Commitments and Contingencies |
12 Months Ended |
|---|---|
Dec. 31, 2025 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Commitments and Contingencies Service Agreements
The Company pays a third party a facility fee for the use of clean-rooms, manufacturing, storage, and office space and for services in support of its tissue processing including for routine sterilization of daily supplies, providing disposable supplies and microbial services, and office support pursuant to a License and Services Agreement, as amended (the “License and Services Agreement”). Pursuant to the License and Services Agreement, the Company recorded expenses of $915, $910 and $2,327 for the years ended December 31, 2025, 2024 and 2023, respectively, in Cost of goods sold. The License and Services Agreement was amended on December 21, 2023, extending the term through December 31, 2026. The License and Services Agreement may be terminated by either party by providing an 18 month written notice. While the Company ended its utilization of the same third party for Avance Nerve Graft in the fourth quarter of 2023, the Company continues to utilize the same third party for processing and packaging of Avive+ Soft Tissue Matrix.
In December 2011, the Company entered into a Master Services Agreement for Clinical Research and Related Services. The Company was required to pay $151 upon execution of this agreement and the remainder monthly based on activities associated with the execution of the Company’s Phase III pivotal clinical trial to support the BLA for Avance. The Master Services Agreement for Clinical Research and Related Services was completed in 2023. Payments made under this agreement were $191 for the year ended December 31, 2023.
Distribution and Supply Agreements
On August 27, 2008, the Company entered into an exclusive distribution agreement with Cook Biotech Incorporated (acquired on January 31, 2024 by RTI Surgical, Inc. and rebranded on December 17, 2024 as Evergen) (“Evergen”), to distribute the Axoguard Nerve Connector and Axoguard Nerve Protector products worldwide and the parties subsequently amended the agreement on August 4, 2023 (the “Distribution Agreement”). The Distribution Agreement expires on December 31, 2030. The Distribution Agreement establishes a formula for the transfer cost of the Axoguard Nerve Connector and Axoguard Nerve Protector products and requires certain minimum purchases by the Company, although, through mutual agreement, the parties have not established such minimums; and, to date, have not enforced such provision. Under the Distribution Agreement, the Company provides purchase orders to Evergen, and Evergen fulfills the purchase orders. The Distribution Agreement allows for termination provisions for both parties. The loss of the ability to sell the Axoguard Nerve Connector and Axoguard Nerve Protector products could have a material adverse effect on the Company’s business until other replacement products would be available.
The Company entered into the Nerve End Cap Supply Agreement dated June 27, 2017, as amended on April 6, 2020 and August 4, 2023 (the “Amended Supply Agreement”) with Evergen whereby Evergen is the exclusive contract manufacturer of the Axoguard Nerve Cap. The Amended Supply Agreement expires on December 31, 2030. The Amended Supply Agreement establishes the terms and conditions in which Evergen will manufacture the product for the Company. Under the Amended Supply Agreement, the Company provides purchase orders to Evergen and Evergen fulfills the purchase orders. The Amended Supply Agreement allows for termination provisions for both parties. The loss of the ability to sell the Axoguard Nerve Cap product could have a material adverse effect on the Company’s business until other replacement products would be available.
In May 2023, the Company entered into a Supply and Manufacturing Agreement (“Axoguard HA+ Nerve Protector Supply Agreement”) with Evergen whereby Evergen is the exclusive contract manufacturer of the Axoguard HA + Nerve Protector. The Axoguard HA+ Nerve Protector Supply Agreement expires on July 1, 2030. The Axoguard HA+ Nerve Protector Supply Agreement establishes the terms and condition in which Evergen will manufacture, package, label and deliver the product to the Company. Under the Axoguard HA+ Nerve Protector Supply Agreement, the Company provides purchase orders to Evergen, and Evergen fulfills the purchase orders. The Axoguard HA+ Nerve Protector Supply Agreement allows for termination provisions for both parties. The loss of the ability to sell the Axoguard HA + Nerve Protector product could have a material adverse effect on the Company’s business until other replacement products would be available.
