	50,127		89,214
Commitments and contingencies (Note 3)
Stockholders’ equity
Preferred stock, par value $0.0001 per share; 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022	—		—
Common stock, par value $0.0001, 75,000,000 shares authorized at September 30, 2023 and December 31, 2022; 50,669,203 and 49,546,727 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	5		5
Additional paid-in capital	1,022,052		969,545
Accumulated deficit	(386,926)		(374,264)
Accumulated other comprehensive loss	(24,511)		(25,147)
Total stockholders’ equity	610,620		570,139
Total liabilities and stockholders’ equity	$	660,747	$	659,353

See accompanying notes to unaudited condensed consolidated financial statements.

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Axonics, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net revenue	$	93,100	$	70,384	$	256,644	$	187,784
Cost of goods sold	23,996		19,124		64,850		53,086
Gross profit	69,104		51,260		191,794		134,698
Operating expenses
Research and development	8,167		7,936		25,172		26,307
General and administrative	11,778		9,389		34,659		29,974
Sales and marketing	47,544		39,751		134,468		112,195
Amortization of intangible assets	2,302		2,317		6,803		7,112
Acquisition-related costs	—		8,242		2,368		20,447
Acquired in-process research & development	—		—		15,447		—
Total operating expenses	69,791		67,635		218,917		196,035
Loss from operations	(687)		(16,375)		(27,123)		(61,337)
Other income (expense)
Interest and other income	4,271		1,501		12,149		1,904

Interest and other expense	(83)		(1,898)		774		(3,026)
Other income (expense), net	4,188		(397)		12,923		(1,122)
Income (loss) before income tax benefit	3,501		(16,772)		(14,200)		(62,459)
Income tax benefit	(427)		(520)		(1,538)		(2,096)
Net income (loss)	3,928		(16,252)		(12,662)		(60,363)




Foreign currency translation adjustment	(6,185)		(12,057)		636		(29,625)
Comprehensive loss	$	(2,257)	$	(28,309)	$	(12,026)	$	(89,988)

Net income (loss) per share, basic (see Note 1)	$	0.08	$	(0.34)	$	(0.26)	$	(1.31)
Weighted-average shares used to compute basic net income (loss) per share (see Note 1)	49,244,981		47,208,192		48,973,252		46,185,209
Net income (loss) per share, diluted (see Note 1)	$	0.08	$	(0.34)	$	(0.26)	$	(1.31)
Weighted-average shares used to compute diluted net income (loss) per share (see Note 1)	50,086,491		47,208,192		48,973,252		46,185,209

See accompanying notes to unaudited condensed consolidated financial statements.

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Axonics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share and per share data)

(unaudited)


								Accumulated
				Additional				Other
	Common Stock			Paid-in		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Loss		Total
Balance at December 31, 2022	49,546,727	$	5	$	969,545	$	(374,264)	$	(25,147)	$	570,139
Issuance of common stock for employee stock option exercises for cash	116,452	—		1,930		—		—		1,930
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation	247,770	—		7,295		—		—		7,295
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation	199,718	—		3,419		—		—		3,419


Foreign currency translation adjustment	—	—		—		—		3,071		3,071

SEC Form 10-Q filed by Axonics Inc.