Full Press Release Details
STATEMENTS OF AVEDRO
of Independent Registered Public Accounting Firm
the Stockholders and the Board of Directors of Avedro, Inc.
on the Financial Statements
have audited the accompanying balance sheets of Avedro, Inc. (the "Company") as of December 31, 2018 and 2017,
the related statements of operations, convertible preferred stock and stockholders' deficit and cash flows for each of the two
years in the period ended December 31, 2018, and the related notes (collectively referred to as the "financial statements").
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31,
2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended December 31,
2018, in conformity with U.S. generally accepted accounting principles.
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on Avedro's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly,
we express no such opinion.
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
have served as Avedro's auditor since 2017.
Boston, Massachusetts
except for Note 18, as to which the date is September 17, 2019
thousands, except share and per share data)
| December 31, | ||||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 9,769 | $ | 8,850 | ||||
| Accounts receivable (including $573 and $445 from related parties as of December 31, 2018 and 2017, net of allowance of $198 and $120, respectively) | 4,725 | 3,239 | ||||||
| Inventories | 4,259 | 5,151 | ||||||
| Prepaid expenses and other current assets | 1,919 | 2,169 | ||||||
| Total current assets | 20,672 | 19,409 | ||||||
| Equipment and furniture, net | 1,524 | 1,640 | ||||||
| Restricted cash | 551 | 551 | ||||||
| Deferred offering costs | 2,829 | - | ||||||
| Other assets | 291 | 96 | ||||||
| Total assets | $ | 25,867 | $ | 21,696 | ||||
| LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,126 | $ | 2,880 | ||||
| Accrued expenses and other current liabilities | 5,366 | 2,900 | ||||||
| Current portion of license obligation (Note 7) | 250 | 250 | ||||||
| Deferred revenue | 688 | 872 | ||||||
| Total current liabilities | 8,430 | 6,902 | ||||||
| Deferred revenue, net of current portion | 12 | 77 | ||||||
| Long-term debt obligations, net of current portion | 19,939 | 19,319 | ||||||
| Derivative and warrant liability | 2,206 | 839 | ||||||
| Other non-current liabilities | 13 | 79 | ||||||
| Deferred rent | 432 | 359 | ||||||
| Total liabilities | $ | 31,032 | $ | 27,575 | ||||
| Commitments and contingencies (Note 7) | ||||||||
| Convertible preferred stock: | ||||||||
| Series AA convertible preferred stock, $0.00001 par value; authorized shares 32,650,000 at December 31, 2018 and 2017, respectively; issued and outstanding shares 7,161,719 at December 31, 2018 and 2017, respectively; liquidation preference of $31,870 at December 31, 2018 | 31,852 | 31,852 | ||||||
| Series BB convertible preferred stock, $0.00001 par value; authorized shares 5,950,000 December 31, 2018 and 2017, respectively; issued and outstanding shares 1,332,708 at December 31, 2018 and 2017, respectively; liquidation preference of $12,000 at December 31, 2018 | 11,789 | 11,789 | ||||||
| Series CC convertible preferred stock, $0.00001 par value; authorized shares 9,529,571 and zero at December 31, 2018 and 2017, respectively; issued and outstanding shares 2,141,467 and zero at December 31, 2018 and 2017, respectively; liquidation preference of $25,000 at December 31, 2018 | 24,782 | - | ||||||
| Stockholders' deficit: | ||||||||
| Common stock, $0.00001 par value; authorized shares 66,905,000 and 54,000,000 at December 31, 2018 and 2017, respectively; issued and outstanding shares 1,412,003 and 1,363,050 at December 31, 2018 and 2017, respectively | 2 | 2 | ||||||
| Additional paid-in capital | 108,532 | 107,478 | ||||||
| Accumulated deficit | (182,122 | ) | (157,000 | ) | ||||
| Total stockholders' deficit | (73,588 | ) | (49,520 | ) | ||||
| Total liabilities, convertible preferred stock and stockholders' deficit | $ | 25,867 | $ | 21,696 |
accompanying notes are an integral part of these financial statements.
thousands, except share and per share data)
| Year Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| Revenue (including related party activity of $2,066 and $1,868 for the years ended December 31, 2018 and 2017, respectively) | $ | 27,672 | $ | 20,154 | ||||
| Cost of goods sold (including related party activity of $517 and $355 for the years ended December 31, 2018 and 2017, respectively) | 10,879 | 9,850 | ||||||
| Gross profit | 16,793 | 10,304 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 25,999 | 18,991 | ||||||
| Research and development | 12,043 | 10,286 | ||||||
| Total operating expenses | 38,042 | 29,277 | ||||||
| Loss from operations | (21,249 | ) | (18,973 | ) | ||||
| Other expense (income): | ||||||||
| Interest income | 208 | 26 | ||||||
| Interest expense | (2,665 | ) | (2,144 | ) | ||||
| Other (expense) income, net | (1,416 | ) | (186 | ) | ||||
| Total other (expense) income, net | (3,873 | ) | (2,304 | ) | ||||
| Net loss | $ | (25,122 | ) | $ | (21,277 | ) | ||
| Net loss per share of common stock, basic and diluted | $ | (17.97 | ) | $ | (16.12 | ) | ||
| Weighted average shares of common stock used to compute net loss per share, basic and diluted | 1,398,065 | 1,319,542 |
accompanying notes are an integral part of these financial statements.
