Sight Sciences(SGHT) - 2024 Q4 - Annual Report

Special Note Regarding Forward-Looking Statements The Annual Report contains forward-looking statements, and actual results may differ due to various risks and uncertainties - The Annual Report on Form 10-K contains forward-looking statements, and actual events or results may differ from those expressed due to various risks and uncertainties[11][12][13] - Key areas of uncertainty include the ability to obtain and maintain sufficient reimbursement for products, manage business growth, compete effectively, maintain compliance with credit facilities, scale infrastructure, protect intellectual property, navigate government regulation, hire and retain key personnel, obtain future financing, and manage stock price volatility[12] PART I This section provides an overview of the company's business, products, strategies, and associated risks Item 1. Business Sight Sciences, Inc. is an ophthalmic medical device company developing technologies for glaucoma and dry eye disease Overview Sight Sciences focuses on glaucoma and dry eye disease with estimated U.S. market opportunities of $6.0 billion and $3.0 billion respectively - Sight Sciences' mission is to develop transformative, interventional technologies for eyecare, focusing on two prevalent and underserved eye diseases: glaucoma and dry eye disease (DED)[21][22] - The estimated annual addressable U.S. market opportunities are approximately $6.0 billion for surgical glaucoma (split between $1.0 billion in combination cataract and $5.0 billion in standalone procedures) and $3.0 billion for dry eye[22] - The company offers OMNI and SION for Surgical Glaucoma and the TearCare system for Dry Eye, aiming to establish them as standards of care[25][31] Our Solutions The company offers OMNI and SION for surgical glaucoma and TearCare for dry eye disease - The OMNI Surgical System enables microinvasive glaucoma surgery (MIGS) to reduce intraocular pressure (IOP) in adult primary open-angle glaucoma (POAG) patients by addressing all three known areas of resistance in the eye's outflow pathway[40][41] - SION Surgical Instrument is a bladeless, manually operated device for excising trabecular meshwork, registered as a Class I 510(k) exempt device, targeting specific subsets of cataract surgeons[45][46] - The TearCare System is a proprietary, interventional dry eye device cleared by the FDA for localized heat therapy in adult patients with evaporative DED due to meibomian gland dysfunction (MGD), when used with manual expression[47][53] Our Success Factors and Growth Strategy Success factors include large market opportunities and transformative technologies, with a growth strategy focused on establishing product standards of care - Success factors include large market opportunities, transformative technologies, exceptional customer experience, clinical and commercial excellence, economic value, and a strong team culture[54] - The growth strategy focuses on establishing OMNI and SION as standards of care, expanding the Standalone Market Segment with OMNI, driving fair market access for TearCare, and continuous innovation[54][59] Clinical Data The company conducts robust clinical trial programs for its products, demonstrating safety and effectiveness through published studies - The company conducts robust clinical trial programs for POAG and MGD, including randomized controlled trials (RCTs) and real-world studies, to evaluate product safety, effectiveness, and durability[56] - For OMNI, 34 articles have been published in peer-reviewed journals since 2018, with a 36-month real-world study demonstrating clinically and statistically significant reductions in IOP (5.6 to 7.1 mmHg) and decreased medication use[57][59][61] - TearCare's OLYMPIA RCT showed statistically significant clinical improvements in DED signs and symptoms, while the SAHARA RCT Phase 1 demonstrated superiority over Restasis® eyedrops in improving tear breakup time (TBUT)[64][66] IRIS® Registry and Meta Analysis | Name | Description | |---|---| | IRIS® Registry | Evaluate retrospective, real-world data for OMNI and competing products from IRIS® Registry in the U.S., including disease-severity outcomes, ethnic minorities outcomes, and standalone outcomes | | Meta Analysis | Meta analysis that combines and analyzes the results of all studies of procedures performed by OMNI to systematically assess the results of previous research to derive conclusions about the procedures performed by OMNI and the related safety and efficacy of such procedures | SAHARA Clinical Trial | Name | Description | |---|---| | SAHARA | NCT04795752: Prospective, Randomized, Masked, Controlled Trial To Evaluate The Safety And Effectiveness Of The TearCare® System In The Treatment Of The Signs And Symptoms Of Dry Eye Disease. Control group will self-administer Restasis® for six months