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18

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2020

OR

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

For the transition period from              to             

Commission file number: 001-36709

 

SIENTRA, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

(State or Other Jurisdiction of

Incorporation or Organization)

 

20-5551000

(I.R.S. Employer

Identification No.)

 

420 South Fairview Avenue, Suite 200

Santa Barbara, California

(Address of Principal Executive Offices)

 

93117

(Zip Code)

 

(805) 562-3500

(Registrant’s Telephone Number, Including Area Code)

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

SIEN

 

The Nasdaq Stock Market LLC

 

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

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

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

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

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

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

 

As of November 2, 2020, the number of outstanding shares of the registrant’s common stock, par value $0.01 per share, was 50,454,122.

 

 

 


 

SIENTRA, INC.

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2020

TABLE OF CONTENTS

 

 

 

Page

 

 

 

Part I — Financial Information

 

1

 

 

 

Item 1. Condensed Consolidated Financial Statements - Unaudited

 

1

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

 

1

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019

 

2

Condensed Consolidated Statement of Stockholders' Equity for the Period from December 31, 2018 through September 30, 2019 and December 31, 2019 through September 30, 2020

                  

3

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019

 

4

Notes to the Condensed Consolidated Financial Statements

 

5

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

 

25

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

36

Item 4. Controls and Procedures

 

36

 

 

 

Part II — Other Information

 

38

 

 

 

Item 1. Legal Proceedings

 

38

Item 1A. Risk Factors

 

38

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

43

Item 3. Defaults Upon Senior Securities

 

43

Item 4. Mine Safety Disclosures

 

43

Item 5. Other Information

 

43

Item 6. Exhibits

 

44

 

“Sientra”, “Sientra Platinum20”, “Sientra Full Circle”, “OPUS”, “Allox”, “Allox2”, “BIOCORNEUM”, “Curve”, “Dermaspan”, “Luxe”, “Softspan”, “Silishield”, “miraDry”, “Miramar Labs”, “miraDry and Design”, “miraDry Fresh”, “bioTip”, “The Sweat Stops Here”, “No Sweat No Stress”, “Sweat Less Live More”, “Drop Design”, “miraWave”, “miraSmooth”, “miraFresh”, “freshRewards”, “freshNet”, “freshEquity”, “freshConnect”, and “ML Stylized mark” are trademarks of our company. Our logo and our other trade names, trademarks and service marks appearing in this document are our property. Other trade names, trademarks and service marks appearing in this document are the property of their respective owners. Solely for convenience, our trademarks and trade names referred to in the document, appear without the TM or the (R) symbol, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the rights of the applicable licensor to these trademarks and trade names.

 


 

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIENTRA, INC.

Condensed Consolidated Balance Sheets

(In thousands, except per share and share amounts)

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

63,483

 

 

$

87,608

 

Accounts receivable, net of allowances of $4,893 and $3,835 at September 30, 2020 and December 31, 2019, respectively

 

 

23,637

 

 

 

27,548

 

Inventories, net

 

 

48,467

 

 

 

39,612

 

Prepaid expenses and other current assets

 

 

2,113

 

 

 

2,489

 

Total current assets

 

 

137,700

 

 

 

157,257

 

Property and equipment, net

 

 

12,742

 

 

 

12,314

 

Goodwill

 

 

9,202

 

 

 

9,202

 

Other intangible assets, net

 

 

9,719

 

 

 

17,390

 

Other assets

 

 

8,441

 

 

 

8,241

 

Total assets

 

$

177,804

 

 

$

204,404

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

928

 

 

$

6,508

 

Accounts payable

 

 

4,071

 

 

 

9,352

 

Accrued and other current liabilities

 

 

26,679

 

 

 

32,551

 

Customer deposits

 

 

15,490

 

 

 

13,943

 

Sales return liability

 

 

10,079

 

 

 

8,116

 

Total current liabilities

 

 

57,247

 

 

 

70,470

 

Long-term debt

 

 

63,330

 

 

 

38,248

 

Derivative liability

 

