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Wainwright Co LLC成員2024-07-192024-07-190001492674us-gaap:跨國非美國成員2023-12-310001492674srt : 最低成員ttoo:許可協議成員2024-01-012024-09-300001492674ttoo:CRG成員ttoo:長期貸款協議成員srt:最大成員2024-07-012024-09-300001492674ttoo:CRG成員srt:最小成員ttoo:長期貸款協議成員2024-09-300001492674us-gaap:凈銷售收入成員ttoo:客戶E成員us-gaap:客戶集中風險成員2023-01-012023-09-300001492674us-gaap: 公平價值輸入第1級成員美元指數:重測定估值成員美元指數:公允價值估計公允價值揭露成員2024-09-300001492674ttoo:A系列可換股優先股成員2024-09-300001492674ttoo:CRG成員ttoo:B系列可贖回可換股優先股成員2024-02-012024-02-290001492674美元指數:凈銷售收入成員ttoo:E客戶成員美元指數:客戶集中風險會員2024-07-012024-09-300001492674us-gaap:在建工程成員2023-12-310001492674美元指數:普通股份會員ttoo:二次公開發行會員2024-07-012024-09-300001492674美元指數:受限名股權單位RSU會員ttoo:股票期權計劃2006年和2014年及引誘計劃會員2024-01-012024-09-300001492674ttoo:A輪可轉換優先股會員ttoo:CRG會員2024-04-122024-04-120001492674美元指數-員工股票期權成員2024-09-300001492674ttoo: A系可贖回優先股成員2023-09-150001492674美元指數-普通股成員2023-09-300001492674美元指數-普通股成員2023-03-310001492674ttoo: Sprague先生Giffin先生和Gibbs先生成員2023-03-300001492674ttoo: 二○二三年七月三十一日成员ttoo: Sprague先生Giffin先生和Gibbs先生成員2023-03-300001492674美元指數-銷售淨收入成員美元指數:客戶集中風險成員ttoo:客戶A成員2023-01-012023-09-300001492674美元指數:關係人成員ttoo:CRG成員ttoo:B系列可贖回可轉換優先股成員2024-02-012024-02-290001492674美元指數:受限股票單位成員2024-01-012024-09-300001492674美元指數:留存收益成員2024-04-012024-06-300001492674ttoo:客戶E成員美元指數:應收帳款成員美元指數:客戶集中風險成員2023-01-012023-12-310001492674ttoo:CRG 成員ttoo:定期貸款協議成員2024-09-300001492674ttoo:普通股認股權證成員srt:最低成員us-gaap:測量輸入預期期間成員2024-09-300001492674美元指數:普通股成員ttoo: CRG成員2024-05-310001492674us-gaap: 限制性股票單位RSU成員2023-07-012023-09-300001492674us-gaap: 銷售收入淨額成員us-gaap: 客戶集中風險成員ttoo: A客戶成員2024-07-012024-09-300001492674us-gaap: 貨幣市場基金成員us-gaap: 重要公允價值測量成員us-gaap: 公允價值估計公允價值披露成員2024-09-300001492674ttoo:股權分配協議成員ttoo:Canaccord Genuity LLC成員2023-01-012023-09-300001492674us-gaap:家具及設備成員2024-09-300001492674srt:最低成員ttoo:許可協議成員2006-12-310001492674us-gaap:保留收益成員2023-12-310001492674us-gaap:應收帳款成員us-gaap:客戶集中風險成員ttoo:客戶D成員2024-01-012024-09-300001492674us-gaap:應收帳款成員us-gaap:客戶集中風險成員ttoo:客戶D成員2023-01-012023-12-310001492674us-gaap:額外股本成員2023-04-012023-06-300001492674ttoo:長期貸款認股權成員2023-01-012023-09-300001492674美元指數-GAAP:銷售成本會員2023-01-012023-09-300001492674ttoo:股票期權計劃二零零六和二零一四成員員工和非員工股票期權成員2024-09-300001492674Series B可轉換優先股成員2024-04-012024-06-300001492674股權分配協議成員Canaccord Genuity LLC成員2023-07-012023-09-300001492674US-GAAP:產品成員2024-07-012024-09-300001492674US-GAAP:額外實收資本成員2023-03-310001492674US-GAAP:家具和固定工具成員2023-12-310001492674US-GAAP:普通股成員ttoo:CRG成員2024-04-120001492674ttoo:普通股票認股權成員2024-01-012024-09-300001492674ttoo:預資基金認股權成員2024-09-300001492674us-gaap:在建工程成員2024-09-300001492674us-gaap: 銷售收入淨額成員us-gaap: 客戶集中風險成員ttoo:客戶D成員2024-07-012024-09-300001492674us-gaap: 公平價值輸入第1級成員us-gaap:重大揭示成員us-gaap:估計公允價值透露成員2023-12-310001492674ttoo:A系列可转换优先股成员us-gaap:相關方成員ttoo:CRG成员2024-05-310001492674ttoo:A系列可转换优先股成员2024-04-012024-06-300001492674US-GAAP:净销售收入成员US-GAAP:客户集中风险成员甲顧客成員2024-01-012024-09-300001492674srt : 最低成員CRG成員借款協議成員2023-05-3100014926742023-02-172023-02-170001492674us-gaap:貨幣市場基金成員2023-12-3100014926742024年5月普通股認股權成員2024-05-172024-05-1700014926742023-04-012023-06-300001492674us-gaap:測量輸入預期股息率成員普通股認股權成員2024-09-300001492674美國通用會計原則:相關方成員CRG成員:TTOOTTOO:B系可轉換優先股成員2023-12-310001492674TTOO:Wainwright附帶認股權成員2024-05-170001492674us-gaap:員工股票期權成員2023-01-012023-09-3000014926742023-11-202023-11-200001492674us-gaap:權證成員2024-01-012024-09-300001492674TTOO:CRG成員2023-07-310001492674TTOO:普通股認股權成員us-gaap:無風險利率測量輸入成員2024-09-300001492674美元指數-GAAP:銷售成本會員2023-07-012023-09-300001492674us-gaap:追加支付資本成員2023-09-300001492674美元指數:營業收入淨額會員美元指數:客戶集中風險會員ttoo:客戶D會員2023-07-012023-09-300001492674ttoo:CRG會員ttoo:長期貸款協議會員2024-05-310001492674ttoo:條款貸款協議成員2024-01-012024-09-300001492674us-gaap:額外資本溢價成員2023-06-300001492674ttoo:T 2 Dx儀器和零組件成員2023-12-310001492674美元指數:研究和發展費用成員2024-07-012024-09-300001492674ttoo:B系列可轉換優先股成員2024-09-300001492674us-gaap:淨銷售收入成員ttoo:客戶C成員us-gaap:客戶集中風險成員2023-07-012023-09-300001492674ttoo: 二〇二四年五月預先資助認股權會員2024-05-172024-05-170001492674us-gaap:員工股票期權會員2024-01-012024-09-300001492674ttoo: 股票獎勵會員2024-09-300001492674US-GAAP:軟體和軟體開發成本成員2023-12-310001492674us-gaap:保留盈餘成員2024-06-300001492674us-gaap:保留收益會員2023-06-300001492674us-gaap:普通股成員2023-06-300001492674us-gaap:普通股會員ttoo:A輪認股權會員2022-08-150001492674us-gaap:貨幣市場基金會員us-gaap:公允價值輸入層級1會員2024-09-300001492674美元指數:服務成員2024-07-012024-09-300001492674us-gaap:貨幣市場基金會員ttoo:房東會員2023-01-310001492674us-gaap:普通股會員2024-03-310001492674ttoo:普通股與普通股認股權會員2023-02-170001492674US GAAP:其他資本公積金成員2024-01-012024-03-310001492674TTOO:化驗室空間成員TTOO:進入2014年11月經營租賃成員2023-12-310001492674TTOO:產品消耗品成員2023-07-012023-09-300001492674US GAAP:普通股成員TTOO:CRG 成員2023-07-030001492674us-gaap:NonUsMember2024-07-012024-09-300001492674TTOO:普通股認股權證成員us-gaap:測量輸入股價成員2024-09-300001492674美元指數:員工股票期權成員2023-07-012023-09-300001492674ttoo:普通股票認股權證成員2023-01-012023-09-3000014926742023-10-122023-10-120001492674ttoo:於2021年9月進入的營運租賃成員ttoo:辦公室研究實驗室和製造空間成員2022-12-310001492674ttoo:實驗室空間成員ttoo:於2014年11月進入的營運租賃成員2019-12-310001492674美元指數:普通股成員2016-12-310001492674us-gaap:員工股票成員2024-01-012024-09-300001492674ttoo:A系可贖回轉換優先股成員2022-08-150001492674us-gaap:租賃改良成員2024-09-300001492674ttoo:普通股認股權成員2024-07-012024-09-300001492674ttoo:CRG成員ttoo:B系可轉換優先股成員2023-07-032023-07-030001492674us-gaap:銷售成本成員2024-01-012024-09-300001492674ttoo:實驗室空間成員ttoo:於2014年11月簽訂的營運租賃合約成員2024-09-300001492674ttoo:CRG成員ttoo:A 級可贖回優先股成員2023-09-150001492674US-GAAP:產品成員ttoo:T2擁有的在役工具成員2024-07-012024-09-300001492674ttoo:修訂的及重新簽訂的2006年員工董事及顧問股票計劃成員ttoo:員工和非員工股票期權成員2024-01-012024-09-300001492674us-gaap:額外的已實收資本成員2024-07-012024-09-300001492674ttoo:CRG成員ttoo:Term Loan Agreement成員2018-12-012018-12-310001492674us-gaap:工具模具成員2024-09-300001492674us-gaap:限制性股票單位RSU會員2024-07-012024-09-300001492674us-gaap:普通股成員ttoo:CRG成員2023-07-032023-07-030001492674ttoo:A系可轉換優先股成員2024-04-120001492674ttoo:CRG成員ttoo : 貸款協議成員2024-04-3000014926742024-10-012024-09-300001492674ttoo : 實驗室空間成員ttoo : 2014年11月締結的營運租賃協議成員2014-11-012014-11-300001492674ttoo : CRG成員ttoo : 貸款協議成員2016-12-310001492674ttoo : 客戶C成員us-gaap:應收賬款成員us-gaap:客戶集中風險成員2023-01-012023-12-310001492674ttoo: 二零二四年六月三十日 會員ttoo: Sprague 先生和 Gibbs 先生 會員2024-03-310001492674ttoo: 二級公開募股 會員2024-01-012024-03-310001492674us-gaap: 貨幣市場型基金 會員us-gaap: 一級公平價值輸入 會員us-gaap: 重複公平價值計量 會員us-gaap: 公正價值估計 公平價值披露 會員2023-12-310001492674us-gaap: 普通股 會員2024-09-300001492674美元指數:產品成員ttoo:T 2自有工具服務成員2023-01-012023-09-3000014926742023-07-012023-09-300001492674美元指數:非美國成員2023-07-012023-09-300001492674ttoo:2006年和2014年股票期權計劃及引誘計劃成員ttoo:員工和非員工股票期權成員2024-09-3000014926742024-01-012024-03-310001492674ttoo:普通股票認股權成員2024-09-300001492674ttoo:CRG成員2023-07-030001492674ttoo:2023年2月預先資助認股權成員2023-02-172023-02-170001492674ttoo:2023年2月預付融資認股權會員2023-02-170001492674us-gaap:公允價值輸入第二層成員us-gaap:重要會計政策說明(將重複)us-gaap:公平價值估算公允價值揭露會員2024-09-300001492674us-gaap:淨銷售收入會員us-gaap:客戶集中風險會員ttoo:客戶D會員2023-01-012023-09-300001492674us-gaap:相關方會員CRG成員2024-09-300001492674US-GAAP:認股權證成員2023-07-012023-09-300001492674CRG成員:可贖回優先股系列A成員2023-07-052023-07-050001492674US-GAAP:相關方成員2023-12-310001492674CRG成員CRG成員: 短期貸款協議成員2018-04-302018-04-300001492674US-GAAP:凈銷售收入成員US-GAAP:客戶集中風險成員客戶D成員2024-01-012024-09-3000014926742024年預先資助認股權成員2024-09-300001492674辦公室空間實驗室空間和設備成員2024-09-300001492674Wainwright條件認股權成員2024-07-012024-09-300001492674關聯方成員普通股成員CRG成員2024-05-012024-05-310001492674機率加權折現現金流模型成員2024-07-012024-09-300001492674ttoo:次級公開發行成員2024-07-012024-09-300001492674us-gaap:普通股成員2024-06-300001492674ttoo:誘因獎勵計劃成員2024-09-300001492674us-gaap:額外實收資本成員2024-04-012024-06-300001492674ttoo:股權分銷協議成員ttoo:Canaccord Genuity LLC成員2023-07-012023-07-310001492674ttoo:器材租賃成員2024-07-012024-09-300001492674us-gaap:公允價值輸入第三層成員美元指數:重現性在財務報告中的公允價值衡量美元指數:公允價值估計及公允價值披露2023-12-310001492674美元指數:普通股2024-01-012024-03-310001492674ttoo:B系列可轉換優先股2023-12-310001492674美元指數:員工股票2024-09-300001492674美元指數:額外資本實收賬款2024-09-3000014926742023-01-012023-03-310001492674美元指數:服務2023-01-012023-09-300001492674美元指數:銷售淨額ttoo:客戶C會員us-gaap:客戶集中風險會員2024-07-012024-09-300001492674us-gaap:銷售、一般及行政費用成員2024-07-012024-09-300001492674us-gaap:限制性股票單位RSU會員ttoo:2014年股票期權計劃和誘因計劃會員2023-12-3100014926742023-03-310001492674ttoo:Wainwright附帶認股權證會員2024-09-300001492674ttoo:二千零六及二千一十四年股票期權計劃及誘因計劃會員ttoo:員工及非員工股票期權會員2023-12-310001492674TTOO:斯普雷格先生和吉布斯先生成員2024-03-310001492674US-GAAP:貨幣市場基金成員US-GAAP:公允價值輸入Level1成員2024-09-300001492674TTOO:2024年11月15日成員TTOO:斯普雷格先生和吉布斯先生成員2024-03-310001492674US-GAAP:留存收益成員2022-12-310001492674TTOO:斯普雷格、吉芬和吉布斯先生成員TTOO:2023年11月30日成員2023-03-300001492674ttoo: A 系可贖回優先股股東2024-01-012024-09-300001492674ttoo: 次級公開發行股東us-gaap: 額外資本金成員2023-01-012023-03-310001492674us-gaap: 保留盈餘成員2024-01-012024-03-310001492674ttoo: 共同開發夥伴協議成員ttoo: 生物醫學先進研究和開發局成員2020-09-012020-09-300001492674ttoo: 營業租賃終止成員ttoo: 辦公研究實驗室和製造空間成員2024-09-300001492674ttoo:已租賃T 2物件會員2023-12-310001492674ttoo:B系列普通股認股權證會員2024-05-170001492674us-gaap:淨銷售收入會員國家:ATsrt : 最高成員us-gaap:地理集中風險成員2023-01-012023-09-300001492674ttoo:儀器租賃會員2023-07-012023-09-300001492674ttoo:B系列可換股優先股會員2024-01-012024-03-310001492674美元指數:製造設施成員2023-12-310001492674us-gaap:普通股成員2023-01-012023-03-310001492674ttoo:貢獻成員2023-01-012023-09-300001492674ttoo:股權分配協議成員ttoo:Canaccord Genuity LLC成員2024-07-012024-09-300001492674ttoo:辦公室和實驗室空間成員ttoo:於2010年8月簽訂的營運租賃成員2017-03-012017-03-310001492674us-gaap:保留盈餘成員2024-07-012024-09-3000014926742024-04-012024-06-300001492674美元指數:普通股票成員ttoo:CRG 成員2024-04-122024-04-120001492674ttoo:CRG 成員ttoo:Term Loan Agreement 成員2023-05-190001492674ttoo:CRG 成員ttoo:Term Loan Agreement 成員2016-12-012016-12-310001492674ttoo:Equity Distribution Agreement 成員ttoo:HC Wainwright Co LLC 成員2024-07-012024-09-300001492674本公司股票期權計劃二零零六年及二零一四年成員員工與非員工股票期權成員2024-01-012024-09-300001492674us-gaap:公允價值輸入第二層成員us-gaap:重大揭示成員us-gaap:估計公允價值透露成員2023-12-310001492674us-gaap:其他非流動資產成員2022-12-3100014926742024-05-170001492674美元指數普通股成員2022-12-310001492674us-gaap:辦公設備成員2024-09-300001492674辦公室和實驗室空間成員經營租賃合同於2010年8月成員2018-01-310001492674srt : 最高成員許可協議成員2024-01-012024-09-300001492674CRG成員定期貸款協議成員2023-10-012023-10-310001492674us-gaap:NonUsMember2023-01-012023-09-300001492674最高成員2024-01-012024-09-300001492674美元指數:普通股成員ttoo:A系列認股權成員2022-08-152022-08-150001492674ttoo:普通股認股權成員srt:最大成員us-gaap:測量輸入預期期間成員2024-09-300001492674ttoo:A系可贖回優先股成員2023-07-012023-09-300001492674US-GAAP:軟體和軟體開發成本成員2024-09-300001492674美元指數:保留盈餘成員2023-07-012023-09-300001492674美元指數:服務成員2023-07-012023-09-300001492674us-gaap: 銷售收入淨額成員美元指數: 非美國成員us-gaap:地理集中風險成員2023-01-012023-09-300001492674國家:IT2023-07-012023-09-300001492674US-GAAP:產品成員2023-07-012023-09-300001492674ttoo: 合作發展協議成員ttoo: 生物醫學先進研究與發展局成員2021-09-012021-09-300001492674us-gaap:相關方成員ttoo:CRG成員ttoo:二次轉換優先庫存成員2023-07-310001492674us-gaap:普通股成員2023-12-310001492674ttoo:定期貸款認股權成員2024-07-012024-09-300001492674us-gaap:留存收益成員2023-03-310001492674us-gaap:其他非營業收益(費用)成員2023-02-172023-02-170001492674us-gaap:追加支付資本成員2024-06-300001492674美元指數:淨銷售收入成員ttoo:客戶A成員us-gaap: 客戶集中風險成員2023-07-012023-09-300001492674ttoo:辦公室和實驗室空間成員ttoo:於2010年8月進入的營業租賃成員2024-09-300001492674ttoo:合作開發夥伴協議成員ttoo:生物醫學高級研究與開發局成員2024-09-300001492674ttoo:B系列可轉換優先股成員2023-07-030001492674ttoo:兩千零六和兩千一十四股票期權計劃和引誘計劃成員ttoo:員工和非員工股票期權成員2023-01-012023-09-300001492674us-gaap:留存收益成員2024-09-300001492674ttoo:CRG成員ttoo:定期貸款協議成員srt:最大值成員2023-01-012023-09-300001492674ttoo:Wainwright條件擔保憑證成員2024-01-012024-09-300001492674us-gaap:銷售收入淨額成員ttoo:B客戶成員us-gaap:客戶集中風險成員2023-01-012023-09-300001492674ttoo:CRG成員ttoo:B系列可轉換優先股份成員2023-07-030001492674美元指數-GAAP:銷售成本會員2024-07-012024-09-300001492674us-gaap:貨幣市場基金成員2024-09-300001492674us-gaap:淨銷售收入成員country:意大利美元指數:地理濃聚風險成員2023-07-012023-09-300001492674ttoo:許可協議成員2006-01-012007-12-310001492674us-gaap:限制性股票單位RSU會員2024-09-300001492674ttoo:2024年5月預先投入股權證和2024年5月普通股權證成員2024-05-170001492674美元指數:淨銷售收入成員國家:意大利美元指數:地理濃聚風險成員2023-01-012023-09-300001492674ttoo:普通股權證成員2023-02-172023-02-170001492674us-gaap:銷售、一般及行政費用成員2023-01-012023-09-300001492674辦公空間實驗室空間和設備會員2024-01-012024-09-300001492674美元指數:銷售淨收入會員國家:意大利美元指數:地理集中風險會員2024-07-012024-09-300001492674辦公空間實驗室空間和設備會員:次級公開發行會員美元指數:額外實收資本會員2023-07-012023-09-300001492674美元指數:受限股票單位RSU會員ttoo:2014年股票期權計畫及引誘計畫成員2024-09-300001492674ttoo:CRG成員ttoo:定期貸款協議成員2023-10-310001492674ttoo:普通股認股權證成員2023-07-012023-09-300001492674ttoo:貢獻收入成員2023-01-012023-09-300001492674us-gaap:淨銷售收入成員國家:墨西哥us-gaap:地理濃度風險成員2024-07-012024-09-300001492674美國通用會計準則:產品成員2023-01-012023-09-300001492674美國通用會計準則:貨幣市場基金成員us-gaap: 公平價值輸入第1級成員2023-12-310001492674ttoo : 二零二四年十二月三十一日成員美國通用會計原則:後續事件成員ttoo : Sprague先生和Gibbs先生成員2024-11-1300014926742023-03-302023-03-300001492674美國通用會計準則:銷售收入淨額成員國家:意大利美元指數:地理集中風險成員2024-01-012024-09-300001492674ttoo:許可協議成員srt:最大成員2006-12-310001492674ttoo:CRG 成員2023-05-192023-05-190001492674美元指數:銷售、總務和行政費用成員2023-07-012023-09-300001492674ttoo:實驗室空間成員ttoo:2014年11月簽訂的營業租賃成員2020-10-012020-10-310001492674美元指數:額外實收資本成員2023-01-012023-03-310001492674Wainwright認股權成員2024-07-012024-09-300001492674Wainwright有條件認股權成員2024-01-012024-09-300001492674國家: 墨西哥2024-07-012024-09-300001492674美元指數:研究和發展費用成員2023-07-012023-09-300001492674us-gaap:銷售淨收入成員國家: 奧地利us-gaap:地理集中風險成員2023-07-012023-09-300001492674us-gaap:限制性股票單位RSU成員2023-01-012023-09-300001492674美元指數:保留收益會員2023-09-300001492674ttoo:次要公開發行會員2023-01-012023-03-310001492674us-gaap:設備成員2023-12-310001492674ttoo:T 2 Dx儀器和零件會員2024-09-300001492674美元指數:淨銷售收入會員國家:墨西哥srt:最大值會員美元指數:地理構成風險會員2023-01-012023-09-300001492674美元指數:淨銷售收入ttoo:客戶E會員美元指數:客戶集中風險2023-07-012023-09-300001492674ttoo:CRG會員2024-04-300001492674ttoo:產品耗材會員2023-01-012023-09-300001492674美元指數:普通股會員ttoo:普通股認股權證會員2023-02-17ttoo: 付款條款純種成員ttoo:分割iso4217:美元指數xbrli:股份xbrli:股份ttoo:投票iso4217:美元指數ttoo:項目

美國

證券交易委員會

華盛頓特區 20549

 

表格 10-Q

 

(標記一個)

根據1934年證券交易法第13或15(d)條款的季度報告。

截至2024年6月30日季度結束 9月30日, 2024

根據1934年證券交易法第13或15(d)條款的過渡報告

委員會文件號碼: 001-36571

 

T2 Biosystems, Inc。

(依憑章程所載的完整登記名稱)

 

 

德拉瓦

20-4827488

(成立州或其他管轄區)

成立或組織證明文件)

(國稅局僱主

識別號碼)

 

 

101 Hartwell Avenue

(§2401.2億2, 麻薩諸塞州

02421

(總部辦公地址)

(郵遞區號)

註冊人的電話號碼,包括區號:(781) 761-4646

 

根據法案第12(b)條規定註冊的證券:

 

每種類別的名稱

 

交易

標的

 

每個註冊交易所的名稱

普通股票,面值為0.001美元

 

TTOO

 

The 納斯達克資本市場

請勾選以下選項以表示申報人(1)已提交證券交易法1934年第13條或15(d)條所要求提交的所有報告,且在過去12個月中(或申報人需要提交此類報告的較短期間)已提交;(2)已受到過去90天內此類提交要求的限制。 Yes ☒ 否 ☐

請打勾號表明註冊人是否根據《S-t條例405條規定(本章節232.405號)的規定,在過去12個月內(或註冊人需要提交此類文件的更短期限內),已提交每個交互數據文件。 Yes ☒ 否 ☐

請用選擇符號指示是否申報者屬於大幅加速提報者、加速提報者、非加速提報者、較小的報告公司或新興成長公司。請參閱《交易所法》第1202條中「大幅加速提報者」、「加速提報者」、「較小的報告公司」和「新興成長公司」的定義。

 

大型加速歸檔人

加速歸檔人

 

 

 

 

非加速歸檔人

小型報告公司

 

 

 

 

新興成長型企業

 

 

如果是新興增長公司,請通過勾選的方式指明註冊人是否選擇不使用延長過渡期來遵守根據《交易所法》第13(a)條款所提供的任何新的或修訂的財務會計標準。

請在核取方框內表明公司是否為空殼公司(根據交易所法規120億2號所定義)。 是 ☐ 否

截至2024年11月11日,登記者擁有 21,042,952 截至2024年7月30日,申報人持有184,769,862股普通股。


 

T2 BIOSYSTEMS, INC.