then receive one TearCare treatment. Following the six-month primary endpoint, patients in the control group stopped Restasis and received a single TearCare treatment and continued to be followed for an additional six months. Patients in the TearCare group will continue to be followed for an additional 18 months with repeat TearCare treatments as needed according to protocol specified criteria. | Commercial Approach The company employs a direct sales organization with specialized teams for surgical glaucoma and dry eye segments - The company employs a world-class direct sales commercial organization with approximately 127 professionals dedicated to sales, marketing, commercial support, training, and professional relations as of December 31, 2024[71] - Distinct sales, marketing, and training teams support the Surgical Glaucoma (OMNI, SION to ASCs/HOPDs) and Dry Eye (TearCare to optometry/ophthalmology practices) segments due to specialized expertise requirements[72] - Sales may be impacted by seasonal factors (e.g., ECP vacations, holidays) and reimbursement changes, such as the Final LCDs published in Q4 2024, which implemented restrictions on multiple MIGS procedures performed concurrently with cataract surgery[74] Reimbursement Medicare Final LCDs impact coverage for MIGS procedures, while TearCare currently lacks formal reimbursement - Medicare Final LCDs, effective November 2024, confirmed coverage for Combination Cataract Procedures (single MIGS with cataract surgery) for OMNI and SION but adopted a non-coverage policy for multiple MIGS procedures performed concurrently[78][168] - Approximately 15% of total MIGS codes billed in the nine months ended September 30, 2024, were for multiple MIGS procedures, indicating a potential reduction in overall MIGS claims volumes due to the new non-coverage policy[169] - TearCare currently lacks formal Medicare or private payor coverage, relying on cash-pay or case-based coverage, but the company is pursuing a market access plan leveraging clinical data (OLYMPIA, SAHARA) and budget impact analyses[86][87][90] HCPCS Code Payment Rates | HCPCS Code | Descriptor | HOPD Facility Payment Rate 2024 | HOPD Facility Payment Rate 2025 | ASC Facility Payment Rate 2024 | ASC Facility Payment Rate 2025 | Physician Payment Rate 2024 | Physician Payment Rate 2025 | |---|---|---|---|---|---|---|---| | 65820 | Goniotomy | $3,874 | $4,023 | $2,045 | $2,094 | $803 | $786 | | 66174 | Canaloplasty | $3,874 | $4,023 | $2,045 | $2,094 | $608 | $600 | Competition The company operates in a highly competitive medical device industry with established competitors offering alternative products - The medical device industry is highly competitive, with key competitors including Glaukos, Alcon, AbbVie, Novartis, Johnson & Johnson, Nova Eye Medical, and New World Medical[92] - Recent increases in customer trialing of alternative MIGS products, often offered at lower prices than OMNI, have had a near-term adverse impact on OMNI utilization[93] - Competitors often possess advantages such as greater name recognition, broader relations with healthcare professionals, more established distribution networks, additional product lines, and greater financial and human resources[95] Manufacturing The company relies on third-party, often single-source, contract manufacturers, with U.S. tariffs impacting gross margins - The company relies entirely on third-party contract manufacturers, many of which are single-source suppliers, for its products and components[96][100] - A significant portion of OMNI and SION products, and certain TearCare system components, are produced and assembled by PTCS in China[100] - U.S. tariffs on Chinese imports, totaling 20% as of March 2025, will negatively impact the company's gross margins[101] Intellectual Property The company protects its proprietary position through U.S. and foreign patents, trademarks, and trade secrets - The company protects its proprietary position through U.S. and foreign patents, trademarks, trade secrets, and technological innovation[105] Intellectual Property Portfolio | Type | Count | |---|---| | Issued U.S. Patents | 49 | | Issued Foreign Patents | 65 | | Pending U.S. Non-Provisional Patent Applications | 24 | | Pending Foreign Patent Applications | 26 | | Pending Patent Cooperation Treaty Patent Applications | 3 | | U.S. Trademark Registrations | 9 | | EU Trademark Registrations | 2 | | German Trademark Registrations | 2 | | Swiss Trademark Registrations | 2 | | UK Trademark Registrations | 2 | | Brazilian Trademark Registrations | 1 | - Issued U.S. patents have expiration dates between 2027 and 2043, with a majority expiring between 2031 and 2035[109] Government Regulation Products and operations are subject to extensive FDA and international regulations, including healthcare fraud and abuse laws - The company's products and operations