axnx-20240630

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 June 30, 2024

☐ 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 July 30, 2024, 51,118,062 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 Income (Loss)	2

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

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
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:

•our ability to consummate the merger (the Merger) contemplated by the Agreement and Plan of Merger (the Merger Agreement) with Boston Scientific Corporation, a Delaware corporation (Boston Scientific) announced on January 8, 2024, in a timely manner or at all;

•the risk that the Merger Agreement may be terminated in circumstances that require us to pay a $75 million termination fee to Boston Scientific;

•the satisfaction (or waiver) of the conditions to the closing of the Merger, including with respect to the approval of our stockholders and approvals under applicable antitrust laws;

•potential delays in consummating the Merger;

•our ability to timely and successfully achieve the anticipated benefits of the Merger;

•the risk related to the diversion of management’s attention from our ongoing business operations as a result of the Merger;

•the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement;

•the effect of the announcement or pendency of the Merger on our business relationships, operating results and business generally;

•the risk that the Merger disrupts our current plans and operations or affects our ability to retain or recruit key employees;

•costs related to the Merger;

•the effect of limitations that the Merger Agreement places on our ability to operate our business or engage in an alternate transaction;

•the risk that our stock price may decline significantly if the Merger is not completed;

•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, in relation to the Merger or Merger Agreement, intellectual property, or 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, including as a result of the Medtronic Litigation (as defined in Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q);

•a termination of the AMF License Agreement, as a result of the arbitration with AMF (as each such capitalized term is defined in Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q);

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•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 the risk of recession, inflation, supply chain constraints or disruptions and high interest rates;

•economic and market conditions in the medical technology industry, 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

•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, 2023 and discussed more detail in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part I. 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

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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)


	June 30,		December 31,
	2024		2023
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	168,619	$	104,811
Short-term investments	174,792		240,149
Accounts receivable, net of allowance for credit losses of $1,111 and $442 at June 30, 2024 and December 31, 2023, respectively	57,221		57,243
Inventory, net	105,428		79,940
Prepaid expenses and other current assets	6,003		9,279
Total current assets	512,063		491,422
Restricted cash	18,629		12,714
Property and equipment, net	18,382		10,760
Intangible assets, net	76,333		81,375
Other assets	23,183		24,235
Goodwill	98,747		99,417
Total assets	$	747,337	$	719,923

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	19,316	$	18,452
Accrued liabilities	11,042		10,527
Accrued compensation and benefits	24,793		15,060
Operating lease liabilities, current portion	2,022		1,777


Total current liabilities	57,173		45,816
Operating lease liabilities, net of current portion	30,431		25,840

Deferred tax liabilities, net	16,417		10,703

Total liabilities	104,021		82,359
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 June 30, 2024 and December 31, 2023	—		—
Common stock, par value $0.0001, 75,000,000 shares authorized at June 30, 2024 and December 31, 2023; 51,014,562 and 50,770,520 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	5		5
Additional paid-in capital	1,052,429		1,033,778
Accumulated deficit	(392,565)		(380,352)
Accumulated other comprehensive loss	(16,553)		(15,867)
Total stockholders’ equity	643,316		637,564
Total liabilities and stockholders’ equity	$	747,337	$	719,923

See accompanying notes to unaudited condensed consolidated financial statements.

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Axonics, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net revenue	$	114,565	$	92,894	$	205,974	$	163,544
Cost of goods sold	25,422		22,704		47,578		40,854
Gross profit	89,143		70,190		158,396		122,690
Operating expenses
Research and development	12,792		8,949		23,848		17,005
General and administrative	16,327		10,713		31,431		22,881
Sales and marketing	51,444		44,270		107,635		86,924
Amortization of intangible assets	2,247		2,279		4,501		4,501
Acquisition-related costs	2,652		602		6,479		2,368
Acquired in-process research & development	—		15,447		—		15,447
Total operating expenses	85,462		82,260		173,894		149,126
Income (loss) from operations	3,681		(12,070)		(15,498)		(26,436)
Other income (expense)
Interest and other income	4,702		4,250		8,675		7,878

Interest and other expense	(32)		174		(91)		857
Other income, net	4,670		4,424		8,584		8,735
Income (loss) before income tax expense (benefit)	8,351		(7,646)		(6,914)		(17,701)
Income tax expense (benefit)	1,452		(304)		5,299		(1,111)
Net income (loss)	6,899		(7,342)		(12,213)		(16,590)




Foreign currency translation adjustment	466		3,750		(686)		6,821
Comprehensive income (loss)	$	7,365	$	(3,592)	$	(12,899)	$	(9,769)

Net income (loss) per share, basic (see Note 1)	$	0.14	$	(0.15)	$	(0.24)	$	(0.34)
Weighted-average shares used to compute basic net income (loss) per share (see Note 1)	50,010,380		49,088,373		50,971,867		48,835,135
Net income (loss) per share, diluted (see Note 1)	$	0.13	$	(0.15)	$	(0.24)	$	(0.34)
Weighted-average shares used to compute diluted net income (loss) per share (see Note 1)	51,230,849		49,088,373		50,971,867		48,835,135

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, 2023	50,770,520	$	5	$	1,033,778	$	(380,352)	$	(15,867)	$	637,564
Issuance of common stock for employee stock option exercises for cash	16,068	—		248		—		—		248
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation	24,857	—		8,106		—		—		8,106
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation	206,734	—		1,445		—		—		1,445


Foreign currency translation adjustment	—	—		—		—		(1,152)		(1,152)
Net loss	—	—		—		(19,112)		—		(19,112)
Balance at March 31, 2024	51,018,179	5		1,043,577		(399,464)		(17,019)		627,099
Issuance of common stock for employee stock option exercises for cash	8,525	—		241		—		—		241
RSA forfeitures for terminations, net and stock-based compensation	(12,142)	—		7,937		—		—		7,937
Issuance of common stock for vesting of RSU and stock-based compensation	—	—		674		—		—		674

Foreign currency translation adjustment	—	—		—		—		466		466
Net income	—	—		—		6,899		—		6,899
Balance at June 30, 2024	51,014,562	$	5	$	1,052,429	$	(392,565)	$	(16,553)	$	643,316

Accumulated

Additional

Other

Common Stock

Paid-in

Accumulated

Comprehensive

Amount

Capital

Deficit

Loss

Total

Balance at December 31, 2022

49,546,727

969,545

(374,264)

(25,147)

SEC Form 10-Q filed by Axonics Inc.