目錄

 

 

頁面

 

 

 

第一部分 財務資訊

 

 

 

 

項目 1。

基本報表 (未經審計)

1

 

 

 

 

2024年9月30日和2023年12月31日的總體資產負債表摘要

1

 

 

 

 

2024年和2023年截至9月30日三個月和九個月的控制項綜合損益表

2

 

 

 

 

2024年9月30日和2023年三個月和九個月結束時的A股可贖回優先股和股東赤字簡明綜合報表

3

 

 

 

 

2024年9月30日結束時的九個月的現金流量簡明綜合報表 2023

5

 

 

 

 

附註至簡明綜合財務報表

7

 

 

 

項目2。

管理層對財務狀況和業績的討論與分析

35

 

 

 

項目3。

有關市場風險的定量和定性披露

49

 

 

 

項目4。

內部控制及程序

49

 

 

 

 

第二部分其他資訊

50

 

 

 

項目 1。

法律訴訟

50

 

 

 

項目1A。

風險因素

50

 

 

 

項目2。

未註冊的權益證券銷售、收益的使用和發行人購買權益證券

51

 

 

 

項目3。

優先證券違約

51

 

 

 

項目4。

礦業安全披露

52

 

 

 

項目5。

其他資訊

52

 

 

 

第6項。

展示、財務報表時間表

53

 

 

簽名

55

 

i


 

PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements

T2 BIOSYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

 

 

September 30,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,083

 

 

$

15,689

 

Accounts receivable, net

 

 

2,033

 

 

 

1,420

 

Inventories

 

 

3,825

 

 

 

4,819

 

Prepaid expenses and other current assets

 

 

1,845

 

 

 

3,261

 

Total current assets

 

 

9,786

 

 

 

25,189

 

Property and equipment, net

 

 

1,477

 

 

 

1,658

 

Operating lease right-of-use assets

 

 

6,268

 

 

 

7,395

 

Restricted cash

 

 

551

 

 

 

551

 

Other assets

 

 

 

 

 

4

 

Total assets

 

$

18,082

 

 

$

34,797

 

Liabilities and stockholders’ deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Notes payable to related party

 

$

11,922

 

 

$

41,284

 

Accounts payable

 

 

4,210

 

 

 

1,527

 

Accrued expenses and other current liabilities

 

 

4,627

 

 

 

4,905

 

Accrued final payment fee on Term Loan with related party

 

 

1,306

 

 

 

4,807

 

Operating lease liability

 

 

1,724

 

 

 

1,616

 

Derivative liability related to Term Loan with related party

 

 

347

 

 

 

1,554

 

Warrant liabilities

 

 

66

 

 

 

235

 

Deferred revenue

 

 

233

 

 

 

224

 

Total current liabilities

 

 

24,435

 

 

 

56,152

 

Operating lease liabilities, net of current portion

 

 

5,298

 

 

 

6,598

 

Deferred revenue, net of current portion

 

 

59

 

 

 

83

 

Total liabilities

 

 

29,792

 

 

 

62,833

 

Commitments and contingencies (see Note 14)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized: Series B
   Convertible Preferred Stock,
0 shares designated on September 30, 2024,
   
0 and 93,297 shares issued and outstanding to related party on September 30, 2024
   and December 31, 2023, respectively

 

 

 

 

 

 

Common stock, $0.001 par value; 400,000,000 shares authorized; 18,760,092 and
   
4,058,381 shares issued and outstanding on September 30, 2024 and
   December 31, 2023, respectively

 

 

18

 

 

 

4

 

Additional paid-in capital

 

 

605,182

 

 

 

556,256

 

Accumulated deficit

 

 

(616,910

)

 

 

(584,296

)

Total stockholders’ deficit

 

 

(11,710

)

 

 

(28,036

)

Total liabilities and stockholders’ deficit

 

$

18,082

 

 

$

34,797

 

 

See accompanying notes to condensed consolidated financial statements.

1


 

T2 BIOSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue

 

$

1,985

 

 

$

1,472

 

 

$

5,998

 

 

$

5,091

 

Contribution revenue

 

 

 

 

 

 

 

 

 

 

 

423

 

Total revenue

 

 

1,985

 

 

 

1,472

 

 

 

5,998

 

 

 

5,514

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product revenue

 

 

4,101

 

 

 

3,925

 

 

 

10,996

 

 

 

12,789

 

Research and development

 

 

2,667

 

 

 

2,663

 

 

 

9,749

 

 

 

10,984

 

Selling, general and administrative

 

 

5,378

 

 

 

5,980

 

 

 

17,589

 

 

 

19,575

 

Impairment of property and equipment

 

 

 

 

 

2,511

 

 

 

 

 

 

2,511

 

Total costs and expenses

 

 

12,146

 

 

 

15,079

 

 

 

38,334

 

 

 

45,859

 

Loss from operations

 

 

(10,161

)

 

 

(13,607

)

 

 

(32,336

)

 

 

(40,345

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense to related party

 

 

(370

)

 

 

(1,119

)

 

 

(2,027

)

 

 

(4,182

)

Change in fair value of derivative related to Term Loan with related party

 

 

77

 

 

 

184

 

 

 

1,207

 

 

 

436

 

Change in fair value of warrant liabilities

 

 

321

 

 

 

(930

)

 

 

169

 

 

 

4,958

 

Other, net

 

 

16

 

 

 

47

 

 

 

373

 

 

 

(604

)

Total other income (expense)

 

 

44

 

 

 

(1,818

)

 

 

(278

)

 

 

608

 

Net loss

 

$

(10,117

)

 

$

(15,425

)

 

$

(32,614

)

 

$

(39,737

)

Net loss per share — basic and diluted

 

$

(0.57

)

 

$

(3.45

)

 

$

(2.63

)

 

$

(21.79

)

Weighted-average number of common shares used in computing
   net loss per share — basic and diluted

 

 

17,892,606

 

 

 

4,477,321

 

 

 

12,381,110

 

 

 

1,823,485

 

 

See accompanying notes to condensed consolidated financial statements.

 

2


 

T2 BIOSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SERIES A REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(In thousands, except share data)

(Unaudited)

 

 

 

Temporary Equity

 

 

 

Permanent Equity

 

 

 

Series A Redeemable

 

 

 

Series B Convertible

 

 

Series A Convertible

 

 

Common

 

 

Additional

 

 

 

 

 

Accumulated Other

 

 

Total

 

 

 

Preferred Stock

 

 

 

Preferred Stock

 

 

Preferred Stock

 

 

Stock

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Deficit

 

Balance on December 31, 2022

 

 

 

 

$

 

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

77,165

 

 

$

 

 

$

494,564

 

 

$

(534,219

)

 

$

 

 

$

(39,655

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,833

 

 

 

 

 

 

 

 

 

1,833

 

Issuance of common stock from vesting of restricted stock, exercise of stock options and employee stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

643

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock from secondary offering, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,528

 

 

 

 

 

 

930

 

 

 

 

 

 

 

 

 

930

 

Issuance of common stock and Pre-Funded Warrant from public offering, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90,173

 

 

 

 

 

 

4,031

 

 

 

 

 

 

 

 

 

4,031

 

Issuance of common stock upon Common Stock Warrant cashless exercises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,718

 

 

 

 

 

 

938

 

 

 

 

 

 

 

 

 

938

 

Issuance of common stock upon Pre-Funded Warrant exercises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,406

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,965

)

 

 

 

 

 

(17,965

)

Balance on March 31, 2023

 

 

 

 

$

 

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

203,633

 

 

$

 

 

$

502,298

 

 

$

(552,184

)

 

$

 

 

$

(49,886

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

913

 

 

 

 

 

 

 

 

 

913

 

Issuance of common stock from vesting of restricted stock, exercise of stock options and employee stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Issuance of common stock from secondary offering, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,146,055

 

 

 

2

 

 

 

18,383

 

 

 

 

 

 

 

 

 

18,385

 

Issuance of common stock upon Common Stock Warrant cashless exercises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65,127

 

 

 

 

 

 

510

 

 

 

 

 

 

 

 

 

510

 

Issuance of common stock upon Pre-Funded Warrant exercises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,347

)

 

 

 

 

 

(6,347

)

Balance on June 30, 2023

 

 

 

 

$

 

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

2,418,433

 

 

$

2

 

 

$

522,106

 

 

$

(558,531

)

 

$

 

 

$

(36,423

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

877

 

 

 

 

 

 

 

 

 

877

 

Issuance of common stock from vesting of restricted stock, exercise of stock options and employee stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock from secondary offering, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,015,385

 

 

 

2

 

 

 

21,701

 

 

 

 

 

 

 

 

 

21,703

 

Issuance of common stock to related party

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

483,457

 

 

 

 

 

 

3,413

 

 

 

 

 

 

 

 

 

3,413

 

Issuance of Series B Convertible Preferred Stock to related party

 

 

 

 

 

 

 

 

 

93,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,587

 

 

 

 

 

 

 

 

 

6,587

 

Issuance of Series A Redeemable Preferred Stock to related party

 

 

1,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redemption of Series A Redeemable Preferred Stock issued to related party

 

 

(1,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon Common Stock Warrant cashless exercises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

925

 

 

 

 

 

 

32

 

 

 

 

 

 

 

 

 

32

 

Reverse stock split rounding adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,425

)

 

 

 

 

 

(15,425

)

Balance on September 30, 2023

 

 

 

 

$

 

 

 

 

93,297

 

 

$

 

 

 

 

 

$

 

 

 

3,918,438

 

 

$

4

 

 

$

554,716

 

 

$

(573,956

)

 

$

 

 

$

(19,236

)

 

3


 

 

 

 

Temporary Equity

 

 

 

Permanent Equity

 

 

 

Series A Redeemable

 

 

 

Series B Convertible

 

 

Series A Convertible

 

 

Common

 

 

Additional

 

 

 

 

 

Accumulated Other

 

 

Total

 

 

 

Preferred Stock

 

 

 

Preferred Stock

 

 

Preferred Stock

 

 

Stock

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Deficit

 

Balance on December 31, 2023

 

 

 

 

$

 

 

 

 

93,297

 

 

$

 

 

 

 

 

$

 

 

 

4,058,381

 

 

$

4

 

 

$

556,256

 

 

$

(584,296

)

 

$

 

 

$

(28,036

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,595

 

 

 

 

 

 

 

 

 

1,595

 

Issuance of common stock from vesting of restricted stock, exercise of stock options and employee stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,549

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Surrender of shares for tax withholding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(288

)

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

Issuance of common stock from secondary offering, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

628,470

 

 

 

1

 

 

 

2,202

 

 

 

 

 

 

 

 

 

2,203

 

Conversion of Series B Convertible Preferred Stock into common stock by related party

 

 

 

 

 

 

 

 

 

(82,422

)

 

 

 

 

 

 

 

 

 

 

 

824,220

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,534

)

 

 

 

 

 

(13,534

)

Balance on March 31, 2024

 

 

 

 

$

 

 

 

 

10,875

 

 

$

 

 

 

 

 

$

 

 

 

5,512,332

 

 

$

6

 

 

$

560,051

 

 

$

(597,830

)

 

$

 

 

$

(37,773

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

208

 

 

 

 

 

 

 

 

 

208

 

Issuance of common stock from vesting of restricted stock, exercise of stock options and employee stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,847

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

10

 

Issuance of common stock, Pre-Funded Warrants, and Series A and Series B Common Stock Warrants from private placement, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,700,000

 

 

 

2

 

 

 

7,267

 

 

 

 

 

 

 

 

 

7,269

 

Issuance of common stock upon Pre-Funded Warrant exercise

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

325,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock to related party

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,028,953

 

 

 

7

 

 

 

27,956

 

 

 

 

 

 

 

 

 

27,963

 

Issuance of Series A Convertible Preferred Stock to related party

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,160

 

 

 

 

 

 

 

 

 

 

 

 

5,388

 

 

 

 

 

 

 

 

 

5,388

 

Conversion of Series A and Series B Convertible Preferred Stock into common stock by related party

 

 

 

 

 

 

 

 

 

(10,875

)

 

 

 

 

 

(17,160

)

 

 

 

 

 

1,824,800

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,963

)

 

 

 

 

 

(8,963

)

Balance on June 30, 2024

 

 

 

 

$

 

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

17,394,249

 

 

$

17

 

 

$

600,878

 

 

$

(606,793

)

 

$

 

 

$

(5,898

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

216

 

 

 

 

 

 

 

 

 

216

 

Issuance of common stock from vesting of restricted stock, exercise of stock options and employee stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock from secondary offering, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,365,710

 

 

 

1

 

 

 

4,088

 

 

 

 

 

 

 

 

 

4,089

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,117

)

 

 

 

 

 

(10,117

)

Balance on September 30, 2024

 

 

 

 

$

 

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

18,760,092

 

 

$

18

 

 

$

605,182

 

 

$

(616,910

)

 

$

 

 

$

(11,710

)

 

See accompanying notes to condensed consolidated financial statements.

4


 

T2 BIOSYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(32,614

)

 

$

(39,737

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

185

 

 

 

785

 

Non-cash lease expense

 

 

1,127

 

 

 

994

 

Stock-based compensation expense

 

 

2,019

 

 

 

3,623

 

Change in fair value of derivative related to Term Loan with related party

 

 

(1,207

)

 

 

(436

)

Change in fair value of warrant liabilities

 

 

(169

)

 

 

(4,958

)

Issuance costs related to Common Stock Warrants

 

 

 

 

 

682

 

Loss on disposal of property and equipment

 

 

21

 

 

 

3

 

Non-cash interest expense to related party

 

 

489

 

 

 

1,332

 

Impairment of property and equipment

 

 

 

 

 

2,511

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(613

)

 

 

1,024

 

Prepaid expenses and other assets

 

 

1,395

 

 

 

(479

)

Inventories

 

 

994

 

 

 

(539

)

Accounts payable

 

 

2,683

 

 

 

(208

)

Accrued expenses and other liabilities

 

 

(278

)

 

 

(2,412

)

Deferred revenue

 

 

(15

)

 

 

92

 

Operating lease liabilities

 

 

(1,193

)

 

 

(997

)

Net cash used in operating activities

 

 

(27,176

)

 

 

(38,720

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases and manufacture of property and equipment

 

 

 

 

 

(166

)

Net cash used in investing activities

 

 

 

 

 

(166

)

Cash flows from financing activities

 

 

 

 

 

 

Payment of employee restricted stock tax withholdings

 

 

(1

)

 

 

 

Proceeds from issuance of shares from employee stock purchase plan and
   stock option exercises

 

 

10

 

 

 

2

 

Proceeds from public offering, net of issuance costs

 

 

 

 

 

10,918

 

Proceeds from private offering, net of issuance costs

 

 

7,269

 

 

 

 

Proceeds from secondary offering, net of issuance costs

 

 

6,292

 

 

 

41,018

 

Payment of debt issuance costs

 

 

 

 

 

(62

)

Net cash provided by financing activities

 

 

13,570

 

 

 

51,876

 

Net change in cash, cash equivalents and restricted cash

 

 

(13,606

)

 

 

12,990

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

16,240

 

 

 

11,880

 

Cash, cash equivalents and restricted cash at end of period

 

$

2,634

 

 

$

24,870

 

 

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

Reconciliation of cash, cash equivalents and restricted cash at end of period

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,083

 

 

$

24,319

 

Restricted cash

 

 

551

 

 

 

551

 

Total cash, cash equivalents and restricted cash

 

$

2,634

 

 

$

24,870

 

 

5


 

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

Cash paid for interest to related party

 

$

2,066

 

 

$

3,860

 

Supplemental disclosures of noncash activities

 

 

 

 

 

 

Transfer of T2 owned instruments and components from inventory

 

$

 

 

$

(543

)

Cashless exercise of Common Stock Warrants

 

$

 

 

$

(1,480

)

Cancellation of Term Loan in exchange for common stock and Convertible Preferred Stock to related party

 

$

33,353

 

 

$

10,000

 

Wainwright Warrant issued in connection with offering costs of May 2024 private offering

 

$

747

 

 

$

 

Purchases of property and equipment included in accounts payable and accrued expenses

 

$

 

 

$

142

 

 

See accompanying notes to condensed consolidated financial statements.

6


 

T2 BIOSYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Business

T2 Biosystems, Inc. and its subsidiary (the “Company,” “we,” or “T2”) have operations based in Lexington, Massachusetts. T2 Biosystems, Inc. was incorporated on April 27, 2006 as a Delaware corporation. The Company is an in vitro diagnostics company that has developed an innovative and proprietary technology platform that offers a rapid, sensitive and simple alternative to existing diagnostic methodologies. The Company has developed a broad set of applications aimed at lowering mortality rates, improving patient outcomes and reducing the cost of healthcare by helping medical professionals make targeted treatment decisions earlier. The Company’s technology enables rapid detection of pathogens, biomarkers and other abnormalities in a variety of unpurified patient sample types, including whole blood, plasma, serum, saliva, sputum, cerebral spinal fluid and urine, and can detect cellular targets at limits of detection as low as one colony forming unit per milliliter (“CFU/mL”). We are currently targeting a range of critically underserved healthcare conditions, focusing initially on those for which a rapid diagnosis will serve an important dual role – saving lives and reducing costs. The Company’s current development efforts primarily target sepsis, bioterrorism and Lyme disease, which are areas of significant unmet medical need in which existing therapies could be more effective with improved diagnostics.

Liquidity and Going Concern

On September 30, 2024, the Company had cash, cash equivalents, and restricted cash of $2.6 million, an accumulated deficit of $616.9 million, stockholders’ deficit of $11.7 million, and has experienced cash outflows from operating activities since its inception. The future success of the Company is dependent on its ability to successfully commercialize its products, obtain regulatory clearance for and successfully launch its future product candidates, obtain additional capital and ultimately attain profitable operations. Historically, the Company has funded its operations primarily through public equity and private debt financings, including the Company's August 2014 initial public offering, the December 2015 public offering, the September 2016 private investment in public equity (“PIPE”) financing, the September 2017 public offering, the June 2018 public offering, the July 2019 establishment of an equity distribution agreement and equity purchase agreement, the March 2021 establishment of the Equity Distribution Agreement (Note 9), the February 2023 public offering (Note 8), the May 2024 private offering (Note 8), the July 2024 establishment of the Wainwright Equity Distribution Agreement (Note 9), private placements of redeemable convertible preferred stock and through debt financing arrangements.

The Company believes its cash position is insufficient to fund future operations without financings during the fourth quarter of 2024, which may include public or private equity or debt financings. These financings may not be successful, however, or on terms favorable to the Company or its stockholders, which would have a negative impact on the Company’s business, results of operations, financial condition and the Company’s ability to develop and commercialize its products and ultimately operate as a going concern.

The Company is subject to a number of risks similar to other early commercial stage life science companies, including, but not limited to commercially launching the Company’s products, development and market acceptance of the Company’s product candidates, development by its competitors of new technological innovations, protection of proprietary technology, and raising additional capital.

In September 2023, the Company’s milestone-based product development contract with the Biomedical Advanced Research and Development Authority (“BARDA”) (Note 12) expired, which may impact the Company’s ability to continue to fund the development of its next-generation products.

The Company’s T2Dx Instrument and T2Candida, T2Bacteria, and the T2Biothreat Panels are authorized for use in the United States by the U.S. Food and Drug Administration (“FDA”).

Pursuant to the requirements of Accounting Standards Codification 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASC 205-40”), management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

7


 

The Company believes that its cash, cash equivalents, and restricted cash of $2.6 million on September 30, 2024 will not be sufficient to fund its current operating plan for at least 12 months from issuance of these financial statements, as certain elements of its operating plan cannot be considered probable. Absent any reductions in current operating expenses, the Company believes it will require additional financing during the fourth quarter of 2024, which may include public or private equity or debt financings. Under ASC 205-40, the future receipt of potential funding from co-development partners and other resources cannot be considered probable at this time because none of the plans are entirely within the Company’s control.

The Company's Term Loan Agreement (the “Term Loan Agreement”) with certain entities managed by CR Group L.P., a Delaware limited partnership (each entity, a “CRG entity” and collectively, “CRG”) (Note 6) has a minimum liquidity covenant, which initially required the Company to maintain a minimum cash balance of $5.0 million. In May 2023, CRG reduced the minimum liquidity covenant under the Term Loan Agreement from $5.0 million to $500,000 until December 31, 2023. In July 2023, April 2024, and May 2024, the Company converted $10.0 million, $15.0 million, and $15.0 million, respectively, of the outstanding debt principal with CRG to equity. In October 2023, the Term Loan Agreement was amended to extend both the interest-only period and the maturity date by one year from December 30, 2024 to December 31, 2025, and permanently reduce the minimum liquidity covenant from $5.0 million to $500,000. Unless the Company raises additional funds, management believes it is probable that the Company will not be able to comply with the minimum liquidity covenant.

On March 30, 2023, the Company received notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, for the last thirty consecutive business days, the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 555(a)(2) (the “Minimum Bid Price Rule”). On May 23, 2023, Nasdaq notified the Company that its securities were subject to delisting due to non-compliance with the Minimum Bid Price Rule and to maintain a minimum value of listed securities (the “MVLS Rule”) of at least $35 million. The Company requested a hearing with Nasdaq and, on July 6, 2023, appealed to the Nasdaq Hearings Panel for an extension to the time period in which to regain compliance with the MVLS Rule and the Minimum Bid Price Rule. On July 26, 2023, we filed a definitive proxy statement to effect a reverse stock split of our common stock in connection with our annual meeting that occurred in September 2023 as required by the Nasdaq Hearings Panel. On August 9, 2023, the Company received written notice from Nasdaq informing the Company that it had regained compliance with the MVLS Rule. On September 15, 2023, at the Company’s annual meeting of stockholders, the Company’s stockholders approved an amendment to the Company’s restated certificate of incorporation to effect a reverse stock split of the Company’s common stock. On October 12, 2023, the Company announced that its board of directors had approved the reverse stock split at the ratio of 1 post-split share for every 100 pre-split shares, which was effective as of October 12, 2023.

On October 31, 2023, the Company received written notice from Nasdaq informing the Company that it had regained compliance with the Minimum Bid Price Rule. The Company was subject to a Mandatory Panel Monitor for a period of one year. If, within that one-year monitoring period, the Company failed to comply with the Minimum Bid Price Rule, the Company would not be permitted additional time to regain compliance with the Minimum Bid Price Rule. However, the Company would have an opportunity to request a new hearing with the Nasdaq Listing Qualifications Hearing Panel prior to the Company’s securities being delisted from Nasdaq.

On November 20, 2023, the Company received written notice from Nasdaq informing the Company that it no longer satisfied the MVLS Rule. In accordance with the terms of the Mandatory Panel Monitor, the Company was not granted a grace period but rather issued a delist determination. The Company exercised its right to appeal by requesting a hearing and paying a non-refundable $20,000 fee, which stayed any further action by Nasdaq pending the issuance of its decision and the expiration of any extension that may be granted to the Company as a result of the hearing. The Company’s common stock remained listed and eligible to trade on Nasdaq pending the outcome of the hearing. On February 15, 2024, the Company appealed to the Nasdaq Hearings Panel for an extension to the time period in which to regain compliance with the MVLS Rule. On March 11, 2024, the Company received notice from the Nasdaq Hearings Panel that it had granted the Company’s request for continued listing on Nasdaq, subject to the Company demonstrating compliance with Nasdaq’s MVLS Rule on or before May 20, 2024. On May 21, 2024, the Company received written notice from Nasdaq informing the Company that it has regained compliance with the MVLS Rule for continued listing on the Nasdaq Capital Market.

8


 

On November 7, 2024, the Company received a letter from Nasdaq indicating that the Company’s market value of its listed securities has been below the minimum $35 million required for continued listing on the Nasdaq Capital Market, as set forth in Listing Rule 5550(b)(2) for the previous 30 consecutive trading days. In accordance with the terms of the previously imposed “Mandatory Panel Monitor” as that term is defined in Nasdaq Listing Rule 5815(d)(4)(B), the Nasdaq Listing Qualifications Staff did not grant the Company a grace period but rather issued a delist determination, which will be stayed if the Company exercises its right to appeal the determination by requesting a hearing and paying a non-refundable $20,000 fee. Subsequently, the Company paid the non-refundable $20,000 fee and plans to request a hearing, which will stay any further action by Nasdaq at least pending the issuance of the Nasdaq Hearings Panel’s decision and the expiration of any extension that may be granted by the Nasdaq Hearings Panel to the Company as a result of the hearing. The Company’s common stock will remain listed and eligible to trade on Nasdaq pending the outcome of the hearing. There can be no assurance, however, that the Nasdaq Hearings Panel will grant the Company’s request for continued listing or that the Company will evidence compliance with all applicable listing criteria prior to the expiration of any extension that may be granted by the Panel to do so.