Insurance Financing Agreement
The Company entered into an Insurance Financing Agreement on December 31, 2024. Outstanding payments owed of $1,255 under the Insurance Financing Agreement were included in Prepaid expenses and other on the Consolidated Balance Sheet as of December 31, 2024.
Processing Facilities
The Company is highly dependent on the continued availability of its processing facilities at its APC Facility in Vandalia, Ohio and the facility it leases Dayton, Ohio and could be harmed if the physical infrastructure of these facilities is unavailable for any prolonged period of time.
Certain Economic Development Grants
The Company obtained certain economic development grants from state and local authorities totaling up to $2,685 including $1,250 of cash grants to offset costs to acquire and develop the APC Facility. Certain of these economic development grants were subject to fixed asset investments and job creation milestones by December 31, 2024, and have clawback clauses if the Company does not meet the job creation milestones. The Company has not met certain job creation milestones and has requested a reduction or waiver of clawbacks or extensions from the grant authorities to extend the job creation milestones. In October 2025, the Company received notification from certain grant authorities that the Company is expected to satisfy our job creation milestone, assuming we continue to maintain certain headcount and payroll amount thresholds through December 31, 2026. If the Company is unable to maintain minimum requirements under our grant agreements the Company could be obligated to pay back up to approximately $950 as of December 31, 2025 related to these grants. As of December 31, 2025, the Company had received $1,250 in cash grants related to these economic development grants during the years ended 2021 and 2020.
Fair Value of the Debt Derivative Liabilities
The fair value of the debt derivative liabilities is $3,886 as of December 31, 2025. The fair value of the debt derivative liabilities was determined using a probability-weighted expected return model based upon three potential settlement scenarios for the Credit Facility which are described in Note 2 - Summary of Significant Accounting Policies – Derivative Instruments. The estimated settlement value of each scenario includes any required Make-Whole Payment, see Note 9 - Long-Term Debt, Net of Debt Discount and Financing Fees, and then discounted to present value using a discount rate that is derived based upon the initial terms of the Credit Facility at issuance and corroborated utilizing a synthetic rating analysis. The calculated fair values under the three scenarios are then compared to the fair value of a plain vanilla note, with the difference reflecting the fair value of the debt derivative liabilities. The Company estimated the Make-Whole Payment required under each scenario according to the terms of the Credit Facility to generate an internal rate of return equal to 11.5% through the scheduled maturity dates, less the total of all quarterly interest and royalty payments previously paid to the Lender. The calculation utilized the XIRR function in Microsoft Excel as required by the Credit Facility.
The Company is aware that the Lender has an alternative interpretation of the calculation of the Make-Whole Payment. The Company estimates the top end of the range of the Make-Whole Payment under an alternative interpretation to be approximately $15,500 for the first tranche of the Credit Facility due on June 30, 2027, and approximately $8,200 for the second tranche of the Credit Facility due on June 30, 2028. Under the alternative interpretation of the calculation, if the Credit Facility was to be prepaid in whole as of December 31, 2025, the Make-Whole Payment, in excess of the outstanding principal of the Credit Facility, is estimated to be approximately $23,700.
In January 2026, the Company entered into a Payoff Letter with the Lender pursuant to which the final Payoff Amount for the Credit Facility, including the Make-Whole Payment, was $69,707. On January 28, 2026, the Company remitted the Payoff Amount to the Lender and after satisfaction of all other conditions specified in the Payoff Letter, all obligations under the Credit Facility were paid in full. See Note 9 - Long-Term Debt, Net of Debt Discount and Financing Fees for additional details regarding the Payoff Letter and termination of the Credit Facility.
Other Commitments
Certain executive officers of the Company are parties to employment contracts. Such contracts have severance payments for certain conditions including change of control.
Legal Proceedings
The Company is and may be subject to various claims, lawsuits, and proceedings in the ordinary course of the Company’s business. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. While there can be no assurances as to the ultimate outcome of any legal proceeding or other loss contingency involving the Company. In the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected, individually or in the aggregate, to result in a material, adverse effect on the Company's financial condition, results of operations or cash flows. However, it is possible that the Company’s results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies.
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