 

24,520

 

 

 

 

Deferred and contingent consideration

 

 

5,342

 

 

 

5,177

 

Warranty reserve and other long-term liabilities

 

 

9,281

 

 

 

8,627

 

Total liabilities

 

 

159,720

 

 

 

122,522

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value – Authorized 10,000,000 shares; none issued or outstanding

 

 

 

 

 

 

Common stock, $0.01 par value — Authorized 200,000,000 shares; issued 50,507,635 and 49,612,907 and outstanding 50,434,908 and 49,540,180 shares at September 30, 2020 and December 31, 2019, respectively

 

 

504

 

 

 

495

 

Additional paid-in capital

 

 

555,465

 

 

 

550,562

 

Treasury stock, at cost (72,727 shares at September 30, 2020 and December 31, 2019)

 

 

(260

)

 

 

(260

)

Accumulated deficit

 

 

(537,625

)

 

 

(468,915

)

Total stockholders’ equity

 

 

18,084

 

 

 

81,882

 

Total liabilities and stockholders’ equity

 

$

177,804

 

 

$

204,404

 

 

See accompanying notes to condensed consolidated financial statements.

1


 

SIENTRA, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share and share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net sales

 

$

19,217

 

 

$

22,412

 

 

 

48,597

 

 

 

60,489

 

Cost of goods sold

 

 

8,391

 

 

 

9,754

 

 

 

20,733

 

 

 

24,041

 

Gross profit

 

 

10,826

 

 

 

12,658

 

 

 

27,864

 

 

 

36,448

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

12,872

 

 

 

18,668

 

 

 

37,614

 

 

 

60,987

 

Research and development

 

 

2,060

 

 

 

3,201

 

 

 

7,747

 

 

 

9,526

 

General and administrative

 

 

10,238

 

 

 

12,249

 

 

 

27,500

 

 

 

37,538

 

Restructuring

 

 

(386

)

 

 

 

 

 

1,849

 

 

 

 

Impairment

 

 

 

 

 

 

 

 

6,432

 

 

 

12,674

 

Total operating expenses

 

 

24,784

 

 

 

34,118

 

 

 

81,142

 

 

 

120,725

 

Loss from operations

 

 

(13,958

)

 

 

(21,460

)

 

 

(53,278

)

 

 

(84,277

)

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

5

 

 

 

510

 

 

 

203

 

 

 

1,083

 

Interest expense

 

 

(2,059

)

 

 

(1,344

)

 

 

(7,289

)

 

 

(3,276

)

Change in fair value of derivative liability

 

 

10,090

 

 

 

 

 

 

(8,420

)

 

 

 

Other income (expense), net

 

 

101

 

 

 

(139

)

 

 

74

 

 

 

(101

)

Total other income (expense), net

 

 

8,137

 

 

 

(973

)

 

 

(15,432

)

 

 

(2,294

)

Loss before income taxes

 

 

(5,821

)

 

 

(22,433

)

 

 

(68,710

)

 

 

(86,571

)

Income tax

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(5,821

)

 

$

(22,433

)

 

 

(68,710

)

 

 

(86,571

)

Basic and diluted net loss per share attributable to common stockholders

 

$

(0.12

)

 

$

(0.45

)

 

 

(1.37

)

 

 

(2.30

)

Weighted average outstanding common shares used for net loss per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

50,394,858

 

 

 

49,401,094

 

 

 

50,155,623

 

 

 

37,671,215

 

 

See accompanying notes to condensed consolidated financial statements.

 

2


 

SIENTRA, INC.