These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of 12 months after the date that the financial statements are issued. Management's plans to alleviate the conditions that raise substantial doubt include raising additional funding, delaying certain research projects and capital expenditures, and eliminating certain future operating expenses in order to fund operations at reduced levels for the Company to continue as a going concern for a period of 12 months from the date these consolidated financial statements are issued. Management has concluded the likelihood that its plan to successfully obtain sufficient funding from one or more of these sources or maintain reduced expenditures, while reasonably possible, is less than probable. Accordingly, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of issuance of these financial statements.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, T2 Biosystems Securities Corporation. All intercompany balances and transactions have been eliminated.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation, including the consolidation of other income and expense items on the condensed consolidated statements of operations. Such reclassifications had no impact on the Company's reported total revenues, expenses, net loss, current assets, total assets, current liabilities, total liabilities, stockholders' equity (deficit) or cash flows. No reclassifications of prior period balances were material to the condensed consolidated financial statements.

Unaudited Interim Financial Information

Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The accompanying interim condensed consolidated balance sheet as of September 30, 2024, the condensed consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023, the condensed consolidated statements of Series A Redeemable Preferred Stock and stockholders’ deficit for the three and nine months ended September 30, 2024 and 2023, the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 and the related financial data and other information disclosed in these notes are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements, and, in the opinion of management, reflect all adjustments, consisting of normal

9


 

recurring adjustments, necessary for the fair presentation of the Company’s financial position as of September 30, 2024, and the results of its operations for the three and nine months ended September 30, 2024 and 2023 and its cash flows for the nine months ended September 30, 2024 and 2023. The results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period.

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision‑making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company views its operations and manages its business in one operating segment, which is the business of developing and, upon regulatory clearance, commercially launching its diagnostic products aimed at lowering mortality rates, improving patient outcomes and reducing the cost of healthcare by helping medical professionals make targeted treatment decisions earlier.

Geographic Information

The Company sells its products domestically and internationally. Total international sales were approximately $0.9 million, or 44% of total revenue, and $0.5 million, or 37% of total revenue, for the three months ended September 30, 2024 and 2023, respectively. Total international sales were approximately $2.7 million, or 44% of total revenue, and $2.3 million, or 41% of total revenue, for the nine months ended September 30, 2024 and 2023, respectively.

International sales to Italy were approximately $0.2 million, or 11% of total revenue, and $0.9 million, or 14% of total revenue, for the three and nine months ended September 30, 2024, respectively. International sales to Italy were approximately $0.2 million, or 15% of total revenue, and $1.3 million, or 23% of total revenue, for the three and nine months ended September 30, 2023, respectively. International sales to Austria did not exceed 10% of total revenue for the three months ended September 30, 2024 and were $0.7 million, or 11% of total revenue, for the nine months ended September 30, 2024. International sales to Austria were approximately $0.2 million, or 16% of total revenue, for the three months ended September 30, 2023 and did not exceed 10% of total revenue for the nine months ended September 30, 2023. International sales to Mexico were approximately $0.3 million, or 16% of total revenue, for the three months ended September 30, 2024 and did not exceed 10% of total revenue for the nine months ended September 30, 2024. International sales to Mexico did not exceed 10% of total revenue for both the three and nine months ended September 30, 2023, respectively.

The following table shows customers that represent greater than 10% of total revenue for the period presented:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Customer A

 

 

16

%

 

 

%

 

 

%

 

 

%

Customer B

 

 

11

%

 

 

15

%

 

 

14

%

 

 

23

%

Customer C

 

 

10

%

 

 

%

 

 

%

 

 

%

Customer D

 

 

%

 

 

16

%

 

 

11

%

 

 

%

Customer E

 

 

%

 

 

12

%

 

 

%

 

 

10

%

 

Customers A, B, and D are international distributors. Customers C and E are U.S. hospitals.

The following table shows customers that represent greater than 10% of the accounts receivable balance for the period presented:

 

 

 

September 30,
2024

 

 

December 31,
2023

 

Customer A

 

 

15

%

 

 

%

Customer C

 

 

19

%

 

 

%

Customer D

 

 

11

%

 

 

%

Customer E

 

 

%

 

 

13

%

Customer F

 

 

%

 

 

16

%

 

Customers A and D are international distributors. Customers C and E are U.S. hospitals. Customer F is a clinical laboratory company.

As of September 30, 2024 and December 31, 2023, the Company had outstanding receivables of $0.9 million and $0.3 million, respectively, from customers located outside of the U.S.

10


 

Net Loss Per Share

As discussed in Note 7, the Company issued 93,297 shares of Series B Convertible Preferred Stock on July 3, 2023 and 17,160.48 shares of Series A Convertible Preferred Stock on April 12, 2024. As of September 30, 2024, no shares of Series B Convertible Preferred Stock or Series A Convertible Preferred Stock remain issued and outstanding. The Company reviewed the terms of the Series B Convertible Preferred Stock and the Series A Convertible Preferred Stock and noted that such stock had no preferential rights and that the liquidation preference for each would be on parity with that of the Company’s common shares. Because the Series B Convertible Preferred Stock and the Series A Convertible Preferred Stock had the same level of subordination and, in substance, the same characteristics as the Company’s common shares, the Company included the Series B Convertible Preferred Stock and Series A Convertible Preferred Stock, on an if-converted basis, in the basic and diluted net loss per share attributable to common stockholders calculation for all periods in which the Series B Convertible Preferred Stock and the Series A Convertible Preferred Stock remained issued and outstanding.

The Company has also issued certain securities that are participating securities. Therefore, the Company must apply the two-class method to determine basic and diluted earnings per share. The two-class method is an earnings allocation method under which net loss per share is calculated for each class of common stock and participating security considering both dividends declared, if any, and participation rights in undistributed earnings as if all such earnings had been distributed for the period. The Company’s participating securities do not have an obligation to share in the losses of the Company; therefore, to the extent that the Company remains in a net loss position, the entire net loss will be allocated to common stockholders.

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, in-substance common stock, and potential common shares exercisable for little to no consideration, and does not consider other common stock equivalents.

Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding, in-substance common stock, and potential common shares exercisable for little to no consideration used to compute basic earnings per share for the dilutive effect of other common stock equivalents that were outstanding during the period, determined using either the if-converted method or the treasury-stock method.

Classification of Series A Redeemable Preferred Stock

The Company applied the guidance in ASC 480-10-S99-3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities and classified the Series A Redeemable Preferred Stock as temporary equity in the mezzanine section of the balance sheet during the three months ended September 30, 2023. The Series A Redeemable Preferred Stock was recorded outside of stockholders’ deficit because under the terms thereof, in the event of stockholder approval of the reverse stock split or a delisting event, which were events considered not solely within the Company’s control, the Series A Redeemable Preferred Stock would become redeemable at the option of the holders.

Derivative Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives requiring bifurcation in accordance with ASC Topic 815, Derivatives and Hedging. Derivative instruments are measured at fair value at issuance and at each reporting date in accordance with ASC 820 with changes in fair value recognized in the period of change in the condensed consolidated statements of operations.

The Company determined that the warrant issued in conjunction with the Series A Redeemable Convertible Preferred Stock in August of 2022 and the Common Stock Warrants issued in February 2023 are derivative instruments. The warrant liabilities are classified on the condensed consolidated balance sheets as current because settlement of the warrant liability could be required by the holder within 12 months of the balance sheet date. Changes in fair value are recognized in change in fair value of warrant liabilities in the period of change in the condensed consolidated statements of operations. See Notes 3 and 8.

The Company has identified a derivative liability related to its Term Loan Agreement with CRG that is classified as a current liability on the condensed consolidated balance sheets to match the classification of the related Term Loan Agreement. Changes in fair value are recognized in change in fair value of derivative related to Term Loan in the period of change in the condensed consolidated statements of operations. See Notes 3 and 6.

The Company does not designate its derivative instruments as hedging instruments.

11


 

Guarantees

As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while each such officer or director is, or was, serving at the Company’s request in such a capacity. The term of the indemnification is the officer’s or director’s lifetime. The maximum potential amount of future payments the Company could be required to make is unlimited; however, the Company has directors’ and officers’ liability insurance coverage that limits its exposure and enables the Company to recover a portion of any future amounts paid.

The Company leases office, laboratory and manufacturing space under noncancelable operating leases. The Company has standard indemnification arrangements under the leases that require it to indemnify the landlords against all costs, expenses, fines, suits, claims, demands, liabilities, and actions directly resulting from any breach, violation or nonperformance of any covenant or condition of the Company’s leases. See Note 14 for a discussion about the Billerica, Massachusetts lease.

In the ordinary course of business, the Company enters into indemnification agreements with certain suppliers and business partners where the Company has certain indemnification obligations limited to the costs, expenses, fines, suits, claims, demands, liabilities and actions directly resulting from the Company’s gross negligence or willful misconduct, and in certain instances, breaches, violations or nonperformance of covenants or conditions under the agreements.

As of September 30, 2024 and December 31, 2023, the Company had not experienced any material losses related to these indemnification obligations, and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.

Leases

Lessee

Pursuant to ASC Topic 842, Leases (“ASC 842”), at the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. The exercise of lease renewal options is at the Company’s discretion and the periods subject to renewal options are not included in the measurement of the Company’s right-of-use assets and lease liabilities as the renewal options are not reasonably certain of exercise. The Company will continue to evaluate the renewal options and when they are reasonably certain of exercise, the Company will include the renewal period in its lease term. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the right-of-use asset may be required for items such as prepaid or accrued lease payments. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.

The Company made the policy election to not separate lease and associated non-lease components. Each lease component and the related non-lease components are accounted for together as a single component.

Lessor

The Company derives revenue from leasing its T2-owned instruments through reagent rental agreements (see the Revenue Recognition section below). Customers typically have the right to cancel every 12 months, resulting in a lease term of generally one year. These lease agreements impose no requirement on the customer to purchase the instrument, and the instrument is not transferred to the customer at the end of the lease term. The short-term nature of the lease agreements does not result in lease payments accumulating to an amount that exceeds substantially all of the fair value of the instrument nor is the lease term for the majority of the remaining economic life of the instrument. Instrument leases are generally classified as operating leases as they do not meet any of the sales-type lease or direct financing lease criteria per ASC 842 and are recognized ratably over the duration of the lease. In accordance with these contracts, customers only make payments when consumables are ordered and delivered thus making these payments variable by nature. The Company estimates the expected volume of consumables to be purchased by each customer over the lease term to measure and recognize rental and consumables revenue.

12


 

Generally, lease arrangements include both lease and non-lease components. The lease component relates to the customer’s right-to-use the T2-owned instrument over the lease term. The non-lease components relate to (1) consumables and (2) maintenance services. Because the timing and pattern of transfer for the operating lease component, the T2-owned instrument, and maintenance components of a reagent rental agreement are recognized over the same time period and in the same pattern, the Company elected the practical expedient to aggregate non-lease components with the associated lease component and account for the combined component as an operating lease for all instrument leases. In the evaluation of whether the lease component (T2-owned instrument) or the non-lease component associated with the lease component (maintenance) is the predominant component, the Company determined that the lease component is predominant as we believe the customer would ascribe more value to the use of the T2-owned instrument than that of the maintenance services. The T2-owned instrument lease and maintenance service performance obligations are classified as a single category of instrument rental revenue within product revenue in the condensed consolidated statements of operations (see disaggregated revenue table below in Revenue Recognition section). The consumables non-lease component does not meet the requirements to elect the practical expedient because of its point-in-time pattern of transfer (versus over time for the combined lease component) and therefore must apply ASC Topic 606, Revenue from Contracts with Customers, as described below in the Revenue Recognition section.

The Company considers the economic life of its T2-owned instruments to be five years. The Company believes five years is representative of the period during which the instrument is expected to be economically usable by one or more users, with normal service, for the purpose for which it is intended. The residual value is estimated to be the value at the end of the lease term based on the anticipated fair market value of the units. The Company mitigates residual value risk of its leased instrument by performing regular management and maintenance, as necessary.

Revenue Recognition

The Company generates revenue from the sale of instruments, consumable diagnostic tests, related services, reagent rental agreements and government contributions. For arrangements in the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company determines revenue recognition through the following steps:

Identification of a contract with a customer
Identification of the performance obligations in the contract
Determination of the transaction price
Allocation of the transaction price to the performance obligations
Recognition of revenue as a performance obligation is satisfied

The amount of revenue recognized reflects the consideration the Company expects to be entitled to receive in exchange for these goods and services.

Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers either at a point in time, typically upon shipment, or over time, as services are performed. Contracts typically have net 30 payment terms in the U.S. and net 60 payment terms internationally.

Most of the Company’s contracts with distributors in geographic regions outside the United States contain only a single performance obligation, whereas most of the Company’s contracts with direct sales customers in the United States contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Excluded from the transaction price are sales tax and other similar taxes which are presented on a net basis.

Product revenue is generated by the sale of instruments and consumable diagnostic tests predominantly through the Company’s direct sales force in the United States and distributors in geographic regions outside the United States. The Company generally does not offer product returns or exchange rights (other than those relating to defective goods under warranty) or price protection allowances to its customers, including its distributors. Payment terms granted to distributors are the same as those granted to end-user customers and payments are not dependent upon the distributors’ receipt of payment from their end-user customers.

The Company either sells instruments to customers and international distributors or retains title and places the instrument at the customer site pursuant to a reagent rental agreement. When an instrument is purchased by a customer or international distributor, the

13


 

Company recognizes revenue when the related performance obligation is satisfied (i.e., when the control of an instrument has passed to the customer; typically, at shipping point).

When the instrument is placed under a reagent rental agreement, the Company’s customers generally agree to fixed term agreements, which can be extended, and incremental charges on each consumable diagnostic test purchased. Revenue from the sale of consumable diagnostic tests (under a reagent rental agreement) is generally recognized upon shipment. The transaction price from consumables purchases is allocated between the lease and non-lease components when related performance obligations are satisfied, as a component of lease and product revenue, and is included as Instrument Rentals in the below table. Revenue associated with reagent rental consumables purchases is currently classified as variable consideration and constrained until a purchase order is received and related performance obligations have been satisfied.

Revenue from the sale of consumable diagnostic tests (under instrument purchase agreements) is recognized when control has passed to the customer, typically at shipping point.

Shipping and handling costs billed to customers in connection with a product sale are recorded as a component of the transaction price and allocated to product revenue in the condensed consolidated statements of operations as they are incurred by the Company in fulfilling its performance obligations.

Direct sales of instruments include warranty, maintenance and technical support services typically for one year following the installation of the purchased instrument (“Maintenance Services”). Maintenance Services are separate performance obligations as they are service based warranties and are recognized on a straight-line basis over the service delivery period. After the completion of the initial Maintenance Services period, customers have the option to renew or extend the Maintenance Services typically for additional one-year periods in exchange for additional consideration. The extended Maintenance Services are also service based warranties that represent separate purchasing decisions. The Company recognizes revenue allocated to the extended Maintenance Services performance obligation on a straight-line basis over the service delivery period.

Fees paid to member-owned group purchasing organizations (“GPOs”) are deducted from related product revenues.

The Company warrants that consumable diagnostic tests will be free from defects, when handled according to product specifications, for the stated life of the product. To fulfill valid warranty claims, the Company provides replacement product free of charge. Warranty expense is recognized based on the estimated defect rates of the consumable diagnostic tests.

Contribution Revenue

The government contract with BARDA was considered a government grant and not considered a contract with a customer and thus not subject to ASC 606. Revenue under the government BARDA contract was earned under a cost-sharing arrangement in which the Company was reimbursed for direct costs incurred plus allowable indirect costs. The government contract revenue was recognized as the related reimbursable expenses were incurred. The cost reimbursement that was reported as revenue was presented gross of the related reimbursable expenses in the Company’s condensed consolidated statements of operations; the related reimbursable expenses were expensed as incurred as research and development expense. The Company accounted for these contracts as a government grant by analogy to International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance.

The BARDA contract expired in September 2023.

14


 

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers by type of products and services, as it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The following table disaggregates our revenue by major source (in thousands):

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Product revenue

 

 

 

 

 

 

 

 

 

 

 

 

Instruments

 

 

440

 

 

 

263

 

 

 

1,084

 

 

 

1,135

 

Consumables

 

 

1,407

 

 

 

1,038

 

 

 

4,404

 

 

 

3,453

 

Instrument rentals

 

 

9

 

 

 

17

 

 

 

120

 

 

 

121

 

Service

 

 

129

 

 

 

154

 

 

 

390

 

 

 

382

 

Total product revenue

 

 

1,985

 

 

 

1,472

 

 

 

5,998

 

 

 

5,091

 

Contribution revenue

 

 

 

 

 

 

 

 

 

 

 

423

 

Total revenue

 

$

1,985

 

 

$

1,472

 

 

$

5,998

 

 

$

5,514

 

 

Remaining Performance Obligations

Under ASC 606, the Company is required to disclose the aggregate amount of the transaction price that is allocated to unsatisfied or partially satisfied performance obligations as of September 30, 2024. However, the guidance provides certain practical expedients that limit this requirement, and therefore, the Company has elected to not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The nature of the excluded unsatisfied performance obligations pursuant to the practical expedient include consumable shipments, service contracts, warranties and installation services that will be performed within one year. The amount of the transaction price that is allocated to unsatisfied or partially satisfied performance obligations, that has not yet been recognized as revenue and that does not meet the elected practical expedient is $0.1 million as of September 30, 2024. The Company expects to recognize 55% of this amount as revenue within one year and the remainder within three years.

Judgments

Certain contracts with customers include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Once the performance obligations are determined, the Company determines the transaction price, which includes estimating the amount of variable consideration, based on the most likely amount, to be included in the transaction price, if any. The Company then allocates the transaction price to each performance obligation in the contract based on a relative standalone selling price method. The corresponding revenue is recognized as the related performance obligations are satisfied as discussed in the revenue categories above.

Judgment is required to determine the standalone selling price for each distinct performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as a range of selling prices, market conditions and the expected costs and margin related to the performance obligations.

Contract Assets and Liabilities

The Company's contract assets represent revenue recognized for performance obligations in advance of invoicing at the contract level based on the transaction price allocated to the respective performance obligations. The opening and closing balances of the Company's contract assets were $0.1 million and $0.1 million for the nine months ended September 30, 2024, respectively, and $0.1 million and $0.1 million for the nine months ended September 30, 2023, respectively.

The Company’s contract liabilities consist of upfront payments for maintenance services on instrument sales. Contract liabilities are classified in deferred revenue as current or non-current based on the timing of when revenue is expected to be recognized. The opening and closing balances of the Company's contract liabilities were $0.3 million and $0.3 million for the nine months ended September 30, 2024, respectively, and $0.2 million and $0.3 million for the nine months ended September 30, 2023, respectively. Revenue recognized during the nine months ended September 30, 2024 relating to contract liabilities on December 31, 2023 was $0.3 million and related to straight-line revenue recognition associated with maintenance agreements.

15


 

Accounts Receivable, Net

The opening and closing balances of the Company's accounts receivable, net were $1.4 million and $2.0 million for the nine months ended September 30, 2024, respectively, and $2.2 million and $1.1 million for the nine months ended September 30, 2023, respectively.

Cost of Product Revenue

Cost of product revenue includes the cost of materials, direct labor and manufacturing overhead costs used in the manufacture of consumable diagnostic tests sold to customers, related warranty and license and royalty fees. Cost of product revenue also includes depreciation on T2-owned revenue generating T2Dx Instruments that have been placed with customers under reagent rental agreements; costs of materials, direct labor and manufacturing overhead costs on the T2Dx Instruments sold to customers; and other costs such as customer support costs, royalties and license fees, warranty and repair and maintenance expense on the T2Dx Instruments that have been placed with customers under reagent rental agreements.

Research and Development Costs

Costs incurred in the research and development of the Company’s product candidates are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including activities associated with delivering products or services associated with contribution revenue, clinical trials to evaluate the clinical utility of product candidates, and costs associated with the enhancements of developed products. These costs include salaries and benefits, stock compensation, research related facility and overhead costs, laboratory supplies, equipment, depreciation on T2Dx Instruments used for research and development activities and contract services.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of costs for the Company’s sales and marketing, finance, legal, human resources, business development and general management functions, as well as professional services, such as legal, consulting and accounting services. Other selling, general and administrative expenses include commercial support activity, facility-related costs, fees and expenses associated with obtaining and maintaining patents, clinical and economic studies and publications, marketing expenses, and travel expenses. The Company expenses the majority of selling, general and administrative expenses as incurred.

Impairment of Long-lived Assets

The Company reviews long‑lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is evaluated by comparing the carrying value of the long-lived assets with the estimated future net undiscounted cash flows expected to result from the use of the assets, including cash flows from disposition. Should the sum of the expected future net cash flows be less than the carrying value, the Company would recognize an impairment loss at that date. An impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value, or the estimated discounted future cash flows, of the long-lived assets.

For the three months ended September 30, 2023, we determined a triggering event occurred that required us to evaluate our long-lived assets for impairment. As a result, the Company recorded a loss on the impairment of property and equipment of $2.5 million for the three and nine months ended September 30, 2023.

Recent Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that its adoption of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations at the respective effective dates.

Accounting Standards Issued, To Be Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). This ASU was issued to improve the disclosures about a public entity’s reportable segments and address requests from investors for more detailed information about a reportable segment’s expenses. This update will be effective for the Company for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact of this update on its disclosures.

16


 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). This ASU was issued to enhance the transparency and decision usefulness of income tax disclosures. This update will be effective for the Company for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently assessing the impact of this update on its disclosures.

3. Fair Value Measurements

The Company measures the following financial assets at fair value on a recurring basis. There were no transfers between levels of the fair value hierarchy during any of the periods presented. The following tables set forth the Company’s financial assets and liabilities carried at fair value categorized using the lowest level of input applicable to each financial instrument as of September 30, 2024 and December 31, 2023 (in thousands):

 

 

 

Balance at
September 30,
2024

 

 

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

950

 

 

$

950

 

 

$

 

 

$

 

 

 

$

950

 

 

$

950

 

 

$

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Warrant liabilities

 

$

66

 

 

$

 

 

 

66

 

 

$

 

Derivative liability related to Term Loan with related party

 

 

347

 

 

 

 

 

 

 

 

 

347

 

 

 

$

413

 

 

$

 

 

$

66

 

 

$

347

 

 

 

 

Balance at
December 31,
2023

 

 

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

8,500

 

 

$

8,500

 

 

$

 

 

$

 

 

$

8,500

 

 

$

8,500

 

 

$

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Warrant liabilities

 

$

235

 

 

$

 

 

$

235

 

 

$

 

Derivative liability related to Term Loan with related party

 

 

1,554

 

 

 

 

 

 

 

 

 

1,554

 

 

$

1,789

 

 

$

 

 

$

235

 

 

$

1,554

 

 

The Company’s cash equivalents are comprised of money market funds and money market accounts as of September 30, 2024 and December 31, 2023. The Company also maintains money market accounts classified as restricted cash, which are Level 1 assets, for $0.6 million on both September 30, 2024 and December 31, 2023 (Note 4).

The Company estimated the fair value of the warrant issued in conjunction with the Series A Redeemable Convertible Preferred Stock in August of 2022 (the “Series A Warrant”) (Note 8) using the Black-Scholes Model, which uses multiple inputs including the Company’s stock price, the exercise price of the warrant, volatility of the Company’s stock price, the risk-free interest rate and the expected term of the warrant.

The estimated fair value of the Series A Warrant on September 30, 2024 was determined using the following assumptions:

 

Risk-free interest rate

 

 

3.58

%

Expected dividend yield

 

 

0.00

%

Expected volatility

 

 

146.00

%

Expected term

 

3.38

 

 

The Company estimated the fair value of the Common Stock Warrant issued in February of 2023 (the “Common Stock Warrant”) (Note 8) using both the Black-Scholes Model and Monte Carlo simulation methods to model different potential settlement outcomes. These models use multiple inputs including the Company’s stock price, the exercise price of the warrant, volatility of the Company’s stock price, the risk-free interest rate and the expected term of the warrant. Such inputs may vary depending on the model applied and the underlying scenario assumptions. Key inputs included the warrant exercise price of $108.00 per share, a risk-free interest rate of

17


 

3.58%, expected volatility ranging from 75% to 173%, an expected dividend yield of 0.00%, a stock price of $2.38 (adjusted to reflect volume weighting) and an expected term ranging from zero years to 3.38 years, depending on the simulation.

The following table provides a roll-forward of the fair value of the Common Stock Warrants (in thousands):

 

Balance on December 31, 2023

 

$

233

 

Change in fair value

 

 

(27

)

Balance on March 31, 2024

 

$

206

 

Change in fair value

 

 

179

 

Balance on June 30, 2024

 

$

385

 

Change in fair value

 

 

(319

)

Balance on September 30, 2024

 

$

66

 

The Company has a single compound derivative instrument related to its Term Loan Agreement (Note 6) that requires the Company to pay additional interest of 4% per annum upon an event of default or if any obligation other than the unpaid principal amount of the Term Loan is not paid when due. Fair value is determined quarterly. The fair value of the derivative on September 30, 2024 and December 31, 2023 is $0.3 million and $1.6 million, respectively, and is classified as a current liability on the condensed consolidated balance sheets to match the classification of the related Term Loan Agreement (Note 6).