of Convertible Preferred Stock and Stockholders' Deficit
thousands, except share and per share data)
| Convertible Preferred Stock $0.00001 Par Value | Common Stock $0.00001 Par Value | |||||||||||||||||||||||||||||||||||||||||||
| Series AA | Series BB | Series CC | Additional Paid-In | Accumulated | Total Stockholders' | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2016 | 7,161,719 | $ | 31,852 | - | $ | - | - | $ | - | 1,205,281 | $ | 2 | $ | 106,413 | $ | (135,723 | ) | $ | (29,308 | ) | ||||||||||||||||||||||||
| Issuance of Series BB convertible preferred stock, net of issuance costs | 1,332,708 | 11,789 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
| Exercise of common stock, options | - | - | - | - | - | - | 150,190 | - | 207 | - | 207 | |||||||||||||||||||||||||||||||||
| Exercise of common stock warrant | - | - | - | - | - | - | 7,579 | - | - | - | - | |||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | - | - | - | 858 | - | 858 | |||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (21,277 | ) | (21,277 | ) | |||||||||||||||||||||||||||||||
| Balance at December 31, 2017 | 7,161,719 | $ | 31,852 | 1,332,708 | $ | 11,789 | - | $ | - | 1,363,050 | $ | 2 | $ | 107,478 | $ | (157,000 | ) | $ | (49,520 | ) | ||||||||||||||||||||||||
| Issuance of Series CC convertible preferred stock, net of issuance costs | - | - | - | - | 2,141,467 | 24,782 | - | - | - | - | - | |||||||||||||||||||||||||||||||||
| Exercise of common stock, options | - | - | - | - | - | - | 48,953 | - | 69 | - | 69 | |||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | - | - | - | 985 | - | 985 | |||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | (25,122 | ) | (25,122 | ) | |||||||||||||||||||||||||||||||
| Balance at December 31, 2018 | 7,161,719 | $ | 31,852 | 1,332,708 | $ | 11,789 | 2,141,467 | $ | 24,782 | 1,412,003 | $ | 2 | $ | 108,532 | $ | (182,122 | ) | $ | (73,588 | ) |
accompanying notes are an integral part of these financial statements.
| Years Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (25,122 | ) | $ | (21,277 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 675 | 563 | ||||||
| Noncash interest expense | 620 | 349 | ||||||
| Loss on extinguishment of debt | - | 230 | ||||||
| Change in assets and liabilities held at fair value (Note 11) | 1,367 | (108 | ) | |||||
| Bad debt expense | 88 | - | ||||||
| Share-based compensation | 985 | 858 | ||||||
| Loss on disposal of equipment and furniture | 29 | 11 | ||||||
| Asset purchase and royalty obligation | 10 | 43 | ||||||
| Gain/(Loss) on foreign currency transactions | (2 | ) | 12 | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (1,574 | ) | (1,247 | ) | ||||
| Prepaid expenses and other current assets | 250 | (1,131 | ) | |||||
| Inventories | 666 | (2,248 | ) | |||||
| Accounts payable and accrued expenses | 201 | 914 | ||||||
| Deferred revenue | (249 | ) | (567 | ) | ||||
| Long-term accrued interest | - | (355 | ) | |||||
| Other non-current assets and liabilities | (122 | ) | 21 | |||||
| Net cash used in operating activities | (22,178 | ) | (23,932 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of equipment and furniture | (361 | ) | (818 | ) | ||||
| Net cash used in investing activities | (361 | ) | (818 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Net proceeds from issuance of Series BB convertible preferred stock | - | 11,789 | ||||||
| Net proceeds from issuance of Series CC convertible preferred stock | 24,782 | - | ||||||
| Proceeds from the exercise of common stock options | 69 | 207 | ||||||
| Deferred offering costs | (1,228 | ) | - | |||||
| Proceeds from debt financing | - | 20,000 | ||||||
| Principal payments on long-term debt obligation | - | (9,777 | ) | |||||
| Payment for asset purchase & license obligation | (128 | ) | (762 | ) | ||||
| Payments for debt extinguishment costs | - | (108 | ) | |||||
| Principal payments on capital lease obligation | (37 | ) | (34 | ) | ||||
| Loan issuance costs | - | (310 | ) | |||||
| Net cash provided by financing activities | 23,458 | 21,005 | ||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 919 | $ | (3,745 | ) | |||
| Cash, cash equivalents and restricted cash-Beginning of period | $ | 9,401 | $ | 13,146 | ||||
| Cash, cash equivalents and restricted cash-End of period | $ | 10,320 | $ | 9,401 | ||||
| Cash paid for interest | $ | 2,042 | $ | 1,850 | ||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Net value of medical devices used for internal purposes transferred from inventory | $ | 226 | $ | 333 | ||||
| Deferred offering costs included in accounts payable and accrued expenses | $ | 1,601 | $ | - |
accompanying notes are an integral part of these financial statements.
