Description of the Business and Financial Condition |
6 Months Ended | ||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||
| Description Of Business And Liquidity [Abstract] | |||||||||||||||||||
| Description of the Business and Financial Condition |
ClearPoint Neuro, Inc. (the “Company”) is a commercial-stage medical device company focused on the development and commercialization of innovative platforms for performing minimally invasive surgical procedures in the brain. From the Company’s inception in 1998, the Company deployed significant resources to fund its efforts to develop the foundational capabilities for enabling MRI-guided interventions, building an intellectual property portfolio, and identifying and building out commercial applications for the technologies it develops. In 2021, the Company’s efforts expanded beyond the MRI suite to encompass development and commercialization of new neurosurgical device products for the operating room setting, as well as consulting services for pharmaceutical and biotech companies, academic institutions, and contract research organizations.
The Company’s initial product offering, the ClearPoint system, is an integrated system comprised of capital equipment and disposable products, designed to allow minimally invasive procedures in the brain to be performed in an MRI suite. The ClearPoint Array Neuro Navigation System and its principal disposable component, introduced in 2021, is designed to be deployed in an operating room setting while also being usable in an MRI suite. Both systems provide guidance for the placement and operation of instruments or devices during the planning and operation of neurosurgical procedures. The Company received 510(k) clearance from the U.S. Food and Drug Administration (“FDA”) in 2010 to market the ClearPoint system in the United States for general neurosurgical interventional procedures; in February 2011, the Company also obtained CE marking approval for its ClearPoint system. In 2011 and 2018, the Company received 510(k) clearance and CE marking approval, respectively, for its SmartFlow cannula which is being used, or is under evaluation, by more than 45 pharmaceutical and biotech companies, academic institutions, or contract research organizations having a focus on biologics and drug delivery.
COVID-19
The extraordinary measures taken beginning in 2020 by governmental authorities in response to the novel strain of the coronavirus (“COVID-19”) pandemic led to reduced economic activity, including the postponement or cancellation of elective surgical procedures. Although economic activity is returning to normalized levels, new variants of COVID-19 continue to spread in the United States and across the globe.
Furthermore, recessionary conditions on the global economy caused by the COVID-19 pandemic could have a material adverse effect on the Company’s business. Although most segments of the United States economy have reopened, future surges of COVID-19 due to new variants could occur in the future, and directives, such as the postponement or cancellation of elective surgeries, which historically have represented approximately 80% of the number of surgical procedures using the Company’s ClearPoint system, could be reinstated. Additionally, global economic and supply chain disruptions, labor shortages and inflationary conditions caused by the COVID-19 pandemic and geopolitical instability could have a material adverse effect on the Company’s business. The rapid development and fluidity of the situation precludes any prediction as to the ultimate impact COVID-19 will have on the Company’s business, financial condition, results of operation and cash flows, which will depend largely on future developments, including vaccination rates, the effectiveness of vaccines, the response by governmental authorities and regulators and the duration and scope of the COVID-19 outbreak in the United States.
Liquidity
The Company has incurred net losses since its inception, which has resulted in a cumulative deficit at June 30, 2022 of $142.2 million. In addition, the Company’s use of cash from operations amounted to $9.3 million for the six months ended June 30, 2022 and $12.7 million for the year ended December 31, 2021. Since its inception, the Company has financed its operations principally from the sale of equity securities and the issuance of notes payable.
In January 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) with two investors (each, a “2020 Convertible Noteholder,” and together, the “2020 Convertible Noteholders”) under which the Company issued an aggregate principal amount of $17.5 million of floating rate secured convertible notes with a five-year term (the
“First Closing Notes”), resulting in proceeds, net of financing costs and a commitment fee paid to one of the 2020 Convertible Noteholders, of approximately $16.8 million.
The SPA also gave the Company the right, but not the obligation, to request one of the 2020 Convertible Noteholders to purchase an additional $5.0 million in principal amount of a note (the “Second Closing Note”, and, together with the First Closing Notes, the “2020 Secured Notes”). On December 29, 2020, under the terms of an amendment to the SPA (the “Amendment”) which, among other provisions, increased the principal amount of the Second Closing Note, the Company issued the Second Closing Note in the principal amount of $7.5 million to one of the 2020 Convertible Noteholders.
See Note 6 for additional information with respect to the 2020 Secured Notes.
As discussed in Note 8, on February 23, 2021, the Company completed a public offering of 2,127,660 shares of its common stock. Net proceeds from the offering were approximately $46.8 million after deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company.
Based on the foregoing, in management’s opinion, cash and cash equivalent balances and short-term investments at June 30, 2022 are sufficient to support the Company’s operations and meet its obligations for at least the next twelve months.
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