The estimated fair value of the derivative on September 30, 2024 was determined using a probability-weighted discounted cash flow model that includes contingent interest payments under the following scenarios:

 

 

 

Probability

 

4% contingent interest beginning in Q4 2024

 

 

50

%

 

Changes in assumptions regarding the probability of the 4% contingent interest feature being triggered and the timing of such a triggering event could significantly affect the estimated fair value of this derivative liability.

The following table provides a roll-forward of the fair value of the derivative liability related to the term loan with related party (in thousands):

 

Balance on December 31, 2023

 

$

1,554

 

Change in fair value of derivative related to Term Loan with related party

 

 

108

 

Balance on March 31, 2024

 

$

1,662

 

Change in fair value of derivative related to Term Loan with related party

 

 

(1,238

)

Balance on June 30, 2024

 

$

424

 

Change in fair value of derivative related to Term Loan with related party

 

 

(77

)

Balance on September 30, 2024

 

$

347

 

 

The Company is required to disclose the fair value and the level within the fair value hierarchy for financial instruments that are not measured at fair value on a recurring basis. For certain financial instruments, including accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses, the carrying amounts approximate their fair values as of September 30, 2024 and December 31, 2023 because of their short-term nature. Cash and cash equivalents were classified as Level 1 and all other financial instruments were classified as Level 2 within the fair value hierarchy. The Company used Level 3 inputs to measure the fair value of the derivative liability related to the Term Loan Agreement with related party. Based on these measurements, the Company concluded that the carrying value of the Term Loan Agreement approximates its fair value on September 30, 2024.

4. Restricted Cash

The Company is required to maintain security deposits for its office lease agreements. On both September 30, 2024 and December 31, 2023, the Company had lease security deposits, invested in money market accounts, aggregating $0.6 million. In January 2023, one of the Company's deposits of $1.0 million was claimed by a landlord as compensation for a lease dispute (Note 14). The remaining collateral deposits aggregating $0.6 million were held at Silicon Valley Bank, which was taken over by the FDIC in March 2023. The Company’s full exposure was ultimately covered by the FDIC and no loss was incurred.

18


 

5. Supplemental Balance Sheet Information

Inventories

Inventories are stated at the lower of cost or net realizable value on a first-in, first-out basis and are comprised of the following (in thousands):

 

 

 

September 30,
2024

 

 

December 31,
2023

 

Raw materials

 

$

1,836

 

 

$

1,881

 

Work-in-process

 

 

1,662

 

 

 

1,441

 

Finished goods

 

 

327

 

 

 

1,497

 

Total inventories

 

$

3,825

 

 

$

4,819

 

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):

 

 

 

September 30,
2024

 

 

December 31,
2023

 

Office and computer equipment

 

$

710

 

 

$

710

 

Software

 

 

778

 

 

 

778

 

Laboratory equipment

 

 

5,094

 

 

 

5,104

 

Furniture

 

 

198

 

 

 

198

 

Manufacturing equipment

 

 

1,127

 

 

 

1,109

 

Manufacturing tooling and molds

 

 

371

 

 

 

371

 

T2-owned instruments and components

 

 

3,662

 

 

 

3,549

 

Leased T2-owned instruments

 

 

904

 

 

 

1,059

 

Leasehold improvements

 

 

3,608

 

 

 

3,608

 

Construction in progress

 

 

29

 

 

 

23

 

 

 

16,481

 

 

 

16,509

 

Less accumulated depreciation and amortization

 

 

(15,004

)

 

 

(14,851

)

Property and equipment, net

 

$

1,477

 

 

$

1,658

 

 

Construction in progress is primarily comprised of equipment that has not been placed in service. T2-owned instruments and components is primarily comprised of instruments that will be used for internal research and development, clinical studies and reagent rental agreement with customers. Depreciation expense, a component of cost of product revenue, from instruments under the T2-owned reagent rental pool was $0.1 million for the three months ended September 30, 2024 and $0.1 million for the three months ended September 30, 2023. Depreciation expense, a component of cost of product revenue, from instruments under the T2-owned reagent rental pool was $0.2 million for the nine months ended September 30, 2024 and $0.2 million for the nine months ended September 30, 2023.

Total depreciation expense for T2-owned instruments used for internal research and development and clinical studies is recorded as a component of research and development expense. Depreciation and amortization expense of $0.1 million and $0.1 million was charged to operations for the three months ended September 30, 2024 and 2023, respectively. Depreciation and amortization expense of $0.2 million and $0.8 million was charged to operations for the nine months ended September 30, 2024 and 2023, respectively.

For the three months ended September 30, 2023, we determined a triggering event occurred that required us to evaluate our long-lived assets for impairment. The triggering event was the reassessment of the Company’s sales demand forecast. We evaluated our long-lived assets by our two asset groups, which are T2-owned assets that are placed at customer sites as rental instruments and all other assets which support the Company’s product research and manufacturing. As a result of the evaluation, the Company recorded impairment charges for T2-owned non-lease instruments and reagent manufacturing assets. T2-owned non-lease instruments were evaluated based on average historical sale prices for refurbished instruments. Reagent manufacturing assets were evaluated based on estimated cash flows from projected reagent test sales using historical margins and commission rates. The Company recorded a total loss on impairment of property and equipment of $2.5 million for the three and nine months ended September 30, 2023.

19


 

Accrued Expenses

Accrued expenses consist of the following (in thousands):

 

 

September 30,
2024

 

 

December 31,
2023

 

Accrued payroll and compensation

 

$

3,412

 

 

$

2,705

 

Accrued clinical trial and development expenses

 

 

234

 

 

 

285

 

Accrued professional services

 

 

428

 

 

 

554

 

Accrued interest

 

 

244

 

 

 

839

 

Other accrued expenses

 

 

309

 

 

 

522

 

Total accrued expenses and other current liabilities

 

$

4,627

 

 

$

4,905

 

 

6. Notes Payable

Term Loan Agreement

In December 2016, the Company entered into the Term Loan Agreement with CRG. The Company initially borrowed $40.0 million under the Term Loan Agreement and had the ability to borrow an additional $10.0 million upon receiving specified clearance for the marketing of T2Bacteria by April 30, 2018 (the “Approval Milestone”). The Company agreed to pay (1) a financing fee based on the amount of principal drawn and (2) a final payment fee based on the principal outstanding upon repayment. The debt discount related to the financing fee and the fees paid to CRG are being amortized over the loan term as interest expense. Interest expense for the debt discount was less than $0.1 million for both the three months ended September 30, 2024 and 2023 and was $0.1 million for both the nine months ended September 30, 2024 and 2023. The final payment fee is accrued as interest expense and is classified consistent with the classification of the Term Loan. The effective interest rate of the Term Loan was 11.1% as of September 30, 2024.

The Term Loan’s principal is prepayable at any time partially or in full without a prepayment penalty. Borrowings are collateralized by a lien on substantially all Company assets, including intellectual property. The Term Loan Agreement provides for affirmative and negative covenants, and originally included a requirement to maintain a minimum cash balance of $5.0 million. The Term Loan Agreement includes a subjective acceleration clause whereby an event of default, including a material adverse change in the business, operations, or conditions (financial or otherwise), could result, at CRG’s discretion, in the acceleration of the obligations under the Term Loan Agreement. Under certain circumstances, a default interest rate of an additional 4.0% per annum may apply, at CRG’s discretion, on all outstanding obligations during the occurrence and continuance of an event of default.

The Term Loan originally had a six-year term, with three years of interest-only payments accruing at a fixed rate of 12.5%, of which 4.0% could be paid in-kind by increasing the principal balance. After achievement of the Approval Milestone, such rates would be reduced and a fourth year of interest-only payments would be granted, after which quarterly payments of principal and interest would be owed through the December 30, 2022 maturity date. Upon achievement of certain performance metrics, the loan would be converted to interest-only until its maturity, at which time all unpaid principal and interest would be due and payable.

In connection with the Term Loan Agreement, the Company issued warrants to CRG to purchase a total of 105 shares of the Company’s common stock, exercisable any time prior to December 30, 2026.

Amendments

The Term Loan Agreement has been amended eleven times as of September 30, 2024. As a result of those amendments, certain terms of the Term Loan have been revised as follows:

In 2018, upon the Company’s achievement of the Approval Milestone, interest on borrowings began accruing at 11.50% per year, 8% of which is payable in cash quarterly and 3.5% of which is deferred and added to principal until maturity.
In 2019:
The final payment fee was increased from 8% to 10% of the principal outstanding upon repayment.
The Company issued additional warrants to CRG to purchase 113 shares of its common stock, exercisable any time prior to September 9, 2029 at an exercise price of $7,750.00 per share, with provisions for termination upon a change of control or a sale of all or substantially all of the assets of the Company (these warrants, along with the warrants to purchase 105 shares of common stock previously issued to CRG, are collectively referred to as the “CRG Warrants”).

20


 

The Company reduced the exercise price for the warrants previously issued to CRG to $7,750.00.
In 2022, the principal maturity date was extended to December 30, 2024, and the Term Loan’s interest-only payment period was extended until that maturity date.
In 2023:
The Company and CRG entered into a waiver and consent that reduced the minimum liquidity covenant to $500,000 until December 31, 2023.
CRG waived certain specified events of default associated with the Company’s issuance of shares of Series A Redeemable Convertible Preferred Stock in August 2022 and the subsequent redemption (Note 7).
In July 2023, CRG canceled $10.0 million of the Term Loan’s principal in exchange for 483,457 shares of common stock and 93,297 shares of Series B Convertible Preferred Stock. In connection with the principal cancelation, CRG waived the final payment fees associated with the canceled principal.
In October 2023, the interest-only period and maturity of the Term Loan were extended to December 31, 2025 and the $500,000 liquidity covenant was made permanent.
In 2024:
In April 2024, CRG canceled $15.0 million of the Term Loan's principal in exchange for 3,280,618 shares of common stock and 17,160.48 shares of Series A Convertible Preferred Stock. In connection with the principal cancelation, CRG waived the final payment fees associated with the canceled principal. In addition, the Term Loan Agreement was amended to extend the period in which the Company may elect to pay a portion of the accrued paid-in-kind interest to the earlier of (a) December 31, 2025 and (b) the date on which a default has occurred.
In May 2024, CRG canceled $15.0 million of the Term Loan's principal in exchange for 4,748,335 shares of common stock. In connection with the principal cancelation, CRG waived the final payment fees associated with the canceled principal. In addition, the Term Loan Agreement was amended to allow CRG or their affiliates to acquire a majority of shares in the Company without causing a change of control as defined under the Term Loan Agreement.

The warrants to purchase 218 shares of the Company’s common stock remain outstanding on September 30, 2024. There were no covenant violations during the three and nine months ended September 30, 2024.

Amendments made in February 2022, November 2022, October 2023, and the partial principal cancellations in July 2023, April 2024, and May 2024 were accounted for as troubled debt restructurings. For all restructurings, at the time of the restructuring the future undiscounted cash outflows required under the amended agreement exceeded the carrying value of the debt and no gain was recognized as a result of the restructurings. The effects of each restructuring were accounted for prospectively.

Related Party Transactions

Upon the close of the July 2023 transaction in which CRG canceled $10.0 million of the Term Loan’s principal in exchange for 483,457 shares of common stock and 93,297 shares of Series B Convertible Preferred Stock, CRG became a holder of more than ten percent of our common stock outstanding, and therefore determined to be a principal owner and related party. As of December 31, 2023, CRG held no shares of common stock and 93,297 shares of Series B Convertible Preferred Stock, which was convertible into more than ten percent of our common stock outstanding as of December 31, 2023. In February 2024, CRG converted 82,422 shares of its Series B Preferred Stock into 824,220 shares of common stock, which represented more than ten percent of our common stock outstanding. In April 2024 and May 2024, CRG canceled an aggregate of $30.0 million of the Term Loan's principal in exchange for an aggregate of 8,028,953 shares of common stock and 17,160.48 shares of Series A Convertible Preferred Stock. In connection with the principal cancelation, CRG waived the final payment fees associated with the canceled principal. In May 2024, CRG converted all of the outstanding shares of Series A Convertible Preferred Stock and remaining Series B Convertible Preferred Stock into an aggregate of 1,824,800 shares of common stock. As of September 30, 2024, CRG held 10,677,973 shares of common stock which represented approximately 57% of our common stock outstanding as of September 30, 2024.

Classification

The Term Loan Agreement with CRG was classified as a current liability on both September 30, 2024 and December 31, 2023. In May 2023, the Company received a modification and waiver reducing the Term Loan’s minimum cash covenant from $5.0 million to $500,000 until December 31, 2023. In addition, in October 2023, the interest-only period and maturity of the Term Loan were

21


 

extended to December 31, 2025, and the $500,000 liquidity covenant was made permanent. Because management believes it is probable that the Company will not be able to comply with the covenant unless additional funds are raised, the Company concluded that the Term Loan and related liabilities should be classified as current on the condensed consolidated balance sheets.

Future Payments

Future principal payments on the notes payable are as follows (in thousands):

 

 

 

September 30,
2024

 

 

December 31,
2023

 

Term Loan Agreement due 2025 including PIK interest,
   before unamortized discount and issuance costs

 

$

12,610

 

 

$

44,457

 

Less: unaccrued paid-in-kind interest

 

 

(546

)

 

 

(3,037

)

Less: unamortized discount and deferred issuance costs

 

 

(142

)

 

 

(136

)

Total notes payable to related party

 

$

11,922

 

 

$

41,284

 

 

7. Preferred Stock

Series A Redeemable Preferred Stock

On July 5, 2023, the Company issued Series A Redeemable Preferred Stock (the “Series A Preferred Stock”) to help effect a Reverse Stock Split Proposal. Subject to the terms and conditions of a Securities Purchase Agreement, the Company agreed to issue and sell to CRG 1,000 shares of newly designated Series A Preferred Stock, par value $0.001 per share, for a total purchase price of $100.00. A “Reverse Stock Split Proposal” means any proposal approved by the Company’s Board of Directors and submitted to the Company’s stockholders to adopt an amendment(s) to the Company’s Amended and Restated Certificate of Incorporation to combine the outstanding shares of common stock into a smaller number of shares of common stock at a ratio to be specified.

Voting Rights

Shares of the Series A Preferred Stock had the right to vote only on any Reverse Stock Split Proposal and as may have been required by law. The Series A Preferred Stock represented an aggregate of 400,000,000 votes, and CRG agreed to vote in the same proportion as shares of common stock of the Company were voted on any Reverse Stock Split Proposal.

Redemption

The Series A Preferred Stock were redeemable (i) at any time if such redemption was ordered by the Board of Directors in its sole discretion, automatically and effective on such time and date specified by the Board of Directors in its sole discretion, or (ii) automatically immediately following the approval by the stockholders of the Company of a Reverse Stock Split Proposal at a redemption price of $100.00. On September 15, 2023, the Company’s stockholders voted to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Company’s common stock, par value $0.001 per share, at a reverse split ratio ranging from any whole number between and including 1-for-50 and 1-for-150, with the exact ratio to be determined at the discretion of the Board of Directors of the Company. As a result of that stockholder vote, the Series A Preferred Stock was redeemed on September 15, 2023, for $100. Upon its redemption, the Company’s Series A Preferred Stock ceased to be outstanding.

Series B Convertible Preferred Stock

On July 3, 2023, in conjunction with an agreement it reached with CRG to cancel $10.0 million of its Term Loan principal, the Company issued to CRG (i) an aggregate of 483,457 shares of common stock at a purchase price of $7.06 per share for a total purchase price of $3.4 million, and (ii) an aggregate of 93,297 shares of newly designated Series B Convertible Preferred Stock (the “Series B Preferred Stock”), par value $0.001 per share, at a purchase price of $70.60 per share (the “Stated Value”) for a total purchase price of $6.6 million.

Dividends

Holders of Series B Preferred Stock are entitled to receive dividends on such shares (other than common stock dividends) equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends actually paid on shares of the common stock when, as and if such dividends are paid on shares of the common stock. No other dividends shall be paid on shares of Series B Preferred Stock.

22


 

All declared but unpaid dividends on shares of Series B Preferred Stock will increase the Stated Value of such shares, but when such dividends are actually paid any such increase in the Stated Value will be rescinded.

Voting Rights

Except as may be required by law, the Series B Preferred Stock has no voting rights. However, as long as any shares of Series B Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series B Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock, (ii) increase or decrease (other than by conversion) the number of authorized shares of Series B Preferred Stock, or (iii) enter into any agreement with respect to any of the foregoing.

Liquidation Preference

The Series B Preferred Stock ranks (i) senior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms junior to any Series B Preferred Stock (collectively, the “Junior Securities”); (ii) on parity with the common stock; (iii) on parity with any class or series of capital stock of the Company hereafter created specifically ranking by its terms on parity with the Series B Preferred Stock (together with the common stock, the “Parity Securities”); and (iv) junior to any class or series of capital stock of the Company hereafter created specifically ranking by its terms senior to any Series B Preferred Stock (“Senior Securities”), in each case, as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily (a “Liquidation”). No Junior Securities, Parity Securities or Senior Securities existed at September 30, 2024.

In a Liquidation, the Series B Preferred Stockholder will, subject to the prior and superior rights of the holders of any Senior Securities, be entitled to receive, in preference to any distributions of any of the assets or surplus funds of the Company to the holders of the Junior Securities and pari passu with any distribution to the holders of Parity Securities, an equivalent amount of any distributions as would be paid on the common stock underlying the Series B Preferred Stock, determined on an as-converted basis (without regard to any limitations on conversion), plus an additional amount equal to any dividends declared but unpaid on such shares, before any payments shall be made or any assets distributed to holders of any class of Junior Securities.

Conversion Rights

Each share of Series B Preferred Stock is convertible, at any time and from time to time from and after the Reverse Split Amendment has been filed with the Secretary of State of the State of Delaware, at the option of the holder thereof, into a number of shares of common stock equal to the product of the Conversion Ratio (which is the $70.60 Stated Value of such shares divided by the $7.06 Conversion Price, subject to adjustment) and the number of shares of Series B Preferred Stock to be converted. The Reverse Split Amendment was filed on October 12, 2023. The conversion feature is subject to certain beneficial ownership limitations. The Conversion Price also is subject to adjustment for stock dividends and stock splits.

In February 2024, CRG converted 82,422 shares of its Series B Preferred Stock into 824,220 shares of common stock. In May 2024, CRG converted all remaining outstanding Series B Preferred Stock into 108,752 shares of common stock. Upon the conversion by CRG in May 2024, the Company’s Series B Preferred Stock ceased to be outstanding.

Series A Convertible Preferred Stock

On April 12, 2024, in conjunction with an agreement it reached with CRG to cancel $15.0 million of its Term Loan principal, the Company issued to CRG (i) an aggregate of 3,280,618 shares of common stock at a purchase price of $3.00 per share for a total purchase price of $9.8 million, and (ii) an aggregate of 17,160.48 shares of Series A Convertible Preferred Stock, par value $0.001 per share, at a purchase price of $300.00 per share (the “Stated Value”) for a total purchase price of $5.2 million.

Dividends

Holders of Series A Convertible Preferred Stock are entitled to receive dividends on such shares (other than common stock dividends) equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends actually paid on shares of the common stock when, as and if such dividends are paid on shares of the common stock. No other dividends shall be paid on shares of Series A Convertible Preferred Stock. All declared but unpaid dividends on shares of Series A Convertible Preferred Stock will increase the Stated Value of such shares, but when such dividends are actually paid any such increase in the Stated Value will be rescinded.

Voting Rights

Except as may be required by law, the Series A Convertible Preferred Stock has no voting rights. However, as long as any shares of Series A Convertible Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Convertible Preferred Stock, (i) alter or change adversely the powers, preferences or rights

23


 

given to the Series A Convertible Preferred Stock, (ii) increase or decrease (other than by conversion) the number of authorized shares of Series A Convertible Preferred Stock, or (iii) enter into any agreement with respect to any of the foregoing.

Liquidation Preference

The Series A Convertible Preferred Stock ranks (i) senior to any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms junior to any Series A Convertible Preferred Stock (collectively, the “Junior Securities”); (ii) on parity with the common stock; (iii) on parity with any class or series of capital stock of the Company hereafter created specifically ranking by its terms on parity with the Series A Convertible Preferred Stock (together with the common stock, the “Parity Securities”); and (iv) junior to any class or series of capital stock of the Company hereafter created specifically ranking by its terms senior to any Series A Convertible Preferred Stock (“Senior Securities”), in each case, as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily (a “Liquidation”). No Junior Securities, Parity Securities or Senior Securities existed at September 30, 2024.

In a Liquidation, the Series A Convertible Preferred Stockholder will, subject to the prior and superior rights of the holders of any Senior Securities, be entitled to receive, in preference to any distributions of any of the assets or surplus funds of the Company to the holders of the Junior Securities and pari passu with any distribution to the holders of Parity Securities, an equivalent amount of any distributions as would be paid on the common stock underlying the Series A Convertible Preferred Stock, determined on an as-converted basis (without regard to any limitations on conversion), plus an additional amount equal to any dividends declared but unpaid on such shares, before any payments shall be made or any assets distributed to holders of any class of Junior Securities.

Conversion Rights

Each share of Series A Convertible Preferred Stock is convertible, at any time and from time to time, at the option of the holder thereof, into a number of shares of common stock equal to the product of the Conversion Ratio (which is the $300.00 Stated Value of such shares divided by the $3.00 Conversion Price, subject to adjustment) and the number of shares of Series A Convertible Preferred Stock to be converted. The conversion feature is subject to certain beneficial ownership limitations. The Conversion Price also is subject to adjustment for stock dividends and stock splits.

In May 2024, CRG converted all 17,160.48 shares of its Series A Convertible Preferred Stock into 1,716,048 shares of common stock. Upon the conversion by CRG in May 2024, the Company’s Series A Convertible Preferred Stock ceased to be outstanding.

8. Warrants

Series A Warrant

On August 15, 2022, the Company issued an aggregate of 3,000 shares of Series A Redeemable Convertible Preferred Stock with a par value of $0.001 per share and the Series A Warrant to purchase up to an aggregate of 428 shares of common stock of the Company at an exercise price of $750.00 per share (such number of shares and exercise price are adjusted for the reverse stock split described in Note 2) for an aggregate subscription amount equal to $0.3 million, before deducting estimated offering expenses payable by the Company. In the fourth quarter of 2022, the Series A Redeemable Convertible Preferred Stock was redeemed. The Series A Warrant became exercisable on February 15, 2023 and expires on February 15, 2028. The Series A Warrant contains certain anti-dilution provisions to protect the holder.

On February 17, 2023, the Company issued and sold shares of common stock, pre-funded warrants to purchase common stock and warrants to purchase common stock to an underwriter pursuant to an underwriting agreement (see discussion below). The terms of that offering triggered an adjustment to the exercise price of the Series A Warrant to $54.00 effective as of February 17, 2023.

The Company is required to measure the Series A Warrant at fair value at inception and in subsequent reporting periods with changes in fair value recognized in change in fair value of warrant liabilities in the period of change in the condensed consolidated statements of operations. The fair value of the liability related to the Series A Warrant at inception was $0.4 million. The Series A Warrant was not exercised as of September 30, 2024 and remains outstanding. The change in fair value during the three and nine months ended September 30, 2024 was immaterial.

February 2023 Pre-Funded Warrants and Common Stock Warrants

On February 17, 2023, the Company sold 90,185 shares of $0.001 par value common stock, 20,925 Pre-Funded Warrants and 222,222 Common Stock Warrants through an offering underwritten by Craig-Hallum Capital Group LLC. Each of the shares and Pre-Funded Warrants were sold in combination with an accompanying Common Stock Warrant to purchase two shares of the Company’s common stock. The combined purchase price for each share and accompanying Common Stock Warrant is $108.00, and for each

24


 

Pre-Funded Warrant and accompanying Common Stock Warrant is $107.90, which was equal to the combined purchase price for each share and accompanying Common Stock Warrant sold in the offering, minus the Pre-Funded Warrant’s exercise price per share of $0.10.

The total proceeds of $12.0 million from the February 17, 2023 offering were allocated between the common stock, Pre-Funded Warrants and Common Stock Warrants. Because the Common Stock Warrants are liability-classified, an amount of proceeds equal to the fair value of the liability were first allocated to the Common Stock Warrants. The remaining proceeds were allocated on a relative fair value basis to the common stock and the Pre-Funded Warrants and recognized in additional paid-in capital. Total issuance costs related to the offering of $1.1 million were allocated in a similar manner as the total proceeds. As a result, approximately $0.7 million of issuance costs were expensed at the issuance date and recognized as Other, net in the condensed consolidated statements of operations. The remaining issuance costs were recognized within additional paid-in-capital as a reduction to the proceeds received for the common stock and Pre-Funded Warrants.

The Pre-Funded Warrants had (i) an exercise price per share of common stock equal to $0.10 or (ii) a cashless exercise option, with the number of shares received determined according to the formula set forth in the Pre-Funded Warrant. The Pre-Funded Warrants were exercisable upon issuance and did not expire. The exercise price and the number of shares of common stock issuable upon exercise of the Pre-Funded Warrants was subject to adjustment in the event of certain stock dividends and distributions, splits, combinations, reclassifications or similar events affecting the common stock. Holders of Pre-Funded Warrants participated in any distributions to common stockholders as if the holders had exercised the Pre-Funded Warrants.