to Financial Statements
in thousands, except per share data)
NATURE OF BUSINESS AND BASIS OF PRESENTATION
was incorporated in Delaware on November 6, 2002. Avedro is an ophthalmic pharmaceutical and medical device company developing
and commercializing a suite of products based on its proprietary corneal collagen cross-linking technology platform (the "Avedro
Cross-Linking Platform") to address a wide variety of ophthalmic disorders and conditions, primarily associated with corneal
weakness. The primary components of the Avedro Cross-Linking Platform are proprietary pharmaceutical formulations of riboflavin
(vitamin B2), a "single dose pharmaceutical," sold primarily in conjunction with Avedro's innovative devices for the
delivery of metered doses of UVA light, a "medical device". The technological advances that Avedro has made with the
Avedro Cross-Linking Platform have enabled Avedro to expand the use of corneal cross-linking beyond the traditional areas in which
it has been historically applied. In April 2016, Avedro received United States Food and Drug Administration ("FDA")
clearance for the single dose pharmaceuticals Photrexa Viscous and Photrexa, and the KXL System medical device. Avedro sells these
products in the United States through a direct sales force and distributes its products outside of the United States through international
medical device distributors.
of December 31, 2018, Avedro has devoted the majority of its efforts to business planning, research and development, starting
up production, developing markets, raising capital, recruiting management and technical staff and commercializing its newly approved
products in the United States.
financial statements are prepared in conformity with GAAP.
January 31, 2019, the Avedro Board and stockholders approved an amended and restated certificate of incorporation to, among
other things, effect a reverse split on the outstanding shares of Avedro's Common Stock and convertible preferred stock on a one-for-4.45
basis (the "Reverse Stock Split"). The Reverse Stock Split became effective on February 1, 2019. The par values
of Avedro Common Stock and convertible preferred stock were not adjusted as a result of the Reverse Stock Split. Accordingly,
all share and per share amounts for all periods presented in these financial statements and notes thereto have been adjusted retroactively,
where applicable, to reflect the Reverse Stock Split. See Note 17, "Subsequent Events," for additional information.
February 2019, Avedro closed its initial public offering ("IPO"), in which it issued and sold 5,000,000 shares
of Avedro Common Stock at a public offering price of $14.00 per share, for net proceeds to Avedro of approximately $61,300,
after deducting underwriting discounts and commissions and offering expenses payable by Avedro. Upon the closing of the IPO,
all of Avedro's outstanding shares of convertible preferred stock were automatically converted into an aggregate of
10,635,894 shares of Avedro Common Stock and all warrants to purchase shares of convertible preferred stock were
automatically converted into warrants to purchase up to an aggregate of 202,981 shares of Avedro Common Stock, resulting in
the reclassification of the related redeemable convertible preferred stock warrant liability to additional paid-in-capital.
Subsequent to the closing of the IPO, there were no shares of preferred stock or warrants to purchase shares of convertible
preferred stock outstanding. The consolidated financial statements as of December 31, 2018, including share and per
share amounts, do not give effect to the IPO or conversion of the convertible preferred stock, as the IPO and such
conversions were completed subsequent to December 31, 2018. See Note 17, "Subsequent Events," for
additional information.
to Financial Statements (Continued)
in thousands, except per share data)
NATURE OF BUSINESS AND BASIS OF PRESENTATION (Continued)
has had recurring losses from operations since inception and has an accumulated deficit of $182,122 at December 31, 2018,
and incurred a net losses of $25,122 and $21,277 for the years ended December 31, 2018 and 2017, respectively. Prior to Avedro's
IPO, Avedro had funded its operations principally from issuances of preferred stock, debt financings, grants, product and service
sales and development and license agreements. At December 31, 2018, Avedro had $9,769 of unrestricted cash and cash equivalents.
Avedro expects the cash balance at December 31, 2018, along with the net proceeds from the IPO received in February 2019,
will be sufficient to fund operations for a period of at least 12 months from the date the financial statements are issued.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that impact
the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in
Avedro's financial statements and accompanying notes. The most significant assumptions used in the financial statements are the
underlying assumptions used in valuing share-based compensation including the fair value of Avedro Common Stock, allowance for
bad debts, the net realizable value of inventories, the value of the warrant liability, the value of embedded derivatives and
the estimated useful lives of equipment and furniture. Avedro bases estimates and assumptions on historical experience when available
and on various factors that it determined to be reasonable under the circumstances. Avedro evaluates its estimates and assumptions
on an ongoing basis. Avedro's actual results may differ from these estimates under different assumptions or conditions.
Act Accounting Election
an emerging growth company under the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"), Avedro is eligible to
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies. Avedro has elected to take advantage of the extended transition period for adopting new or revised
accounting standards that have different effective dates for public and private companies until such time as those standards apply
to private companies.