Condensed Consolidated Statement of Stockholders' Equity

(In thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Preferred stock

 

 

Common stock

 

 

Treasury stock

 

 

paid-in

 

 

Accumulated

 

 

stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

equity

 

Balances at December 31, 2018

 

 

 

 

$

 

 

 

28,701,494

 

 

$

286

 

 

 

72,727

 

 

$

(260

)

 

$

428,949

 

 

$

(362,097

)

 

$

66,878

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,772

 

 

 

 

 

 

3,772

 

Stock option exercises

 

 

 

 

 

 

 

 

 

 

45,453

 

 

 

 

 

 

 

 

 

 

 

 

106

 

 

 

 

 

 

106

 

Employee stock purchase program (ESPP)

 

 

 

 

 

 

 

 

68,899

 

 

 

1

 

 

 

 

 

 

 

 

 

682

 

 

 

 

 

 

683

 

Vested restricted stock

 

 

 

 

 

 

 

 

671,245

 

 

 

7

 

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

 

Shares withheld for tax obligations on vested RSUs

 

 

 

 

 

 

 

 

(212,714

)

 

 

(2

)

 

 

 

 

 

 

 

 

(2,723

)

 

 

 

 

 

(2,725

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,484

)

 

 

(26,484

)

Balances at March 31, 2019

 

 

 

 

 

 

 

 

29,274,377

 

 

$

292

 

 

 

72,727

 

 

$

(260

)

 

$

430,779

 

 

$

(388,581

)

 

$

42,230

 

Proceeds from follow-on offering, net of costs

 

 

 

 

 

 

 

 

20,000,000

 

 

 

200

 

 

 

 

 

 

 

 

 

107,534

 

 

 

 

 

 

107,734

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,963

 

 

 

 

 

 

2,963

 

Vested restricted stock

 

 

 

 

 

 

 

 

88,454

 

 

 

1

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

Shares withheld for tax obligations on vested RSUs

 

 

 

 

 

 

 

 

(12,565

)

 

 

 

 

 

 

 

 

 

 

 

(100

)

 

 

 

 

 

(100

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37,654

)

 

 

(37,654

)

Balances at June 30, 2019

 

 

 

 

$

 

 

 

49,350,266

 

 

$

493

 

 

 

72,727

 

 

$

(260

)

 

$

541,175

 

 

$

(426,235

)

 

$

115,173

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,115

 

 

 

 

 

 

3,115

 

Stock option exercises

 

 

 

 

 

 

 

 

3,271

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

9

 

Employee stock purchase program (ESPP)

 

 

 

 

 

 

 

 

106,725

 

 

 

1

 

 

 

 

 

 

 

 

 

533

 

 

 

 

 

 

534

 

Vested restricted stock

 

 

 

 

 

 

 

 

92,676

 

 

 

1

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

Shares withheld for tax obligations on vested RSUs

 

 

 

 

 

 

 

 

(18,524

)

 

 

 

 

 

 

 

 

 

 

 

(131

)

 

 

 

 

 

(131

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,433

)

 

 

(22,433

)

Balances at September 30, 2019

 

 

 

 

$

 

 

 

49,534,414

 

 

$

495

 

 

 

72,727

 

 

$

(260

)

 

$

544,700

 

 

$

(448,668

)

 

$

96,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Preferred stock

 

 

Common stock

 

 

Treasury stock

 

 

paid-in

 

 

Accumulated

 

 

stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

equity

 

Balances at December 31, 2019

 

 

 

 

$

 

 

 

49,612,907

 

 

$

495

 

 

 

72,727

 

 

$

(260

)

 

$

550,562

 

 

$

(468,915

)

 

$

81,882

 

Issuance of common stock through ATM

 

 

 

 

 

 

 

 

37,000

 

 

 

1

 

 

 

 

 

 

 

 

 

263

 

 

 

 

 

 

264

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,000

 

 

 

 

 

 

2,000

 

Employee stock purchase program (ESPP)

 

 

 

 

 

 

 

 

113,615

 

 

 

1

 

 

 

 

 

 

 

 

 

533

 

 

 

 

 

 

534

 

Vested restricted stock

 

 

 

 

 

 

 

 

472,914

 

 

 

5

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

 

Shares withheld for tax obligations on vested RSUs

 

 

 

 

 

 

 

 

(157,412

)

 

 

(2

)

 

 

 

 

 

 

 

 

(1,199

)

 

 

 

 

 

(1,201

)

Net loss