The Company determined that the Pre-Funded Warrants were indexed to the Company’s own stock and met the requirements for equity classification. Proceeds allocated to such warrants totaled $0.8 million. No Pre-Funded Warrants remain outstanding on September 30, 2024.

The Common Stock Warrants have (i) an exercise price per share of common stock equal to $108.00 per share, (ii) a cashless exercise option if, at the time of exercise, there is no effective registration statement registering or the prospectus is not available for the issuance of the warrant shares to the holder, with the number of shares received determined according to the formula set forth in the Common Stock Warrant or (iii) an alternate cashless exercise option, which became exercisable on March 15, 2023, equal to the product of (x) the aggregate number of shares of common stock that would be issuable upon a cash exercise and (y) 0.5. The Common Stock Warrants are exercisable upon issuance and expire on February 17, 2028. The exercise price and the number of shares of common stock issuable upon exercise of the Common Stock Warrants are subject to adjustment in the event of certain stock dividends and distributions, splits, combinations, reclassifications or similar events affecting the common stock. Holders of the Common Stock Warrants will participate in any distributions to common stockholders as if the holders had exercised the Common Stock Warrants. The Common Stock Warrants are redeemable upon the occurrence of a Fundamental Transaction (as defined in the Common Stock Purchase Warrant Agreement).

The Company determined that the Common Stock Warrants are not indexed to the Company’s own stock and therefore are precluded from equity classification. In addition, the Common Stock Warrant liability meets the definition of a derivative instrument. The Common Stock Warrants will be measured at fair value at inception and in subsequent reporting periods with changes in fair value recognized in income as change in fair value of warrant liabilities in the period of change in the condensed consolidated statements of operations. The fair value of the Common Stock Warrant liability at inception was $7.6 million. During the three and nine months ended September 30, 2024, no Common Stock Warrants were exercised. On September 30, 2024, 66,665 Common Stock Warrants remain outstanding. The change in fair value after issuance consisted of a reduction of expense of $0.3 million and $0.2 million during the three and nine months ended September 30, 2024, respectively. The change in fair value after issuance consisted of expense of $0.9 million and a reduction of expense of $5.0 million during the three and nine months ended September 30, 2023, respectively.

May 2024 Pre-Funded Warrants, May 2024 Common Stock Warrants and Wainwright Warrant

On May 17, 2024, the Company sold 1,700,000 shares of $0.001 par value common stock, 325,317 Pre-Funded Warrants (the "May 2024 Pre-Funded Warrants"), Series A Common Stock Warrant to purchase up to 2,025,317 shares of common stock (the “May 2024 Series A Warrant”) and Series B Common Stock Warrant to purchase up to 2,025,317 shares of common stock (the “May 2024 Series B Warrant” and together with the May 2024 Series A Warrant, the “May 2024 Common Stock Warrants”) through an offering underwritten by H.C. Wainwright & Co., LLC ("Wainwright"). The common stock, the May 2024 Pre-Funded Warrant and the May 2024 Common Stock Warrants were sold at a combined purchase price of $3.95 per share and accompanying May 2024 Common Stock Warrants or $3.949 per May 2024 Pre-Funded Warrant and accompanying May 2024 Common Stock Warrants. The exercise price of the May 2024 Pre-Funded Warrant is $0.001 per underlying share of common stock. The exercise price of the May 2024 Common Stock Warrants is $3.70 per underlying share of common stock.

The total proceeds of $8.0 million from the May 17, 2024 offering were allocated between the common stock, May 2024 Pre-Funded Warrants and May 2024 Common Stock Warrants. The proceeds were allocated on a relative fair value basis to the common

25


 

stock, May 2024 Pre-Funded Warrants, and May 2024 Common Stock Warrants and recognized in additional paid-in capital. Total issuance costs related to the offering of $1.5 million were allocated in a similar manner as the total proceeds within additional paid-in-capital as a reduction to the proceeds received.

The May 2024 Pre-Funded Warrants had (i) an exercise price per share of common stock equal to $0.001 or (ii) a cashless exercise option, with the number of shares received determined according to the formula set forth in the May 2024 Pre-Funded Warrant. The May 2024 Pre-Funded Warrants were exercisable upon issuance and did not expire. The exercise price and the number of shares of common stock issuable upon exercise of the May 2024 Pre-Funded Warrants was subject to adjustment in the event of certain stock dividends and distributions, splits, combinations, reclassifications or similar events affecting the common stock. Holders of the May 2024 Pre-Funded Warrants participated in any distributions to common stockholders as if the holders had exercised the May 2024 Pre-Funded Warrants.

The Company determined that the May 2024 Pre-Funded Warrants were indexed to the Company’s own stock and met the requirements for equity classification. Proceeds allocated to such warrants totaled $0.5 million. All May 2024 Pre-Funded Warrants were exercised in June 2024, and none remain outstanding on September 30, 2024.

The May 2024 Common Stock Warrants have (i) an exercise price per share of common stock equal to $3.70 per share and (ii) a cashless exercise option if, at the time of exercise, there is no effective registration statement registering or the prospectus is not available for the issuance of the warrant shares to the holder, with the number of shares received determined according to the formula set forth in the May 2024 Common Stock Warrant. The May 2024 Common Stock Warrants are exercisable upon issuance and the May 2024 Series A Warrants expire on November 19, 2029 and the May 2024 Series B Warrants expire on November 17, 2025. The exercise price and the number of shares of common stock issuable upon exercise of the May 2024 Common Stock Warrants are subject to adjustment in the event of certain stock dividends and distributions, splits, combinations, reclassifications or similar events affecting the common stock. Holders of the May 2024 Common Stock Warrants will participate in any distributions to common stockholders as if the holders had exercised the May 2024 Common Stock Warrants. The May 2024 Common Stock Warrants are redeemable upon the occurrence of a Fundamental Transaction (as defined in the Common Stock Purchase Warrant Agreement).

The Company determined that the May 2024 Common Stock Warrants were indexed to the Company’s own stock and met the requirements for equity classification. Proceeds allocated to such warrants totaled $5.1 million. All May 2024 Common Stock Warrants remain outstanding on September 30, 2024.

In connection with the May 2024 offering, the Company entered into an agreement with Wainwright pursuant to which the Company issued to Wainwright’s designees warrants to purchase up to 141,772 shares of common stock (the “Wainwright Warrant”). The terms of the Wainwright Warrant are substantially the same as the terms of the May 2024 Series A Warrant except that they have an exercise price of $4.9375 per share. Additionally, upon exercise, if any, of the May 2024 Common Stock Warrants for cash, the Company shall pay Wainwright a cash fee of 7.0% of the aggregate gross exercise price paid in cash with respect thereto (the "Wainwright Contingent Cash Fee"). In addition, upon any exercise for cash of the May 2024 Common Stock Warrants, the Company shall issue to Wainwright or its designees warrants to purchase the number of shares of common stock equal to 7.0% of the aggregate number of shares of common stock underlying such May 2024 Common Stock Warrants that have been exercised and such warrants will be in the same form and terms as the Wainwright Warrant (the "Wainwright Contingent Warrant").

The Company determined that the Wainwright Warrant was indexed to the Company’s own stock and met the requirements for equity classification. Proceeds allocated to such warrants totaled $0.7 million. All Wainwright Warrants remain outstanding on September 30, 2024. The Company determined that the cash fees and deductions from gross proceeds and the Wainwright Warrant represented issuance costs incurred to facilitate the offering and, as such, were allocated to the common stock, May 2024 Pre-Funded Warrants, and May 2024 Common Stock Warrants as a reduction of proceeds. The Company determined that the Wainwright Contingent Cash Fee was a loss contingency that is not probable as of September 30, 2024 (see Note 14). The Company determined that the Wainwright Contingent Warrant was equity compensation with a performance condition that is not probable of being achieved as of September 30, 2024 (see Note 10).

The Company has also issued certain warrants in conjunction with its Term Loan Agreement. See Note 6.

9. Stockholders’ Deficit

Preferred Stock

The Company has authorized the issuance of up to 10,000,000 shares of $0.001 par value preferred stock. The Board of Directors will determine the preferred stock’s rights, preferences, privileges, restrictions, voting rights, dividend rights, conversion rights, redemption privileges, and liquidation preferences.

26


 

Common Stock

The Company has authorized the issuance of 400,000,000 shares of $0.001 par value common stock. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors, subject to the prior rights of holders of all classes of stock outstanding. As of September 30, 2024, a total of 1,440 shares, 8,122 shares, and 4,543,261 shares of common stock were reserved for issuance upon (i) the exercise of outstanding stock options, (ii) the issuance of stock awards, and (iii) the exercise of warrants, respectively, under the Company's 2014 Incentive Award Plan, Inducement Award Plan and 2014 Employee Stock Purchase Plan.

Equity Distribution Agreement

On March 31, 2021, the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Canaccord Genuity LLC (“Canaccord”), through which the Company may sell up to $75.0 million of gross proceeds of common stock. In July 2023, the Company filed an amendment to the prospectus supplement relating to the offer and sale of shares under the Equity Distribution Agreement to increase the maximum amount of shares that the Company may sell pursuant to its Equity Distribution Agreement with Canaccord by $65 million. At the time of the amendment, the Company had sold shares of its common stock for gross proceeds of $71.3 million under the Equity Distribution Agreement.

Canaccord, as agent, sold shares at the Company’s request through “at the market” offerings, subject to shelf limitations, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, or by any other method permitted by law, including negotiated transactions. Canaccord received a fee of 3% of gross proceeds of common stock sold under the Equity Distribution Agreement for its services. Legal and accounting fees from sales under the Equity Distribution Agreement are charged to share capital. Under the Equity Distribution Agreement, the Company sold no shares of common stock during the three months ended September 30, 2024 and 1,015,385 shares of common stock during the three months ended September 30, 2023 for net proceeds of $21.7 million. Under the Equity Distribution Agreement, the Company sold 628,470 shares of common stock during the nine months ended September 30, 2024 for net proceeds of $2.2 million, and 3,167,968 shares of common stock during the nine months ended September 30, 2023 for net proceeds of $41.0 million.

On July 19, 2024, the Equity Distribution Agreement with Canaccord was terminated pursuant to the terms therein. The Company is not subject to any termination penalties related to the termination of the Equity Distribution Agreement.

Wainwright Equity Distribution Agreement

On July 19, 2024, the Company entered into an Equity Distribution Agreement (the "Wainwright Equity Distribution Agreement”) with Wainwright, pursuant to which the Company may offer and sell shares of common stock, for aggregate gross sale proceeds of up to $14.7 million from time to time from the effective date of the respective registration statement through Wainwright. In August 2024, the Company filed a prospectus supplement relating to the offer and sale of shares under the Wainwright Equity Distribution Agreement to increase the maximum amount of shares that the Company may sell pursuant to the Wainwright Equity Distribution Agreement by $13.4 million. At the time of the prospectus supplement, the Company had sold shares of its common stock for gross proceeds of $2.8 million under the Wainwright Equity Distribution Agreement.

We pay Wainwright for its services of acting as agent 3% of the gross proceeds from the sale of the shares pursuant to the Wainwright Equity Distribution Agreement. Legal and accounting fees are reclassified to share capital upon issuance of shares under the Wainwright Equity Distribution Agreement. Under the Wainwright Equity Distribution Agreement, the Company sold 1,365,710 shares during the three and nine months ended September 30, 2024 for net proceeds of $4.1 million.

10. Stock-Based Compensation

Stock Incentive Plans

2006 Stock Incentive Plan

The Company’s Amended and Restated 2006 Employee, Director and Consultant Stock Plan (the “2006 Plan”) was established for granting stock incentive awards to directors, officers, employees and consultants of the Company. Upon closing of the Company’s IPO in August 2014, the Company ceased granting stock incentive awards under the 2006 Plan. The 2006 Plan provided for the grant of incentive and non-qualified stock options and restricted stock grants as determined by the Company’s Board of Directors. Under the 2006 Plan, stock options were generally granted with exercise prices equal to or greater than the fair value of the common stock as determined by the Board of Directors, expired no later than 10 years from the date of grant, and vest over various periods not exceeding 4 years.

27


 

2014 Stock Incentive Plan

The Company’s 2014 Incentive Award Plan (the “2014 Plan,” and together with the 2006 Plan, the “Stock Incentive Plans”), which was amended and restated in October 2023, provides for the issuance of shares of common stock in the form of stock options, awards of restricted stock, awards of restricted stock units, performance awards, dividend equivalent awards, stock payment awards and stock appreciation rights to directors, officers, employees and consultants of the Company. Since the establishment of the 2014 Plan, the Company has primarily granted stock options and restricted stock units. Generally, stock options are granted with exercise prices equal to or greater than the fair value of the common stock on the date of grant, expire no later than 10 years from the date of grant, and vest over various periods not exceeding 4 years.

The number of shares reserved for future issuance under the 2014 Plan is the sum of (1) 823,529 shares, (2) any shares that were granted under the 2006 Plan which are forfeited, lapse unexercised or are settled in cash subsequent to the effective date of the 2014 Plan and (3) an annual increase on the first day of each calendar year, beginning January 1, 2015 and ending on and including January 1, 2026, equal to the lesser of (A) 4% of the shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (B) such smaller number of shares determined by the Company’s Board of Directors; provided, however, no more than 35 million shares may be issued upon the exercise of incentive stock options. As of September 30, 2024, there were 981,831 shares available for future grant under the 2014 Plan.

Inducement Award Plan

The Company’s Inducement Award Plan (the “Inducement Plan”), which was adopted in March 2018 without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq listing rules (“Rule 5635(c)(4)”) and most recently amended and restated in February 2023, provides for the grant of equity awards to new employees, including options, restricted stock awards, restricted stock units, performance awards, dividend equivalent awards, stock payment awards and stock appreciation rights. In accordance with Rule 5635(c)(4), awards under the Inducement Plan may only be made to a newly hired employee who has not previously been a member of the Company’s Board of Directors, or an employee who is being rehired following a bona fide period of non-employment by us as a material inducement to the employee’s entering into employment with us. The aggregate number of shares of common stock which may be issued or transferred pursuant to awards under the Inducement Plan is 6,925 shares. Any awards that forfeit, expire, lapse, or are settled for cash without the delivery of shares to the holder are available for the grant of an award under the Inducement Plan. Any shares repurchased by or surrendered to the Company that are returned shall be available for the grant of an award under the Inducement Plan. The payment of dividend equivalents in cash in conjunction with any outstanding award shall not be counted against the shares available for issuance under the Inducement Plan. As of September 30, 2024, there were 5,085 shares available for future grant under the Inducement Plan.

Stock Options

There were no stock options granted in the nine months ended September 30, 2024. The aggregate fair value of stock options granted during the nine months ended September 30, 2023 was immaterial and is being amortized into compensation expense over the vesting period of the options as the services are being provided.

The following is a summary of option activity under the Stock Incentive Plans and Inducement Plan (in thousands, except term, share and per share amounts):

 

 

 

Number of
Shares

 

 

Weighted-Average
Exercise Price Per
Share

 

 

Weighted-Average
Remaining
Contractual Term
(In years)

 

 

Aggregate Intrinsic
Value

 

Outstanding on December 31, 2023

 

 

1,573

 

 

$

12,371.09

 

 

 

6.08

 

 

$

 

Granted

 

 

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(39

)

 

 

1,403.14

 

 

 

 

 

 

 

Cancelled

 

 

(94

)

 

 

26,897.98

 

 

 

 

 

 

 

Outstanding on September 30, 2024

 

 

1,440

 

 

$

11,719.85

 

 

 

5.44

 

 

$

 

Exercisable on September 30, 2024

 

 

1,240

 

 

$

13,476.99

 

 

 

4.95

 

 

$

 

Vested or expected to vest on September 30, 2024

 

 

1,396

 

 

$

12,071.65

 

 

 

5.34

 

 

$

 

 

28


 

There were no options exercised in the nine months ended September 30, 2024 and 2023. There were no stock options granted in the nine months ended September 30, 2024. The weighted-average grant date fair values of stock options granted in the nine months ended September 30, 2023 was $26.30 per share and were calculated using the following estimated assumptions:

 

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

Weighted-average risk-free interest rate

 

 

 

 

 

3.88

%

Expected dividend yield

 

 

 

 

 

%

Expected volatility

 

 

 

 

 

118

%

Expected terms

 

 

 

 

6.0 years

 

 

The total fair values of stock options that vested during the nine months ended September 30, 2024 and 2023 were $0.2 million and $0.8 million, respectively.

As of September 30, 2024, there was $0.1 million of total unrecognized compensation cost related to non-vested stock options granted under the Stock Incentive Plans and Inducement Plan. Total unrecognized compensation cost will be adjusted for future changes in the estimated forfeiture rate. The Company expects to recognize that cost over a remaining weighted-average period of 0.9 years as of September 30, 2024.

Wainwright Contingent Warrant

In connection with the May 2024 offering, the Company entered into an agreement with Wainwright pursuant to which, upon any exercise for cash of the May 2024 Common Stock Warrants, the Company shall issue to Wainwright or its designees warrants to purchase the number of shares of common stock equal to 7.0% of the aggregate number of shares of common stock underlying such May 2024 Common Stock Warrants that have been exercised and will be in the same form and terms as the Wainwright Warrant. The Wainwright Contingent Warrant has an exercise price of $4.9375 per share and the maximum amount of common stock issuable under the Wainwright Contingent Warrant is 283,544 shares. The Company determined that the Wainwright Contingent Warrant was equity compensation with a performance condition that is not probable of being achieved as of September 30, 2024.

The following is a summary of Wainwright Contingent Warrant activity (in thousands, except term, share and per share amounts):

 

 

 

Number of
Shares

 

 

Weighted-Average
Exercise Price Per
Share

 

 

Weighted-Average
Remaining
Contractual Term
(In years)

 

 

Aggregate Intrinsic
Value

 

Outstanding on December 31, 2023

 

 

 

 

$

 

 

 

 

 

$

 

Granted

 

 

283,544

 

 

 

4.9375

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

 

 

 

 

 

Cancelled

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding on September 30, 2024

 

 

283,544

 

 

$

4.9375

 

 

 

5.14

 

 

$

 

Exercisable on September 30, 2024

 

 

 

 

$

 

 

 

 

 

$

 

Vested or expected to vest on September 30, 2024

 

 

 

 

$

 

 

 

 

 

$

 

Restricted Stock Units

During the nine months ended September 30, 2024, the Company awarded restricted stock units to certain employees and directors at no cost to them. The restricted stock units, excluding any restricted stock units with market conditions, vest through the passage of time, assuming continued service. Restricted stock units are not included in issued and outstanding common stock until the underlying shares are vested and released. The fair value of the restricted stock units, at the time of the grant, is expensed on a straight-line basis. The granted restricted stock units had an aggregate fair value of less than $0.1 million, which are being amortized into compensation expense over the vesting period of the restricted stock units as the services are being provided.

29


 

The following is a summary of restricted stock unit activity under the 2014 Plan and Inducement Plan:

 

 

 

Number of
Shares

 

 

Weighted-Average
Grant Date Fair
Value Per Share

 

Nonvested on December 31, 2023

 

 

3,691

 

 

$

1,202.65

 

Granted

 

 

6,369

 

 

 

6.28

 

Vested

 

 

(1,682

)

 

 

2,005.48

 

Forfeited

 

 

(256

)

 

 

182.33

 

Nonvested on September 30, 2024

 

 

8,122

 

 

$

129.26

 

 

As of September 30, 2024, there was $0.6 million of total unrecognized compensation cost related to nonvested restricted stock units granted. Total unrecognized compensation cost will be adjusted for future changes in the estimated forfeiture rate. The Company expects to recognize that cost over a remaining weighted-average period of 0.4 years as of September 30, 2024.

Employee Stock Purchase Plan

Under the 2014 Employee Stock Purchase Plan (the “2014 ESPP”) participants may purchase the Company’s common stock during semi-annual offering periods at 85% of the lower of (i) the market value per share of common stock on the first day of the offering period or (ii) the market value per share of the common stock on the purchase date. Each participant can purchase up to a maximum of $25,000 per calendar year in fair market value as calculated in accordance with applicable tax rules. The first offering period began on August 7, 2014. Stock-based compensation expense from the 2014 ESPP was immaterial for both the three months ended September 30, 2024 and 2023. Stock-based compensation expense from the 2014 ESPP was immaterial for both the nine months ended September 30, 2024 and 2023.

The 2014 ESPP, which was amended and restated effective October 2023, provides for the issuance of up to 400,000 shares of the Company’s common stock to eligible employees. On September 30, 2024, there were 391,630 shares available for issuance under the 2014 ESPP.

Stock-Based Compensation Expense

The following table summarizes the stock-based compensation expense resulting from awards granted under Stock Incentive Plans, the Inducement Plan and the 2014 ESPP, that was recorded in the Company’s results of operations for the periods presented (in thousands):

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Cost of product revenue

 

$

13

 

 

$

5

 

 

$

76

 

 

$

120

 

Research and development

 

 

22

 

 

 

110

 

 

 

297

 

 

 

512

 

Selling, general and administrative

 

 

180

 

 

 

760

 

 

 

1,646

 

 

 

2,989

 

Total stock-based compensation expense

 

$

215

 

 

$

875

 

 

$

2,019

 

 

$

3,621

 

 

For the three and nine months ended September 30, 2024 and 2023, stock-based compensation expense capitalized as part of inventory or T2-owned instruments and components was immaterial.

11. Net Loss Per Share

The Company applies the two-class method for computing earnings per share because its Series A Warrants, Pre-Funded Warrants and Common Stock Warrants, and May 2024 Pre-Funded Warrants and Common Stock Warrants are participating securities. Because the Company incurred a net loss for the three and nine months ended September 30, 2024 and 2023, and the holders of the participating securities do not have the contractual obligation to share in the losses of the Company, none of the net loss attributable to common stockholders was allocated to the participating securities when computing earnings per share. The basic and diluted net loss per share calculation includes the Series B Convertible Preferred Shares and Series A Convertible Preferred Shares, on an if-converted basis, given that these instruments have essentially the same economic rights and privileges as the currently outstanding common stock.

The Pre-Funded Warrants allowed the holders to acquire a specified number of common shares at a nominal exercise price of $0.10 per share and were classified as equity. Since the shares underlying the Pre-Funded Warrants were exercisable for little or no consideration, the underlying shares were considered outstanding at the issuance of the Pre-Funded Warrants for purposes of calculating

30


 

the weighted-average number of shares of common stock outstanding in basic and diluted earnings per share for common stock. At September 30, 2024, none of the Pre-Funded Warrants were outstanding.

The May 2024 Pre-Funded Warrants allowed the holders to acquire a specified number of common shares at a nominal exercise price of $0.001 per share and were classified as equity. Since the shares underlying the May 2024 Pre-Funded Warrants were exercisable for little or no consideration, the underlying shares were considered outstanding at the issuance of the May 2024 Pre-Funded Warrants for purposes of calculating the weighted-average number of shares of common stock outstanding in basic and diluted earnings per share for common stock. At September 30, 2024, none of the May 2024 Pre-Funded Warrants were outstanding.

The following shares were excluded from the calculation of diluted net loss per share applicable to common stockholders, prior to the application of the treasury stock or if-converted methods, because their effect would have been anti-dilutive for the periods presented:

 

 

 

For the Three and Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

Options to purchase common shares

 

 

1,440

 

 

 

1,573

 

Restricted stock units

 

 

8,122

 

 

 

3,545

 

Term Loan Warrants

 

 

218

 

 

 

218

 

Series A Warrant

 

 

428

 

 

 

428

 

Common Stock Warrants

 

 

66,665

 

 

 

66,665

 

May 2024 Common Stock Warrants

 

 

4,050,634

 

 

 

 

Wainwright Warrant

 

 

141,772

 

 

 

 

Wainwright Contingent Warrant

 

 

283,544

 

 

 

 

Total

 

 

4,552,823

 

 

 

72,429

 

 

Note that all net loss per share computations for all periods presented reflect the changes in the number of shares resulting from the 1-for-100 reverse stock split that was approved by shareholders on September 15, 2023 and became effective as of October 12, 2023.

12. U.S. Government Contract

In September 2019, BARDA awarded the Company a milestone-based product development contract, with an initial value of $6.0 million, and a potential value of up to $69.0 million, which was amended with Option 3 to $62.0 million due to a change in scope, if BARDA exercises all contract options (the “U.S. Government Contract”). BARDA operates within the Office of the Assistant Secretary for Preparedness and Response (“ASPR”) at the U.S. Department of Health and Human Services (“HHS”). If BARDA exercises and the Company completes all options, the Company’s management believes it will enable a significant expansion of the Company’s current portfolio of diagnostics for sepsis-causing pathogen and antibiotic resistance genes. In September 2020, BARDA exercised the first contract option valued at $10.5 million. In September 2021, BARDA exercised an option valued at approximately $6.4 million.

In April 2021, BARDA agreed to accelerate product development by modifying the contract to advance future deliverables into the currently funded Option 1 of the BARDA contract for the T2Biothreat Panel and the T2Resistance Panel. The modification did not change the overall total potential value of the BARDA contract.

On March 31, 2022, the Company announced that BARDA had exercised Option 2B under the existing multiple-year cost-share contract between BARDA and the Company and provided an additional $4.4 million in funding to the Company.

The option exercise occurred simultaneously on March 31, 2022 with a modification to the BARDA contract to make immaterial changes to, among other things, the statement of work.

In September 2022, BARDA exercised Option 3 and agreed to provide an additional $3.7 million in funding for the multiple-year cost-share contract. The additional funding under Option 3 was used to advance the U.S. clinical trials for the T2Biothreat Panel and T2Resistance Panel, and to file submissions to the FDA for U.S. regulatory clearance.

The Company recorded no contribution revenue for the three months ended September 30, 2024 and 2023 under the BARDA contract. The Company recorded no contribution revenue for the nine months ended September 30, 2024 and $0.4 million of contribution revenue for the nine months ended September 30, 2023 under the BARDA contract.

The Company had no outstanding accounts receivable on September 30, 2024 and December 31, 2023 under the BARDA contract.

31


 

The BARDA contract expired in September 2023.

13. Leases

Operating Leases

The Company leases certain office space, laboratory space and equipment. At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. The Company does not recognize right-of-use assets or lease liabilities for leases determined to have a term of 12 months or less. The Company has elected to account for the lease and associated non-lease components as a combined lease component.

In August 2010, the Company entered into an operating lease for office and laboratory space at its headquarters in Lexington, Massachusetts. The lease commenced in January 2011, with the Company providing a security deposit of $400,000. In accordance with the operating lease agreement, the Company reduced its security deposit to $160,000 in January 2018, which is recorded as restricted cash in the condensed consolidated balance sheets. In March 2017, the Company entered into an amendment to extend the term to December 2021. In October 2020, the Company entered into an amendment to extend the term to December 31, 2028. In accordance with the October 2020 amendment, the Company increased its security deposit to $420,438, which is classified as restricted cash on September 30, 2024 and December 31, 2023.

In May 2013, the Company entered into an operating lease for additional office, laboratory and manufacturing space in Wilmington, Massachusetts. In August 2018, the Company entered into an amendment to extend the term to December 2020. In October 2020, the Company entered into an amendment to extend the term to December 31, 2022. In September 2022, the Company entered into an amendment to extend the term to December 31, 2024.

In November 2014, the Company entered into a lease for additional laboratory space in Lexington, Massachusetts. The lease term commenced in April 2015 and extended for six years. The rent expense, inclusive of the escalating rent payments, is recognized on a straight-line basis over the lease term. As an incentive to enter into the lease, the landlord paid approximately $1.4 million of the $2.2 million space build-out costs. The unamortized balance of the lease incentive as of January 1, 2019 was reclassified as a reduction to the initial recognition of the right-of-use asset related to this lease. In connection with this lease agreement, the Company paid a security deposit of $281,000, which was recorded as a component of both prepaid expenses and other current assets and other assets in the condensed consolidated balance sheets on December 31, 2019. In October 2020, the Company entered into an amendment to extend the term of the lease to October 31, 2025. In accordance with this amendment, the Company paid a replacement security deposit of $130,977, which is classified as restricted cash on September 30, 2024 and December 31, 2023 and received the initial $281,000 security deposit in return.

In September 2021, the Company entered into a lease for office, research, laboratory and manufacturing space in Billerica, Massachusetts. The lease had a term of 126 months from the commencement date. The Company opened a money market account for $1.0 million, which represented collateral as a security deposit for this lease and was classified as restricted cash on December 31, 2022. Occupancy of the building had been delayed due to disagreement between the Company and the landlord as to the parties’ obligations under the lease agreement. Included within accrued expenses and other current liabilities on the balance sheet on December 31, 2022 was a $1.0 million estimated liability pertaining to this lease. In January 2023, the Company was notified that the landlord terminated the lease because of the Company’s alleged failure to perform its obligations under the Lease in a timely manner and the Company’s alleged breach of the covenant of good faith and fair dealing and exercised its right to draw upon the $1.0 million security deposit. In addition, the landlord is seeking damages for unpaid rent, brokerage fees, transaction costs, attorney’s fees and court costs. The Company filed a response to the landlord’s complaint and a counterclaim alleging that the landlord breached its obligations under the contract and unlawfully drew on the security deposit, in addition to breaching its covenants of good faith and fair dealing, making fraudulent misrepresentations, and engaging in deceptive and unfair trade practices. The matter is in dispute (Note 14). The Company intends to pursue legal remedies available under applicable laws. The Company believes it will continue to meet its current manufacturing needs with its operations at its Lexington and Wilmington, Massachusetts facilities.

Operating leases are amortized over the lease term and included in costs and expenses in the condensed consolidated statement of operations. Variable lease costs are recognized in costs and expenses in the condensed consolidated statement of operations as incurred. Variable lease costs may include costs such as common area maintenance, utilities, real estate taxes or other costs. Expenses related to short-term leases were not material for the periods presented.

32


 

14. Commitments and Contingencies

Contingencies

In September 2021, the Company entered into a lease for office, research, laboratory and manufacturing space in Billerica, Massachusetts. The lease had a term of 126 months from the commencement date. The Company opened a money market account for $1.0 million, which represented collateral as a security deposit for this lease and was classified as restricted cash on December 31, 2022. Occupancy of the building had been delayed due to disagreement between the Company and the landlord as to the parties’ obligations under the lease agreement. Included within accrued expenses and other current liabilities on the balance sheet on December 31, 2022 was a $1.0 million estimated liability pertaining to this lease. In January 2023, the Company was notified that the landlord terminated the lease because of the Company’s alleged failure to perform its obligations under the Lease in a timely manner and the Company’s alleged breach of the covenant of good faith and fair dealing and exercised its right to draw upon the $1.0 million security deposit. In addition, the landlord is seeking damages for unpaid rent, brokerage fees, transaction costs, attorney’s fees and court costs. The Company filed a response to the landlord’s complaint and a counterclaim alleging that the landlord breached its obligations under the contract and unlawfully drew on the security deposit, in addition to breaching its covenants of good faith and fair dealing, making fraudulent misrepresentations, and engaging in deceptive and unfair trade practices. The Company intends to pursue legal remedies available under applicable laws. The Company believes it will continue to meet its current manufacturing needs with its operations at its Lexington and Wilmington, Massachusetts facilities.

In connection with the May 2024 offering, the Company entered into an agreement with Wainwright pursuant to which, upon exercise, if any, of the May 2024 Common Stock Warrants for cash, the Company shall pay Wainwright a cash fee of 7.0% of the aggregate gross exercise price paid in cash with respect thereto. None of the May 2024 Common Stock Warrants have been exercised as of September 30, 2024. The Company determined that the Wainwright Contingent Cash Fee was a loss contingency that is not probable as of September 30, 2024. The maximum potential cash payout of the Wainwright Contingent Cash Fee is approximately $1.0 million.

License Agreement

In 2006, the Company entered into a license agreement with a third party, pursuant to which the third party granted the Company an exclusive, worldwide, sublicensable license under certain patent rights to make, use, import and commercialize products and processes for diagnostic, industrial and research and development purposes. The Company agreed to pay an annual license fee ranging from $5,000 to $25,000 for the royalty-bearing license to certain patents. The Company also issued a total of 16 shares of common stock pursuant to the agreement in 2006 and 2007, which were recorded at fair value at the date of issuance. The Company is required to pay royalties on net sales of products and processes that are covered by patent rights licensed under the agreement at a percentage ranging between 0.5% - 3.5%, subject to reductions and offsets in certain circumstances, as well as a royalty on net sales of products that the Company sublicenses at 10% of specified gross revenue. Royalties that became due under this agreement for the three and nine months ended September 30, 2024 and 2023 were less than $0.1 million.

Letter Agreements

On March 31, 2024, the Company entered into letter agreements with Mr. Sprague and Mr. Gibbs that provide for the payment of a retention bonus in the total aggregate amount of $80,000, to be paid in two installments of $40,000. The first installment, in the amount of $40,000, was paid in June 2024, and the second installment, in the amount of $40,000, was to be paid within five business days following November 15, 2024. On November 13, 2024, the letter agreements were amended so that the second installment, in the amount of $40,000, shall now be paid within five business days following December 31, 2024. Each such installment payment is subject to the applicable executive's continued employment through such payment date.

On March 30, 2023, the Company entered into agreements with Mr. Sprague, Mr. Giffin, and Mr. Gibbs that provide for the payment of retention bonuses, subject to the respective executive’s continued employment through such payment dates, of $80,000 each, to be paid in two installments of $40,000. The first installment, of $40,000 each, was paid in July 2023, and the second installment, of $40,000 each, was paid in November 2023.

15. Subsequent Events

On November 7, 2024, the Company received a letter from Nasdaq indicating that the Company’s market value of its listed securities has been below the minimum $35 million required for continued listing on the Nasdaq Capital Market, as set forth in Listing Rule 5550(b)(2) for the previous 30 consecutive trading days. In accordance with the terms of the previously imposed “Mandatory Panel Monitor” as that term is defined in Nasdaq Listing Rule 5815(d)(4)(B), the Nasdaq Listing Qualifications Staff did not grant the Company a grace period but rather issued a delist determination, which will be stayed if the Company exercises its right to appeal the determination by requesting a hearing and paying a non-refundable $20,000 fee. Subsequently, the Company paid the non-refundable $20,000 fee and plans to request a hearing, which will stay any further action by Nasdaq at least pending the issuance of the Nasdaq

33


 

Hearings Panel’s decision and the expiration of any extension that may be granted by the Nasdaq Hearings Panel to the Company as a result of the hearing. The Company’s common stock will remain listed and eligible to trade on Nasdaq pending the outcome of the hearing. There can be no assurance, however, that the Nasdaq Hearings Panel will grant the Company’s request for continued listing or that the Company will evidence compliance with all applicable listing criteria prior to the expiration of any extension that may be granted by the Panel to do so.

Wainwright Equity Distribution Agreement

Subsequent to September 30, 2024, the Company sold 2,886,496 shares of common stock for net proceeds of $3.3 million under the Wainwright Equity Distribution Agreement.

Wilmington Operating Lease

In October 2024, the Company entered into an amendment to extend the term of its Wilmington, Massachusetts operating lease to December 31, 2025.

Amendments to Letter Agreements

On November 13, 2024, the March 2024 letter agreements with Mr. Sprague and Mr. Gibbs were amended so that the second installment, in the amount of $40,000 each, shall now be paid within five business days following December 31, 2024.

34


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding our future results of operations and financial position, business strategy, prospective products and product candidates, their expected performance and impact on healthcare costs, marketing clearance from the U.S. Food and Drug Administration (“FDA”), reimbursement for our product candidates, research and development costs, timing of regulatory filings, timing and likelihood of success, plans and objectives of management for future operations, availability of raw materials and components for our products, availability of funding for such operations and future results of anticipated products, are forward-looking statements. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements are subject to numerous risks, including, without limitation, the following:

the substantial doubt about our ability to continue as a going concern and the potential for us to suspend operations, sell assets or seek protection by filing a voluntary petition for bankruptcy relief if we are unable to arrange financing in the near term;
our ability to maintain compliance with Nasdaq listing requirements;
our expectation that we will incur losses in the future and be unable to utilize limited net operating losses against future profitability, if any;
compliance with the terms of our debt instruments;
our future capital needs and our ability to raise additional funds;
the impact of litigation, including our ability to adequately resolve current legal claims;
our status as an early-stage commercial company;
the market acceptance of our technology;
our ability to timely and successfully develop and commercialize our existing products and future product candidates;
the length and variability of our anticipated sales and adoption cycle;
our ability to gain the support of hospitals and key thought leaders and publish the results of our clinical studies in peer-reviewed journals;
our ability to successfully manage our growth;
fluctuations in demand for, and prices of, raw materials and other supplies;
our ability to recruit, train and retain key personnel;
the performance of our diagnostics;
our ability to compete in the highly competitive diagnostics market;
manufacturing and other product risks, including unforeseen interruptions in the manufacturing of our products and backlogs in order fulfillment;
our dependence on third parties;
the impact of cybersecurity risks, including ransomware, phishing, and data breaches on our information technology systems;
our ability to obtain marketing clearance from the U.S. Food and Drug Administration or regulatory clearance or certifications for new product candidates in other jurisdictions, including IVDR in the European Union;

35


 

federal, state, and foreign regulatory requirements, including diagnostic product reimbursements and FDA regulation of our products and product candidates;
our ability to protect and enforce our intellectual property rights, including our trade secret-protected proprietary rights in our technology;
an active trading market for our common stock;
volatility of our stock price which may be impacted by shortsellers and day traders; and
our ability to maintain an effective system of internal control over financial reporting.

These forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q. Unless required by U.S. federal securities laws, we do not intend to update any of these forward-looking statements to reflect circumstances or events that occur after the statement is made or to conform these statements to actual results. The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q, and Part I, Item 1A "Risk Factors" and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, as updated by Part II, Item 1A—“Risk Factors” in this Quarterly Report on Form 10-Q.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Business Overview

Overview

We are an in vitro diagnostics company and leader in the rapid detection of sepsis-causing pathogens and antibiotic resistance genes. Our technology enables rapid detection of pathogens, biomarkers and other abnormalities in a variety of unpurified patient sample types, including whole blood, plasma, serum, saliva, sputum and urine, and can detect cellular targets at limits of detection as low as one colony forming unit per milliliter, or CFU/mL. We are currently targeting what we believe to be a range of critically underserved healthcare conditions, focusing initially on those for which rapid detection may enable faster targeted antimicrobial treatment, improve patient outcomes, and reduce cost. Our current focus includes three areas – sepsis, bioterrorism, and Lyme disease – which we believe collectively represent a multi-billion dollar market opportunity.

Our primary commercial products include the T2Dx® Instrument, the T2Bacteria® Panel, the T2Candida® Panel, the T2Resistance® Panel, and the T2Biothreat™ Panel. Our sepsis products – including the T2Dx Instrument, the T2Bacteria Panel, and the T2Candida Panel – are FDA-cleared products able to detect sepsis-causing pathogens directly from blood. Where traditional diagnostics like blood cultures and post-culture diagnostics may take days to produce results, our products are designed to detect these pathogens in three to five hours. We believe our products provide a significant and sustainable competitive advantage compared to other products in our markets.

We have never been profitable and have incurred net losses in each year since inception. Our accumulated deficit on September 30, 2024 was $616.9 million and we have experienced cash outflows from operating activities since inception. Substantially all of our net losses resulted from costs incurred in connection with our research and development programs, from selling, general and administrative costs associated with our operations, and costs of product revenue. We have incurred significant commercialization expenses related to product sales, marketing, manufacturing and distribution of our FDA-cleared products, the T2Dx Instrument, T2Candida Panel, T2Bacteria Panel, and T2Biothreat Panel. In addition, we will continue to incur significant costs and expenses as we continue to develop other product candidates, improve existing products and maintain, expand and protect our intellectual property portfolio. We may seek to fund our operations through public equity or private equity or debt financings, as well as other sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements if and when needed would have a negative impact on our business, results of operations and financial condition and our ability to develop, commercialize and drive adoption of the T2Dx Instrument and the T2Candida, T2Bacteria, T2Resistance, and T2Biothreat Panels and future products.

36


 

We are subject to a number of risks similar to other early commercial stage life science companies, including, but not limited to commercially launching our products, development and market acceptance of our product candidates, development by our competitors of new technological innovations, protection of proprietary technology, and raising additional capital.

We believe that our cash and cash equivalents of $2.1 million on September 30, 2024 will not be sufficient to fund our current operating plan unless additional funds are raised during the fourth quarter of 2024. Certain elements of our operating plan cannot be considered probable, and in order to support our business we initiated a process to explore a range of strategic alternatives focused on maximizing value.

As part of our strategic restructuring program, we initiated a workforce reduction of nearly 30% in May 2023. Additionally, we are continuing to explore alternative strategic options, including an acquisition, merger, reverse merger, other business combination, sale of assets or licensing. We have also converted an aggregate of $30.0 million of outstanding principal under the Term Loan Agreement in exchange for equity in 2024, reducing total debt to CRG by approximately 80% percent from May 2023 amounts.

The Term Loan Agreement with CRG (See Note 6 of the notes to our condensed consolidated financial statements) has a minimum liquidity covenant which initially required us to maintain a minimum cash balance of $5.0 million. In May 2023, CRG reduced the minimum liquidity covenant under the Term Loan Agreement from $5.0 million to $500,000 until December 31, 2023. In July 2023, April 2024, and May 2024, the Company converted $10.0 million, $15.0 million, and $15.0 million, respectively, of the outstanding debt with CRG to equity. In October 2023, the Term Loan Agreement was amended to extend both the interest-only period and the maturity date by one year from December 30, 2024 to December 31, 2025, and permanently reduce the minimum liquidity covenant from $5.0 million to $500,000.

In September 2023, the Company’s milestone-based product development contract with BARDA expired, which may impact the Company’s ability to continue to fund the development of its next-generation products.

These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of 12 months after the date that these financial statements are issued. Management’s plans to alleviate the conditions that raise substantial doubt include raising additional funding, delaying certain research projects and capital expenditures and eliminating certain future operating expenses in order to fund operations at reduced levels for us to continue as a going concern for a period of 12 months from the date these financial statements are issued. Management has concluded the likelihood that its plan to successfully obtain sufficient funding from one or more of these sources or adequately reduce expenditures, while reasonably possible, is less than probable. Accordingly, we have concluded that substantial doubt exists about our ability to continue as a going concern for a period of at least 12 months from the date of issuance of these financial statements. See Part II, Item 1A—“Risk Factors” in this Quarterly Report on Form 10-Q.

Product History

In September 2014, we received marketing authorization from the United States Food and Drug Administration, or FDA, for our first two products, the T2Dx Instrument and the T2Candida Panel, or T2Candida. T2Candida, which runs on the T2Dx Instrument, has the ability to rapidly identify the five most clinically relevant species of Candida, a fungal pathogen known to cause sepsis, directly from blood specimens. The T2Dx Instrument and T2Candida were CE marked in the European Union, or the EU, in July 2014.

In May 2018, we received market clearance from the FDA for the T2Bacteria Panel, or T2Bacteria, which runs on the T2Dx Instrument and has the ability to rapidly identify six of the most common and deadly sepsis-causing bacteria directly from blood specimens. T2Bacteria was CE marked in the EU in June 2017.

In February 2019, our T2Resistance Panel, or T2Resistance, was granted FDA Breakthrough Device designation and, in November 2019, was CE marked in the EU. In December 2021, we initiated a U.S. clinical trial for T2Resistance. The clinical trial is expected to be completed in 2024, and we believe the data from this trial may enable submission of a marketing application to the FDA in Q1 2025.

In September 2019, the Biomedical Advanced Research and Development Authority, or BARDA, an office of the U.S. Department of Health and Human Services, or HHS, awarded us a milestone-based contract for the development of a next-generation diagnostic instrument, a comprehensive sepsis panel and a multi-target biothreat panel. In September 2020, BARDA exercised the first contract option valued at $10.5 million. In April 2021, BARDA agreed to modify the contract to accelerate product development by advancing future deliverables and adding a U.S. T2Resistance Panel into Option 1 of the contract. In September 2021, BARDA exercised Option 2A valued at approximately $6.4 million to further advance the new product development initiatives. In December 2021, we initiated the U.S. clinical trials for T2Resistance and the T2Biothreat Panel, or T2Biothreat. In March 2022, BARDA exercised Option 2B valued at approximately $4.4 million. In May 2022, BARDA exercised Option 3 valued at approximately $3.7 million to complete the U.S. clinical trials for T2Resistance and T2Biothreat and subsequently submit applications to the FDA for U.S. regulatory clearance for those product candidates. In December 2022 the T2Biothreat clinical evaluation was completed. In May 2023, we submitted a 510(k)

37


 

premarket notification to the FDA for T2Biothreat and in September 2023, we received 510(k) clearance from the FDA to market T2Biothreat. The BARDA contract expired in September 2023.

In June 2020, we launched a COVID-19 molecular diagnostic test, the T2SARS-CoV-2 Panel, or T2SARS-CoV-2, after validation of the test pursuant to the FDA’s policy permitting COVID-19 tests to be marketed prior to receipt of an Emergency Use Authorization, or EUA, subject to certain prerequisites. In August 2020, the FDA granted an EUA to T2SARS-CoV-2 for the qualitative direct detection of nucleic acid from SARS-CoV-2 in upper respiratory specimens and bronchoalveolar lavage specimens from individuals suspected of COVID-19 by their healthcare provider. We marketed and sold T2SARS-CoV-2 between 2020 and 2023, with peak sales occurring during 2021. In 2023, we experienced decreased demand for the product as the incidence of COVID-19 infections decreased significantly and, as a result, we have stopped marketing, selling and manufacturing T2SARS-CoV-2.

In July 2022, we received Breakthrough Device designation for the T2Lyme Panel, or T2Lyme, a direct-from-blood molecular diagnostic test designed to run on the T2Dx Instrument and detect Borrelia burgdorferi, the bacteria that cause Lyme disease. T2Lyme is intended to test individuals with signs and symptoms of Lyme disease and aid in the diagnosis of early Lyme disease. In November 2022, the HHS and the Steven & Alexandra Cohen Foundation, or Cohen Foundation, selected T2 Biosystems as a Phase 1 winner in the LymeX Diagnostics Prize, a LymeX Innovation Accelerator prize competition intended to accelerate the development of Lyme disease diagnostics. As a Phase 1 winner, we received $100,000 and an invitation to participate in a second phase. In February 2024, we were selected as a Phase 2 winner and received $265,000.

In July 2023, we received Breakthrough Device Designation for our Candida auris (C. auris) test, a direct-from-blood molecular diagnostic test designed to run on the T2Dx Instrument and detect C. auris. C. auris is a multidrug-resistant fungal pathogen recognized as a serious global health threat with a mortality rate of up to 60%, and is difficult to identify with standard laboratory methods, which can lead to inappropriate treatment. We plan to expand the test menu on the T2Dx Instrument by seeking 510(k) clearance from the FDA to add C. auris detection to the FDA-cleared T2Candida Panel.

In October 2023, we submitted a 510(k) premarket notification to the FDA to expand the number of pathogens detected on the FDA-cleared T2Bacteria Panel to include the detection of Acinetobacter baumannii (A. baumannii). A. baumannii is a cause of bloodstream infections especially in critically ill patients, which can range from a benign transient bacteremia to septic shock.

In December 2023, we submitted a 510(k) premarket notification to the FDA to expand the use of the T2Candida Panel to include pediatric testing. Candida species are a major contributor to morbidity and mortality in hospitalized children.

In September 2024, we received clearance from the FDA to market the T2Candida Panel for pediatric patients. The Company expects to immediately begin marketing and selling the T2Candida Panel under the expanded pediatric claim.

Nasdaq Compliance Update

On March 30, 2023, the Company received notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, for the last thirty consecutive business days, the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 555(a)(2) (the “Minimum Bid Price Rule”). On May 23, 2023, Nasdaq notified the Company that its securities were subject to delisting due to non-compliance with the Minimum Bid Price Rule and to maintain a minimum value of listed securities (the “MVLS Rule”) of at least $35 million. The Company requested a hearing with Nasdaq and, on July 6, 2023, appealed to the Nasdaq Hearings Panel for an extension to the time period in which to regain compliance with the MVLS Rule and the Minimum Bid Price Rule. On July 26, 2023, we filed a definitive proxy statement to effect a reverse stock split of our common stock in connection with our annual meeting that occurred in September 2023 as required by the Nasdaq Hearings Panel. On August 9, 2023, the Company received written notice from Nasdaq informing the Company that it had regained compliance with the MVLS Rule. On September 15, 2023, at the Company’s annual meeting of stockholders, the Company’s stockholders approved an amendment to the Company’s restated certificate of incorporation to effect a reverse stock split of the Company’s common stock. On October 12, 2023, the Company announced that its board of directors had approved the reverse stock split at the ratio of 1 post-split share for every 100 pre-split shares, which was effective as of October 12, 2023.

On October 31, 2023, the Company received written notice from Nasdaq informing the Company that it has regained compliance with the Minimum Bid Price Rule. The Company will be subject to a Mandatory Panel Monitor for a period of one year. If, within that one-year monitoring period, the Company fails to comply with the Minimum Bid Price Rule, the Company will not be permitted additional time to regain compliance with the Minimum Bid Price Rule. However, the Company will have an opportunity to request a new hearing with the Nasdaq Hearings Panel prior to the Company’s securities being delisted from Nasdaq.

On November 20, 2023, the Company received written notice from Nasdaq informing the Company that it no longer satisfied the MVLS Rule. In accordance with the terms of the Mandatory Panel Monitor, the Company was not granted a grace period but rather

38


 

issued a delist determination. The Company exercised its right to appeal by requesting a hearing and paying a non-refundable $20,000 fee, which stayed any further action by Nasdaq pending the issuance of its decision and the expiration of any extension that may be granted to the Company as a result of the hearing. The Company’s common stock remained listed and eligible to trade on Nasdaq pending the outcome of the hearing. On February 15, 2024, the Company appealed to the Nasdaq Hearings Panel for an extension to the time period in which to regain compliance with the MVLS Rule. On March 11, 2024, the Company received notice from the Nasdaq Hearings Panel that it had granted the Company’s request for continued listing on Nasdaq, subject to the Company demonstrating compliance with Nasdaq’s MVLS Rule on or before May 20, 2024. On May 21, 2024, the Company received written notice from Nasdaq informing the Company that it has regained compliance with the MVLS Rule for continued listing on the Nasdaq Capital Market.

On November 7, 2024, the Company received a letter from Nasdaq indicating that the Company’s market value of its listed securities has been below the minimum $35 million required for continued listing on the Nasdaq Capital Market, as set forth in Listing Rule 5550(b)(2) for the previous 30 consecutive trading days. In accordance with the terms of the previously imposed “Mandatory Panel Monitor” as that term is defined in Nasdaq Listing Rule 5815(d)(4)(B), the Nasdaq Listing Qualifications Staff did not grant the Company a grace period but rather issued a delist determination, which will be stayed if the Company exercises its right to appeal the determination by requesting a hearing and paying a non-refundable $20,000 fee. Subsequently, the Company paid the non-refundable $20,000 fee and plans to request a hearing, which will stay any further action by Nasdaq at least pending the issuance of the Nasdaq Hearings Panel’s decision and the expiration of any extension that may be granted by the Nasdaq Hearings Panel to the Company as a result of the hearing. The Company’s common stock will remain listed and eligible to trade on Nasdaq pending the outcome of the hearing. There can be no assurance, however, that the Nasdaq Hearings Panel will grant the Company’s request for continued listing or that the Company will evidence compliance with all applicable listing criteria prior to the expiration of any extension that may be granted by the Panel to do so.

Financial Overview

Revenue

We generate revenue from the sale of our products, related services, reagent rental agreements and government contributions.

Grants received, including cost reimbursement agreements, are assessed to determine if the agreement should be accounted for as an exchange transaction or a contribution. An agreement is accounted for as a contribution if the resource provider does not receive commensurate value in return for the assets transferred.

Product revenue is generated by the sale of instruments and consumable diagnostic tests predominantly through our direct sales force in the United States and distributors in geographic regions outside the United States. We generally do not offer product returns or exchange rights (other than those relating to defective goods under warranty) or price protection allowances to our customers, including our distributors. Payment terms granted to distributors are the same as those granted to end-user customers and payments are not dependent upon the distributors’ receipt of payment from their end-user customers. We either sell instruments to customers and international distributors or retain title and place the instrument at the customer site pursuant to a reagent rental agreement. When the instrument is placed under a reagent rental agreement, our customers generally agree to fixed term agreements, which can be extended, and incremental charges on each consumable diagnostic test purchased. Shipping and handling costs are billed to customers in connection with a product sale.

Fees paid to member-owned group purchasing organizations (“GPOs”) are deducted from related product revenues.

Direct sales of instruments include warranty, maintenance and technical support services typically for one year following the installation of the purchased instrument (“Maintenance Services”). Maintenance Services are separate performance obligations as they are service based warranties and are recognized on a straight-line basis over the service delivery period. After the completion of the initial Maintenance Services period, customers have the option to renew or extend the Maintenance Services typically for additional one-year periods in exchange for additional consideration. The extended Maintenance Services are also service based warranties that represent separate purchasing decisions.

We warrant that consumable diagnostic tests will be free from defects, when handled according to product specifications, for the stated life of the product. To fulfill valid warranty claims, we provide replacement product free of charge.

Our current sales strategy is to drive adoption of our test platform installed base in hospitals and to increase test use by our existing hospital customers. Accordingly, we expect the following to occur:

recurring revenue from our consumable diagnostic tests will increase; and

39


 

become a more predictable and significant component of total revenue; and
gain manufacturing economies of scale through the growth in our sales, resulting in improving gross margins and operating margins.

The BARDA contract expired in September 2023.

Cost of Product Revenue

Cost of product revenue includes the cost of materials, direct labor and manufacturing overhead costs used in the manufacture of our consumable diagnostic tests sold to customers and related license and royalty fees. Cost of product revenue also includes depreciation on the revenue-generating T2Dx Instruments that have been placed with our customers under reagent rental agreements; costs of materials, direct labor and manufacturing overhead costs on the T2Dx Instruments sold to customers; and other costs such as customer support costs, warranty and repair and maintenance expense on the T2Dx Instruments that have been placed with our customers under reagent rental agreements. We manufacture the T2Dx Instruments and part of our consumable diagnostic tests in our facilities. We outsource the manufacturing of components of our consumable diagnostic tests to contract manufacturers. We expect cost of product revenue to decrease as a percentage of revenue as a result of the cost of product revenue improvement initiatives.

Research and development expenses

Our research and development expenses consist primarily of costs incurred for the development of our technology and product candidates, technology improvements and enhancements, clinical trials to evaluate the clinical utility of our product candidates, and laboratory development and expansion, and include salaries and benefits, including stock-based compensation, research related facility and overhead costs, laboratory supplies, equipment, depreciation on T2Dx Instruments used in research and development activities and contract services. Research and development expenses also include costs of delivering products or services associated with contribution revenue. We expense all research and development costs as incurred.

We expect to continue developing additional product candidates, improving existing products, and conducting ongoing and new clinical trials.

Selling, general and administrative expenses

Selling, general and administrative expenses consist primarily of costs for our sales, marketing, service, medical affairs, finance, legal, human resources, information technology, and general management functions, as well as professional services, such as legal, consulting and accounting services. Other selling, general and administrative expenses include commercial support activity, facility-related costs, fees and expenses associated with obtaining and maintaining patents, clinical and economic studies and publications, marketing expenses, and travel expenses. We expense the majority of selling, general and administrative expenses as incurred. We expect selling, general and administrative expenses to decrease as a percentage of revenue in future periods.

Impairment of property and equipment

Impairment of property and equipment relates to loss recorded when the carrying value of property and equipment is written down to its estimated fair value when indicators of impairment exist.

Interest expense to related party

Interest expense to related party consists primarily of interest expense on our notes payable, the amortization of deferred financing costs and debt discount.

Change in fair value of derivative related to Term Loan with related party

The change in fair value of derivative related to Term Loan with related party consists of the change in fair value of the derivative associated with the CRG Term Loan Agreement.

Change in fair value of warrant liabilities

The change in fair value of warrant liabilities consists of the changes in fair value of the Common Stock Warrants and Series A Warrant.

Other, net

Other, net consists of dividend income, other investment income, interest income earned on our cash and cash equivalents, non-recurring expenses and non-recurring gains and losses.

40


 

Critical Accounting Policies and Use of Estimates

We have prepared our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States. Our preparation of these condensed consolidated financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, expenses, and related disclosures at the date of the condensed consolidated financial statements, as well as revenue and expenses recorded during those periods. We evaluated our estimates and judgments on an ongoing basis. We based our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from these estimates under different assumptions or conditions.

The items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 remained materially consistent. For a description of those critical accounting policies, please refer to our Annual Report on Form 10-K filing for the year ended December 31, 2023.

Results of Operations for the Three Months Ended September 30, 2024 and 2023

 

 

 

Three Months Ended
September 30,

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

 

 

(in thousands)

 

Revenue:

 

 

 

 

 

 

 

 

 

Product revenue

 

$

1,985

 

 

$

1,472

 

 

$

513

 

Total revenue

 

 

1,985

 

 

 

1,472

 

 

 

513

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of product revenue

 

 

4,101

 

 

 

3,925

 

 

 

176

 

Research and development

 

 

2,667

 

 

 

2,663

 

 

 

4

 

Selling, general and administrative

 

 

5,378

 

 

 

5,980

 

 

 

(602

)

Impairment of property and equipment

 

 

 

 

 

2,511

 

 

 

(2,511

)

Total costs and expenses

 

 

12,146

 

 

 

15,079

 

 

 

(2,933

)

Loss from operations

 

 

(10,161

)

 

 

(13,607

)

 

 

3,446

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest expense to related party

 

 

(370

)

 

 

(1,119

)

 

 

749

 

Change in fair value of derivative related to Term Loan with related party

 

 

77

 

 

 

184

 

 

 

(107

)

Change in fair value of warrant liabilities

 

 

321

 

 

 

(930

)

 

 

1,251

 

Other, net

 

 

16

 

 

 

47

 

 

 

(31

)

Total other expense

 

 

44

 

 

 

(1,818

)

 

 

1,862

 

Net loss

 

$

(10,117

)

 

$

(15,425

)

 

$

5,308

 

Product revenue

Product revenue was $2.0 million for the three months ended September 30, 2024 compared to $1.5 million for the three months ended September 30, 2023, an increase of $0.5 million, which was driven by higher consumables sales of $0.4 million, higher instrument sales of $0.2 million, offset by lower instrument rental and service revenue of less than $0.1 million.

Cost of product revenue

Cost of product revenue was $4.1 million for the three months ended September 30, 2024, compared to $3.9 million for the three months ended September 30, 2023, an increase of $0.2 million. The increase was driven by $0.5 million of increased costs related to higher instrument sales, $0.3 million of increased costs related to higher consumable sales, $0.1 million of increase shipping costs, partially offset by $0.7 million of decreased costs because of a change in build plan and manufacturing efficiencies.

Research and development expenses

Research and development expenses were $2.7 million for the three months ended September 30, 2024, which were flat compared to $2.7 million of expenses for the three months ended September 30, 2023. Research and development project related expenses increased by $0.8 million, which were offset by decreased lab and facility expenses of $0.6 million due to lower employee headcount and material purchases and decreased payroll related and stock-based compensation expense of $0.2 million due to lower employee headcount.

41


 

Selling, general and administrative expenses

Selling, general and administrative expenses were $5.4 million for the three months ended September 30, 2024, compared to $6.0 million for the three months ended September 30, 2023, a decrease of $0.6 million. The decrease was driven by lower payroll related and stock-based compensation expenses of $0.7 million primarily due to lower employee headcount and $0.1 million of lower consulting and legal expenses, partially offset by $0.1 million of increased marketing costs and $0.1 million of increased other costs.

Impairment of property and equipment

There was no impairment of property and equipment for the three months ended September 30, 2024. Impairment of property and equipment was $2.5 million for the three months ended September 30, 2023, which was comprised of $2.3 million of impairment charges related to reagent manufacturing assets and $0.2 million of impairment charges related to T2-owned non-lease instruments.

Interest expense to related party

Interest expense to related party was $0.4 million and $1.1 million for the three months ended September 30, 2024 and 2023, respectively. Interest expense to related party decreased by $0.7 million primarily due to the cancellation of $10.0 million, $15.0 million, and $15.0 million of the CRG Term Loan’s principal in exchange for equity in July 2023, April 2024, and May 2024, respectively.

Change in fair value of derivative related to Term Loan with related party

The change in fair value of the derivative instrument associated with the CRG Term Loan Agreement (see Note 6 of the notes to our condensed consolidated financial statements) was a $0.1 million reduction of expense for the three months ended September 30, 2024, compared to a $0.2 million reduction of expense for the three months ended September 30, 2023.

Change in fair value of warrant liabilities

The change in fair value of warrant liabilities consisted of a $0.3 million reduction of expense primarily associated with the Common Stock Warrants (see Note 8 of the notes to our condensed consolidated financial statements) for the three months ended September 30, 2024. The change in fair value of the warrant liabilities consisted of $0.9 million of expense during the three months ended September 30, 2023.

Other, net

Other, net was immaterial for both the three months ended September 30, 2024 and 2023.

Results of Operations for the Nine Months Ended September 30, 2024 and 2023

 

 

 

Nine Months Ended
September 30,

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

 

 

(in thousands)

 

Revenue:

 

 

 

 

 

 

 

 

 

Product revenue

 

$

5,998

 

 

$

5,091

 

 

$

907

 

Contribution revenue

 

 

 

 

 

423

 

 

 

(423

)

Total revenue

 

 

5,998

 

 

 

5,514

 

 

 

484

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of product revenue

 

 

10,996

 

 

 

12,789

 

 

 

(1,793

)

Research and development

 

 

9,749

 

 

 

10,984

 

 

 

(1,235

)

Selling, general and administrative

 

 

17,589

 

 

 

19,575

 

 

 

(1,986

)

Impairment of property and equipment

 

 

 

 

 

2,511

 

 

 

(2,511

)

Total costs and expenses

 

 

38,334

 

 

 

45,859

 

 

 

(7,525

)

Loss from operations

 

 

(32,336

)

 

 

(40,345

)

 

 

8,009

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest expense to related party

 

 

(2,027

)

 

 

(4,182

)

 

 

2,155

 

Change in fair value of derivative related to Term Loan with related party

 

 

1,207

 

 

 

436

 

 

 

771

 

Change in fair value of warrant liabilities

 

 

169

 

 

 

4,958

 

 

 

(4,789

)

Other, net

 

 

373

 

 

 

(604

)

 

 

977

 

Total other expense

 

 

(278

)

 

 

608

 

 

 

(886

)

Net loss

 

$

(32,614

)

 

$

(39,737

)

 

$

7,123

 

 

42


 

Product revenue

Product revenue was $6.0 million for the nine months ended September 30, 2024 compared to $5.1 million for the nine months ended September 30, 2023, an increase of $0.9 million, which was driven by higher consumables sales of $1.0 million, offset by lower instrument sales of $0.1 million.

Contribution revenue

Contribution revenue relates to our BARDA agreement and we had no contribution revenue for the nine months ended September 30, 2024 and $0.4 million of contribution revenue for the nine months ended September 30, 2023. The BARDA contract expired in September 2023.

Cost of product revenue

Cost of product revenue was $11.0 million for the nine months ended September 30, 2024, compared to $12.8 million for the nine months ended September 30, 2023, a decrease of $1.8 million. The decrease was driven by $2.6 million of decreased costs because of a change in build plan and manufacturing efficiencies and $0.4 million of lower service and repair costs, partially offset by $0.8 million of increased costs related to higher consumable sales, $0.3 million of increased shipping and other costs, and $0.1 million of increased instrument costs.

Research and development expenses

Research and development expenses were $9.7 million for the nine months ended September 30, 2024, compared to $11.0 million for the nine months ended September 30, 2023, a decrease of $1.2 million. Payroll related and stock-based compensation expenses decreased by $1.7 million due to lower employee headcount, lab and facility expenses decreased by $0.9 million due to lower employee headcount and material purchases, clinical expenses decreased by $0.4 million, and consulting expenses decreased by $0.1 million, partially offset by increased research and development project related expenses of $1.9 million.

Selling, general and administrative expenses

Selling, general and administrative expenses were $17.6 million for the nine months ended September 30, 2024, compared to $19.6 million for the nine months ended September 30, 2023, a decrease of $2.0 million. The decrease was driven by lower payroll related and stock-based compensation expenses of $2.4 million primarily due to lower employee headcount and lower other expenses of $0.1 million, partially offset by a $0.3 million increase in consulting and legal expenses, $0.1 million of increased costs related to IT support services and facilities, and $0.1 million of increased marketing costs.

Impairment of property and equipment

There was no impairment of property and equipment for the nine months ended September 30, 2024. Impairment of property and equipment was $2.5 million for the nine months ended September 30, 2023, which was comprised of $2.3 million of impairment charges related to reagent manufacturing assets and $0.2 million of impairment charges related to T2-owned non-lease instruments.

Interest expense to related party

Interest expense to related party was $2.0 million and $4.2 million for the nine months ended September 30, 2024 and 2023, respectively. Interest expense to related party decreased by $2.2 million primarily due to the cancellation of $10.0 million, $15.0 million, and $15.0 million of the CRG Term Loan’s principal in exchange for equity in July 2023, April 2024, and May 2024, respectively.

Change in fair value of derivative related to Term Loan with related party

The change in fair value of the derivative instrument associated with the CRG Term Loan Agreement (see Note 6 of the notes to our condensed consolidated financial statements) was a $1.2 million reduction of expense for the nine months ended September 30, 2024, compared to a $0.4 million reduction of expense for the nine months ended September 30, 2023.

Change in fair value of warrant liabilities

The change in fair value of warrant liabilities consisted of a $0.2 million reduction of expense primarily associated with the Common Stock Warrants (see Note 8 of the notes to our condensed consolidated financial statements) for the nine months ended September 30, 2024. The change in fair value of the warrant liabilities consisted of a $5.0 million reduction of expense during the nine months ended September 30, 2023.

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Other, net

Other, net was a reduction of expense of $0.4 million for the nine months ended September 30, 2024, primarily consisting of a $0.3 million cash prize received for the Phase 2 LymeX Diagnostics Prize and $0.1 million of dividend income. Other, net was $0.6 million of expense for the nine months ended September 30, 2023, primarily consisting of issuance costs allocated to the Common Stock Warrants.

Liquidity and Capital Resources

We have incurred losses and cumulative negative cash flows from operations since our inception, and as of September 30, 2024 and December 31, 2023, we had an accumulated deficit of $616.9 million and $584.3 million, respectively. We have incurred significant commercialization expenses related to product sales, marketing, manufacturing and distribution. We may seek to continue to fund our operations through public equity or private equity or debt financings, as well as other sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements if and when needed would have a negative impact on our business, results of operations and financial condition.

Historically, the Company has primarily funded its operations through public equity and private debt financings. The Company believes its cash position is insufficient to fund future operations without financings during the fourth quarter of 2024. Financings may include public or private equity or debt financings. These financings may not be successful, however, or on terms favorable to the Company or its stockholders which would have a negative impact on the Company’s business, results of operations, financial condition and the Company’s ability to develop and commercialize its products and ultimately operate as a going-concern.

Equity Distribution Agreement

On March 31, 2021, the Company entered into an Equity Distribution Agreement (“Equity Distribution Agreement”) with Canaccord Genuity LLC, as agent (“Canaccord”), pursuant to which the Company may offer and sell shares of common stock, for aggregate gross sale proceeds of up to $75.0 million from time to time from the effective date of the respective registration statement through Canaccord. In July 2023, the Company filed an amendment to the prospectus supplement relating to the offer and sale of shares under the Equity Distribution Agreement to increase the maximum amount of shares that the Company may sell pursuant to its Equity Distribution Agreement with Canaccord Genuity by $65 million. At the time of the amendment, the Company had sold shares of its common stock for gross proceeds of $71.3 million. Under the Equity Distribution Agreement, the Company sold no shares of common stock during the three months ended September 30, 2024 and 1,015,385 shares of common stock during the three months ended September 30, 2023 for net proceeds of $21.7 million. Under the Equity Distribution Agreement, the Company sold 628,470 shares of common stock during the nine months ended September 30, 2024 for net proceeds of $2.2 million, and 3,167,968 shares of common stock during the nine months ended September 30, 2023 for net proceeds of $41.0 million.

We paid Canaccord for its services of acting as agent 3% of the gross proceeds from the sale of the shares pursuant to the Equity Distribution Agreement. Legal and accounting fees are reclassified to share capital upon issuance of shares under the Equity Distribution Agreement.

On July 19, 2024, the Equity Distribution Agreement with Canaccord was terminated pursuant to the terms therein. The Company is not subject to any termination penalties related to the termination of the Equity Distribution Agreement.

Wainwright Equity Distribution Agreement

On July 19, 2024, the Company entered into an Equity Distribution Agreement (the "Wainwright Equity Distribution Agreement”) with H.C. Wainwright & Co., LLC, as agent (“Wainwright”), pursuant to which the Company may offer and sell shares of common stock, for aggregate gross sale proceeds of up to $14.7 million from time to time from the effective date of the respective registration statement through Wainwright. In August 2024, the Company filed a prospectus supplement relating to the offer and sale of shares under the Wainwright Equity Distribution Agreement to increase the maximum amount of shares that the Company may sell pursuant to the Wainwright Equity Distribution Agreement by $13.4 million. At the time of the prospectus supplement, the Company had sold shares of its common stock for gross proceeds of $2.8 million under the Wainwright Equity Distribution Agreement.

We pay Wainwright for its services of acting as agent 3% of the gross proceeds from the sale of the shares pursuant to the Wainwright Equity Distribution Agreement. Legal and accounting fees are reclassified to share capital upon issuance of shares under the Wainwright Equity Distribution Agreement. Under the Wainwright Equity Distribution Agreement, the Company sold 1,365,710 shares during the three and nine months ended September 30, 2024 for net proceeds of $4.1 million.

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Plan of operations and future funding requirements

As of September 30, 2024, we had unrestricted cash and cash equivalents of approximately $2.1 million. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, costs related to our products, clinical trials, laboratory and related supplies, supplies and materials used in manufacturing, legal and other regulatory expenses and general overhead costs.

Until such time as we can generate substantial product revenue, we expect to finance our cash needs, beyond what is currently available or on hand, through a combination of equity offerings, debt financings and revenue from existing and potential research and development and other collaboration agreements. If we raise additional funds in the future, we may need to relinquish valuable rights to our technologies, future revenue streams or grant licenses on terms that may not be favorable to us.

Going Concern

We believe that our cash and cash equivalents of $2.1 million on September 30, 2024 will not be sufficient to fund our current operating plan at least 12 months from issuance of these condensed consolidated financial statements unless additional funds are raised during the fourth quarter of 2024. Certain elements of our operating plan cannot be considered probable.

The Company's Term Loan Agreement (see Note 6 of the notes to our condensed consolidated financial statements) has a minimum liquidity covenant, which initially required the Company to maintain a minimum cash balance of $5.0 million. In May 2023, CRG reduced the minimum liquidity covenant under the Term Loan Agreement from $5.0 million to $500,000 until December 31, 2023. In July 2023, April 2024, and May 2024, the Company converted $10.0 million, $15.0 million, and $15.0 million, respectively, of the outstanding debt principal with CRG to equity. In October 2023, the Term Loan Agreement was amended to extend both the interest-only period and the maturity date by one year from December 30, 2024 to December 31, 2025, and permanently reduce the minimum liquidity covenant from $5.0 million to $500,000. Unless the Company raises additional funds, management believes that it is probable that the Company will not be able to comply with the minimum liquidity covenant.

On March 30, 2023, the Company received notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, for the last thirty consecutive business days, the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 555(a)(2) (the “Minimum Bid Price Rule”). On May 23, 2023, Nasdaq notified the Company that its securities were subject to delisting due to non-compliance with the Minimum Bid Price Rule and to maintain a minimum value of listed securities (the “MVLS Rule”) of at least $35 million. The Company requested a hearing with Nasdaq and, on July 6, 2023, appealed to the Nasdaq Hearings Panel for an extension to the time period in which to regain compliance with the MVLS Rule and the Minimum Bid Price Rule. On July 26, 2023, we filed a definitive proxy statement to effect a reverse stock split of our common stock in connection with our annual meeting that occurred in September 2023 as required by the Nasdaq Hearings Panel. On August 9, 2023, the Company received written notice from Nasdaq informing the Company that it had regained compliance with the MVLS Rule. On September 15, 2023, at the Company’s annual meeting of stockholders, the Company’s stockholders approved an amendment to the Company’s restated certificate of incorporation to effect a reverse stock split of the Company’s common stock. On October 12, 2023, the Company announced that its board of directors had approved the reverse stock split at the ratio of 1 post-split share for every 100 pre-split shares, which was effective as of October 12, 2023.

On October 31, 2023, the Company received written notice from Nasdaq informing the Company that it has regained compliance with the Minimum Bid Price Rule. The Company will be subject to a Mandatory Panel Monitor for a period of one year. If, within that one-year monitoring period, the Company fails to comply with the Minimum Bid Price Rule, the Company will not be permitted additional time to regain compliance with the Minimum Bid Price Rule. However, the Company will have an opportunity to request a new hearing with the Nasdaq Hearings Panel prior to the Company’s securities being delisted from Nasdaq.

On November 20, 2023, the Company received written notice from Nasdaq informing the Company that it no longer satisfied the MVLS Rule. In accordance with the terms of the Mandatory Panel Monitor, the Company was not granted a grace period but rather issued a delist determination. The Company exercised its right to appeal by requesting a hearing and paying a non-refundable $20,000 fee, which stayed any further action by Nasdaq pending the issuance of its decision and the expiration of any extension that may be granted to the Company as a result of the hearing. The Company’s common stock remained listed and eligible to trade on Nasdaq pending the outcome of the hearing. On February 15, 2024, the Company appealed to the Nasdaq Hearings Panel for an extension to the time period in which to regain compliance with the MVLS Rule. On March 11, 2024, the Company received notice from the Nasdaq Hearings Panel that it had granted the Company’s request for continued listing on Nasdaq, subject to the Company demonstrating compliance with Nasdaq’s MVLS Rule on or before May 20, 2024. On May 21, 2024, the Company received written notice from Nasdaq informing the Company that it has regained compliance with the MVLS Rule for continued listing on the Nasdaq Capital Market.

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On November 7, 2024, the Company received a letter from Nasdaq indicating that the Company’s market value of its listed securities has been below the minimum $35 million required for continued listing on the Nasdaq Capital Market, as set forth in Listing Rule 5550(b)(2) for the previous 30 consecutive trading days. In accordance with the terms of the previously imposed “Mandatory Panel Monitor” as that term is defined in Nasdaq Listing Rule 5815(d)(4)(B), the Nasdaq Listing Qualifications Staff did not grant the Company a grace period but rather issued a delist determination, which will be stayed if the Company exercises its right to appeal the determination by requesting a hearing and paying a non-refundable $20,000 fee. Subsequently, the Company paid the non-refundable $20,000 fee and plans to request a hearing, which will stay any further action by Nasdaq at least pending the issuance of the Nasdaq Hearings Panel’s decision and the expiration of any extension that may be granted by the Nasdaq Hearings Panel to the Company as a result of the hearing. The Company’s common stock will remain listed and eligible to trade on Nasdaq pending the outcome of the hearing. There can be no assurance, however, that the Nasdaq Hearings Panel will grant the Company’s request for continued listing or that the Company will evidence compliance with all applicable listing criteria prior to the expiration of any extension that may be granted by the Panel to do so.

These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of 12 months after the date that these financial statements are issued. Management's plans to alleviate the conditions that raise substantial doubt include raising additional funding and maintaining reduced operating expenses in order to continue as a going concern for a period of 12 months from the date these financial statements are issued. Management has concluded the likelihood that its plan to successfully obtain sufficient funding from one or more of these sources or maintain reduced expenditures, while reasonably possible, is less than probable. Accordingly, we have concluded that substantial doubt exists about our ability to continue as a going concern for a period of at least 12 months from the date of issuance of these financial statements.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

Cash flows

The following is a summary of cash flows for each of the periods set forth below:

 

 

 

Nine Months Ended
September 30,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Net cash (used in) provided by:

 

 

 

 

 

 

Operating activities

 

$

(27,176

)

 

$

(38,720

)

Investing activities

 

 

 

 

 

(166

)

Financing activities

 

 

13,570

 

 

 

51,876

 

Net change in cash, cash equivalents and restricted cash

 

$

(13,606

)

 

$

12,990

 

Net cash used in operating activities

Net cash used in operating activities was approximately $27.2 million for the nine months ended September 30, 2024 and consisted of a net loss of $32.6 million adjusted for non-cash items including stock-based compensation expense of $2.0 million, non-cash lease expense of $1.1 million, non-cash interest expense to related party of $0.5 million, a change in fair value of warrant liabilities of $0.2 million, depreciation and amortization expense of $0.2 million, a change in fair value of the derivative related to Term Loan with related party of $1.2 million, and a net change in operating assets and liabilities of $3.0 million. The net change in operating assets and liabilities was primarily driven by an increase in accounts payable of $2.7 million due to the timing of invoices, payments, and an increase in past due payables, a decrease in prepaid expenses and other assets of $1.4 million due to the timing of deposits for goods and services, and a decrease in inventory of $1.0 million due to the timing of purchases and shipments, partially offset by a decrease in operating lease liabilities of $1.2 million, an increase in accounts receivable of $0.6 million due to the timing and volume of instrument and consumable sales, and a decrease in accrued expenses and other liabilities of $0.3 million.

Net cash used in operating activities was approximately $38.7 million for the nine months ended September 30, 2023 and consisted of a net loss of $39.7 million adjusted for non-cash items including stock-based compensation expense of $3.6 million, a change in fair value of warrant liabilities of $5.0 million, non-cash interest expense of $1.3 million, non-cash lease expense of $1.0 million, depreciation and amortization expense of $0.8 million, issuance costs related to Common Stock Warrants of $0.7 million, a change in fair value of the derivative related to Term Loan of $0.4 million, an impairment of property and equipment of $2.5 million, and a net change in operating assets and liabilities of $3.5 million. The net change in operating assets and liabilities was primarily driven by a decrease in accrued expenses of $2.4 million primarily due to the payout of 2022 bonuses and a $1.0 million reduction to legal fees due

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to expensing of the $1.0 million rent deposit for the Billerica lease, a decrease in operating lease liabilities of $1.0 million, an increase in inventory of $0.5 million due to timing of purchases and shipments, an increase in prepaid expenses and other assets of $0.5 million due to timing of deposits for goods and services, and a decrease in accounts payable of $0.2 million due to timing of invoices and payments, partially offset by a decrease in accounts receivable of $1.0 million due to payment from BARDA and the timing and volume of instrument and consumable sales, and an increase in deferred revenue of $0.1 million.

Net cash used in investing activities

There was no net cash provided by or used in investing activities for the nine months ended September 30, 2024.

Net cash used in investing activities was $0.2 million for the nine months ended September 30, 2023, and consisted of equipment purchases.

Net cash provided by financing activities

Net cash provided by financing activities was approximately $13.6 million for the nine months ended September 30, 2024, and consisted of proceeds from the May 2024 private offering, net of issuance costs, of $7.3 million and proceeds from sales of our common stock under the Equity Distribution Agreement and Wainwright Equity Distribution Agreement, net of issuance costs, of $6.2 million.

Net cash provided by financing activities was approximately $51.9 million for the nine months ended September 30, 2023, and consisted primarily of proceeds from sales of our common stock under the Equity Distribution Agreement, net of issuance costs, of $41.0 million and proceeds from the February 2023 public offering, net of issuance costs, of $10.9 million, offset by payment of debt issuance costs of $0.1 million.

Borrowing Arrangements

Term Loan Agreement

In December 2016, we entered into the Term Loan Agreement with CRG. We initially borrowed $40.0 million under the Term Loan Agreement and had the ability to borrow an additional $10.0 million upon receiving specified clearance for the marketing of T2Bacteria by April 30, 2018 (the “Approval Milestone”). We agreed to pay (1) a financing fee based on the amount of principal drawn and (2) a final payment fee based on the principal outstanding upon repayment. The debt discount related to the financing fee and the fees paid to CRG are being amortized over the loan term as interest expense. The final payment fee is accrued as interest expense and is classified consistent with the classification of the Term Loan.

The Term Loan’s principal is prepayable at any time partially or in full without a prepayment penalty. Borrowings are collateralized by a lien on substantially all of our assets, including intellectual property. The Term Loan Agreement provides for affirmative and negative covenants, and initially included a requirement to maintain a minimum cash balance of $5.0 million. The Term Loan Agreement includes a subjective acceleration clause whereby an event of default, including a material adverse change in the business, operations, or conditions (financial or otherwise), could result, at CRG’s discretion, in the acceleration of the obligations under the Term Loan Agreement. Under certain circumstances, a default interest rate of an additional 4.0% per annum may apply, at CRG’s discretion, on all outstanding obligations during the occurrence and continuance of an event of default.

The Term Loan originally had a six-year term, with three years of interest-only payments accruing at a fixed rate of 12.5%, of which 4.0% could be paid in-kind by increasing the principal balance. After achievement of the Approval Milestone, such rates would be reduced and a fourth year of interest-only payments would be granted, after which quarterly payments of principal and interest would be owed through the December 30, 2022 maturity date. Upon achievement of certain performance metrics, the loan would be converted to interest-only until its maturity, at which time all unpaid principal and interest would be due and payable.

In connection with the Term Loan Agreement, we issued warrants to CRG to purchase a total of 105 shares of our common stock, exercisable any time prior to December 30, 2026.

Amendments

The Term Loan Agreement has been amended eleven times. As a result of those amendments, certain terms of the Term Loan have been revised as follows:

In 2018, upon our achievement of the Approval Milestone, interest on borrowings began accruing at 11.50% per year, 8% of which is payable in cash quarterly and 3.5% of which is deferred and added to principal until maturity.

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In 2019:
The final payment fee was increased from 8% to 10% of the principal outstanding upon repayment.
We issued additional warrants to CRG to purchase 113 shares of our common stock, exercisable any time prior to September 9, 2029 at an exercise price of $7,750.00 per share, with provisions for termination upon a change of control or a sale of all or substantially all of our assets (these warrants, along with the warrants to purchase 105 shares of common stock previously issued to CRG, are collectively referred to as the “CRG Warrants”).
We reduced the exercise price for the warrants previously issued to CRG to $7,750.00.
In 2022, the principal maturity date was extended to December 30, 2024, and the Term Loan’s interest-only payment period was extended until that maturity date.
In 2023:
We entered into a waiver and consent with CRG that reduced the minimum liquidity covenant to $500,000 until December 31, 2023.
CRG waived certain specified events of default associated with our issuance of shares of Series A Redeemable Convertible Preferred Stock in August 2022 and the subsequent redemption (See Note 7 of the notes to our condensed consolidated financial statements).
In July 2023, CRG canceled $10.0 million of the Term Loan’s principal in exchange for 483,457 shares of common stock and 93,297 shares of Series B Convertible Preferred Stock. In connection with the principal cancelation, CRG waived the final payment fees associated with the canceled principal.
In October 2023, the interest-only period and maturity of the Term Loan were extended to December 31, 2025 and the $500,000 liquidity covenant was made permanent.
In 2024:
In April 2024, CRG canceled $15.0 million of the Term Loan's principal in exchange for 3,280,618 shares of common stock and 17,160.48 shares of Series A Convertible Preferred Stock. In connection with the principal cancelation, CRG waived the final payment fees associated with the canceled principal. In addition, the Term Loan Agreement was amended to extend the period in which the Company may elect to pay a portion of the accrued paid-in-kind interest to the earlier of (a) December 31, 2025 and (b) the date on which a default has occurred.
In May 2024, CRG canceled $15.0 million of the Term Loan's principal in exchange for 4,748,335 shares of common stock. In connection with the principal cancelation, CRG waived the final payment fees associated with the canceled principal. In addition, the Term Loan Agreement was amended to allow CRG or their affiliates to acquire a majority of shares in the Company without causing a change of control as defined under the Term Loan Agreement.

The warrants to purchase 218 shares of our common stock remain outstanding on September 30, 2024. There were no covenant violations during the three and nine months ended September 30, 2024.

Amendments made in February 2022, November 2022, October 2023, and the partial principal cancellation in July 2023, April 2024, and May 2024 were accounted for as troubled debt restructurings. For all restructurings, at the time of the restructuring the future undiscounted cash outflows required under the amended agreement exceeded the carrying value of the debt and no gain was recognized as a result of the restructurings. The effects of each restructuring were accounted for prospectively.

Classification

The Term Loan Agreement with CRG was classified as a current liability both September 30, 2024 and December 31, 2023. In May 2023, we received a modification and waiver reducing the Term Loan’s minimum cash covenant from $5.0 million to $500,000 until December 31, 2023. In addition, in October 2023, the interest-only period and maturity of the Term Loan were extended to December 31, 2025, and the $500,000 liquidity covenant was made permanent. Because management believes it is probable that we will not be able to comply with the covenant unless additional funds are raised, we concluded that the Term Loan and related liabilities should be classified as current.

We have a single compound derivative instrument related to our Term Loan Agreement that requires us to pay additional interest of 4% per annum upon an event of default or if any obligation other than the unpaid principal amount of the Term Loan is not paid when

48


 

due. Fair value is determined quarterly. The fair value of the derivative was $0.3 million and $1.6 million as of September 30, 2024 and December 31, 2023, respectively, and is classified as a current liability on the condensed consolidated balance sheets to match the classification of the related Term Loan Agreement.

Contractual Obligations and Commitments

There were no other material changes to our contractual obligations and commitments from those described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Annual Report on Form 10-K for the year ended December 31, 2023.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, we are not required to provide this information.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of September 30, 2024. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported on a timely basis and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.

Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, the Company’s disclosure controls and procedures were not effective due to material weaknesses in our internal control over (1) the timeliness of assumptions and accounting conclusions reached for unusual transactions, (2) the accounting impact of changes in our sales demand forecast, (3) our year-end reagent inventory count process, and (4) the review of the year-end tax provision and 382 study prepared by third-party experts. Each of these material weaknesses were included in the Form 10-K for the year ended December 31, 2023 and remain unremediated as of September 30, 2024.

The Company took actions to remediate the deficiencies in its internal controls over financial reporting and implemented additional processes designed to address the underlying causes associated with the above-mentioned material weaknesses. These include (1) enhanced evaluation considerations of unusual transactions including the timely use of third-party experts, (2) enhanced evaluation procedures to consider the effect of changes in our sales demand forecast, (3) enhanced physical inventory count procedures, and (4) enhanced review procedures of the year-end tax provision and 382 study prepared by third-party experts.

Management will monitor the progress of the remediation plan and report regularly to the audit committee on the progress and results of the remediation plan, including the identification, status and resolution of internal control deficiencies. As the Company continues to evaluate and work to improve its internal control over financial reporting, management may determine to take additional measures to address the material weaknesses or determine to modify the remediation plans described above. Until the remediation steps set forth above are fully implemented and operating for a sufficient period of time, the material weaknesses described above will continue to exist.

(b) Changes in Internal Control over Financial Reporting

Except as noted above, there have been no changes to the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting during the three months ended September 30, 2024.

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PART II.

OTHER INFORMATION

On September 8, 2021, the Company entered into a 10-year lease agreement (the “Lease”) with Farley White Concord Road, LLC (the “Landlord”), pursuant to which the Company leased approximately 70,125 square feet for its occupancy and use as office, laboratory and commercial manufacturing space at 290 Concord Road, Billerica, Massachusetts (the “Premises").

On January 17, 2023, the Landlord sent a Notice of Termination (the “Notice”) of the Lease to the Company. The Notice provides that the Landlord terminated the Lease because of the Company’s alleged failure to perform its obligations under the Lease in a timely manner and the Company’s alleged breach of the covenant of good faith and fair dealing. In connection with the Notice, on January 18, 2023, the Landlord filed a complaint in the Massachusetts Superior Court and has unilaterally deducted the Company’s $1,000,000 security deposit for its alleged damages. In addition, the Landlord is seeking damages for unpaid rent, brokerage fees, transaction costs, attorney's fees and court costs.

On March 1, 2023, the Company filed a response to the Landlord’s complaint and a counterclaim alleging that the Landlord breached its obligations under the contract and unlawfully drew on the security deposit, in addition to breaching its covenants of good faith and fair dealing, making fraudulent misrepresentations, and engaging in deceptive and unfair trade practices.

The Company intends to pursue legal remedies available under applicable laws.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. Other than as set forth below, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

There is substantial doubt about our ability to continue as a going concern if we are unable to raise additional capital to finance our operations. If we are unable to arrange financing in the near term we may be forced to suspend operations, sell assets or seek protection by filing a voluntary petition for bankruptcy relief, which would have a material adverse effect on our business and could impact your investment.

As of September 30, 2024, we had $2.1 million in unrestricted cash and cash equivalents which, without additional funding, will not be sufficient to meet our obligations for a period of 12 months after the date that the financial statements are issued. The Company believes its cash position is insufficient to fund future operations without financings during the fourth quarter of 2024. Based on their assessment, our management has substantial doubt about the Company's ability to continue as a going concern. As substantial doubt about our ability to continue as a going concern exists, our ability to finance our operations through equity financing or otherwise could be impaired.

Our ability to fund working capital, make capital expenditures, and service our debt depends on our ability to generate cash from operating activities, which is subject to its future operating success, and obtain financing on reasonable terms, which is subject to factors beyond our control, including general economic, political, and financial market conditions. The capital markets have in the past experienced, are currently experiencing, and may in the future experience, periods of upheaval that could impact the availability and cost of financing and there can be no assurances that such financing will be available to the Company on satisfactory terms, or at all. Management continues to explore raising additional capital through equity financing to supplement the Company’s capitalization and liquidity, but there can be no assurance that such financing will be available on terms commercially acceptable to the Company, or at all. Any inability to raise adequate funds on commercially reasonable terms in the near term could force us to suspend operations, sell assets or seek protection by filing a voluntary petition for bankruptcy relief, which may result in a significant decrease in value for all stockholders and cause our stockholders to lose some or all of their investment.

Our failure to maintain the continued listing requirements of The Nasdaq Capital Market could result in a delisting of our common stock.

In 2023, the Company received notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, for the last thirty consecutive business days, the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 555(a)(2) (the “Minimum Bid Price Rule”) and also that its securities were subject to delisting due to non-compliance with the Minimum Bid Price Rule and to maintain a minimum value of listed securities (the “MVLS Rule”) of at least $35 million. The Company requested a hearing with Nasdaq and, on July 6, 2023, appealed to the Nasdaq Hearings Panel for an extension to the time period in which to regain compliance with the MVLS Rule and the

50


 

Minimum Bid Price Rule. On July 26, 2023, we filed a definitive proxy statement to effect a reverse stock split of our common stock in connection with our annual meeting that occurred in September 2023 as required by the Nasdaq Hearings Panel. On August 9, 2023, the Company received written notice from Nasdaq informing the Company that it had regained compliance with the MVLS Rule. On September 15, 2023, at the Company’s annual meeting of stockholders, the Company’s stockholders approved an amendment to the Company’s restated certificate of incorporation to effect a reverse stock split of the Company’s common stock. On October 12, 2023, the Company announced that its board of directors had approved the reverse stock split at the ratio of 1 post-split share for every 100 pre-split shares, which was effective as of October 12, 2023.

On October 31, 2023, the Company received written notice from Nasdaq informing the Company that it had regained compliance with the Minimum Bid Price Rule. The Company was subject to a Mandatory Panel Monitor for a period of one year. If, within that one-year monitoring period, the Company failed to comply with the Minimum Bid Price Rule, the Company would not be permitted additional time to regain compliance with the Minimum Bid Price Rule. However, the Company would have an opportunity to request a new hearing with the Nasdaq Hearings Panel prior to the Company’s securities being delisted from Nasdaq.

On November 20, 2023, the Company received written notice from Nasdaq informing the Company that it no longer satisfied the MVLS Rule. In accordance with the terms of the Mandatory Panel Monitor, the Company was not granted a grace period but rather issued a delist determination. The Company exercised its right to appeal by requesting a hearing and paying a non-refundable $20,000 fee, which stayed any further action by Nasdaq pending the issuance of its decision and the expiration of any extension that may be granted to the Company as a result of the hearing. The Company’s common stock remained listed and eligible to trade on Nasdaq pending the outcome of the hearing. On February 15, 2024, the Company appealed to the Nasdaq Hearings Panel for an extension to the time period in which to regain compliance with the MVLS Rule. On March 11, 2024, the Company received notice from the Nasdaq Hearings Panel that it had granted the Company’s request for continued listing on Nasdaq, subject to the Company demonstrating compliance with Nasdaq’s MVLS Rule on or before May 20, 2024. On May 21, 2024, the Company received written notice from Nasdaq informing the Company that it has regained compliance with the MVLS Rule for continued listing on the Nasdaq Capital Market. Nasdaq has informed the Company that it will be subject to a Mandatory Panel Monitor for a period of one year from the date of the letter. If, within that one-year monitoring period, the Company fails to comply with any continued listing requirement, the Company will not be permitted additional time to regain compliance with such requirement. However, the Company will have an opportunity to request a new hearing with the Nasdaq Listing Qualifications Hearing Panel prior to the Company’s securities being delisted from Nasdaq.

On November 7, 2024, the Company received a letter from Nasdaq indicating that the Company’s market value of its listed securities has been below the minimum $35 million required for continued listing on the Nasdaq Capital Market, as set forth in Listing Rule 5550(b)(2) for the previous 30 consecutive trading days. In accordance with the terms of the previously imposed “Mandatory Panel Monitor” as that term is defined in Nasdaq Listing Rule 5815(d)(4)(B), the Nasdaq Listing Qualifications Staff did not grant the Company a grace period but rather issued a delist determination, which will be stayed if the Company exercises its right to appeal the determination by requesting a hearing and paying a non-refundable $20,000 fee. Subsequently, the Company paid the non-refundable $20,000 fee and plans to request a hearing, which will stay any further action by Nasdaq at least pending the issuance of the Nasdaq Hearings Panel’s decision and the expiration of any extension that may be granted by the Nasdaq Hearings Panel to the Company as a result of the hearing. The Company’s common stock will remain listed and eligible to trade on Nasdaq pending the outcome of the hearing. There can be no assurance, however, that the Nasdaq Hearings Panel will grant the Company’s request for continued listing or that the Company will evidence compliance with all applicable listing criteria prior to the expiration of any extension that may be granted by the Panel to do so.

The failure to maintain the continued listing of our common stock on the Nasdaq may make it more difficult for us to raise capital on favorable terms in the future. Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. Further, if we were to be delisted from Nasdaq, our common stock would cease to be recognized as covered securities and we would be subject to regulation in each state in which we offer our securities. Moreover, there is no assurance that any actions that we take to restore our compliance with the MVLS Rule and Minimum Bid Price Rule will stabilize the market price or improve the liquidity of our common stock, prevent our common stock from falling below the minimum value of listed securities required for continued listing again, or prevent future non-compliance with Nasdaq’s listing requirements.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

51


 

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

(a)
None.
(b)
None.
(c)
None of the Company's directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company's fiscal quarter ended September 30, 2024, as such terms are defined under Item 408(a) of Regulation S-K under the Exchange Act.

52


 

Item 6. Exhibits, Financial Statement Schedules

 

Exhibit Number

 

Exhibit Description

 

 

 

   1.1

 

At The Market Offering Agreement, dated as of July 19, 2024, by and between T2 Biosystems, Inc. and H.C. Wainwright & Co., LLC. (incorporated by reference to Exhibit 1.1 of the Company’s Form S-3 (File No. 333-280922) filed on July 19, 2024)

 

 

 

   3.1

 

Restated Certificate of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K (File No. 001-36571) filed on August 12, 2014)

 

 

 

   3.2

 

Certificate of Amendment of Restated Certificate of Incorporation of the Company dated July 23, 2021 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K (File No. 001-36571) filed on July 23, 2021)

 

 

 

   3.3

 

Certificate of Amendment of Restated Certificate of Incorporation of the Company dated October 12, 2022 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K (File No. 001-36571) filed on October 12, 2022)

 

 

 

   3.4

 

Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K (File No. 001-36571) filed on July 6, 2023)

 

 

 

   3.5

 

Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 of the Company’s Form 8-K (File No. 001-36571) filed on July 6, 2023)

 

 

 

   3.6

 

Certificate of Amendment of Restated Certificate of Incorporation of the Company dated October 12, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K (File No. 001-36571) filed on October 12, 2023)

 

 

 

   3.7

 

Third Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.4 of the Company’s Form 10-Q (File No. 001-36571) filed on August 16, 2022)

 

 

 

   3.8

 

Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K (File No. 001-36571) filed on April 18, 2024)

 

 

 

   4.1

 

Form of Common Stock Certificate of the Company (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1/A (File No. 333-197193) filed on July 28, 2014)

 

 

 

   4.2

 

Fourth Amended and Restated Investors’ Rights Agreement, dated as of March 22, 2013, as amended (incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement on Form S-1/A (File No. 333-197193) filed on July 28, 2014)

 

 

 

   4.3

 

Registration Rights Agreement dated as of July 29, 2019 by and between T2 Biosystems Inc. and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K (File No. 001-36571) filed on July 30, 2019)

 

 

 

   4.4

 

Form of Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Form 10-Q (File No. 001-36571) filed on August 16, 2022)

 

 

 

   4.5

 

Pre-Funded Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K (File No. 001-36571) filed on February 16, 2023)

 

 

 

   4.6

 

Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K (File No. 001-36571) filed on February 16, 2023)

 

 

 

   4.7

 

Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K (File No. 001-36571) filed on May 20, 2024)

 

 

 

   4.8

 

Form of Series A Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K (File No. 001-36571) filed on May 20, 2024)

 

 

 

   4.9

 

Form of Series B Warrant (incorporated by reference to Exhibit 4.3 of the Company’s Form 8-K (File No. 001-36571) filed on May 20, 2024)

 

 

 

   4.10

 

Form of Wainwright Warrant (incorporated by reference to Exhibit 4.4 of the Company’s Form 8-K (File No. 001-36571) filed on May 20, 2024)

 

 

 

53


 

Exhibit Number

 

Exhibit Description

   10.1*

 

Amendment No. 7 to Commercial Lease, dated October 30 2024, between Columbus Day Realty, Inc. and T2 Biosystems, Inc.

 

 

 

   10.2*

 

Amendment to Retention Bonus Letter Agreement, dated November 13, 2024, by and between T2 Biosystems, Inc. and John Sprague

 

 

 

   10.3*

 

Amendment to Retention Bonus Letter Agreement, dated November 13, 2024, by and between T2 Biosystems, Inc. and Michael Gibbs

 

 

 

   31.1*

 

Certification of principal executive officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

   31.2*

 

Certification of principal financial officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

   32.1**

 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

   32.2**

 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

101.INS

 

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

 

 

 

101.SCH*

 

Inline XBRL Taxonomy Extension Schema Document

 

 

 

101.CAL*

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

101.DEF*

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

101.LAB*

 

Inline XBRL Taxonomy Extension Label Linkbase Document

 

 

 

101.PRE*

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

104*

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith

** Furnished herewith

54


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

T2 BIOSYSTEMS, INC.

 

 

 

 

Date: November 14, 2024

By:

/s/ JOHN SPERZEL

John Sperzel

President, Chief Executive Officer and Chairman of the Board

(Principal Executive Officer)

 

 

 

 

Date: November 14, 2024

By:

/s/ JOHN M. SPRAGUE

John M. Sprague

Chief Financial Officer

(Principal Accounting Officer and Principal Financial Officer)

 

55