are subject to extensive regulation by the FDA in the United States and comparable authorities in foreign jurisdictions, including the EU MDR and UK MDR[113][131][136] - OMNI and TearCare are regulated as Class II devices requiring 510(k) clearance, while SION is a Class I 510(k) exempt device[118] - The company is subject to federal and state healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Physician Payments Sunshine Act) and data privacy and security laws (e.g., HIPAA, CCPA, GDPR, UK GDPR)[137][140][141][142][153][154][155] Human Capital The company had 216 full-time employees as of December 31, 2024, focusing on talent attraction and retention - As of December 31, 2024, the company had 216 full-time employees[156] - The company focuses on attracting and retaining talent through competitive compensation and benefits, talent development, health, safety and wellness programs, and a commitment to diversity, equity, inclusion, and belonging (DEIB)[157][158][159][160] Additional Information Sight Sciences, Inc. was incorporated in Delaware in 2010, with investor information available online - Sight Sciences, Inc. was incorporated as a Delaware corporation on February 10, 2010[162] - Investor information, including SEC filings, is available free of charge on the company's investor relations website[162] Item 1A. Risk Factors This section details numerous risks that could materially affect the company's business, financial condition, and results of operations Risks Related to Our Business Key business risks include significant losses, dependence on OMNI sales, reimbursement challenges, and reliance on third-party manufacturers - The company has a history of significant net losses ($51.5 million in 2024, $55.5 million in 2023) and an accumulated deficit of $346.3 million as of December 31, 2024, and expects to incur future losses[165] - The business is highly dependent on revenue from OMNI sales, and the Final LCDs, effective November 2024, restricting multiple MIGS procedures with cataract surgery, are expected to reduce overall MIGS claims volumes and adversely impact revenue[167][169] - The company relies on a limited number of third-party, often single-source, manufacturers, many located in China, exposing it to supply chain disruptions and increased costs due to U.S. tariffs (20% as of March 2025) on Chinese imports[199][201] - The company has a significant amount of debt ($40.0 million outstanding as of December 31, 2024) under the Hercules Loan Agreement, which imposes financial covenants and restrictions on operations[247][248] Risks Related to Our Intellectual Property Commercial success depends on protecting intellectual property, with patent law changes and ongoing litigation posing risks - Commercial success depends on the ability to obtain, maintain, and protect intellectual property rights, but patent applications may not result in issued patents or provide meaningful protection[270][271] - Changes in patent law (e.g., Leahy-Smith Act, Unitary Patent System in Europe) could diminish the value of patents and increase prosecution and enforcement costs[273][275] - The company is involved in intellectual property litigation against Alcon and Ivantis, with a $34 million jury verdict in its favor in April 2024, though the outcome is subject to post-trial motions and appeal[279] Risks Related to Government Regulation Extensive government regulation, potential delays in approvals, and compliance failures pose significant operational and financial risks - The company's products and operations are subject to extensive and stringent government regulation by the FDA in the U.S. and internationally, including the EU Medical Device Regulation (EU MDR)[288][293] - Delays or denials in obtaining necessary regulatory clearances, certifications, or approvals for new products or modifications could adversely affect business growth[290][292] - Failure to comply with post-marketing requirements (e.g., QSR, medical device reporting) or promoting off-label uses could result in enforcement actions, product recalls, or substantial penalties[298][299][303] - The company is subject to federal, state, and foreign fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA) and health information privacy and security laws (e.g., HIPAA, GDPR), with potential for substantial penalties for violations[311][315][317] Risks Related to Our Common Stock The common stock price is highly volatile, influenced by reimbursement changes and corporate charter provisions - The market price of the company's common stock is highly volatile and can fluctuate substantially due to various factors, including changes in analyst estimates, reimbursement coverage, and general market conditions[322] - The publication of Prior LCDs and subsequent Final LCDs (effective November 2024) adversely affected the business and stock price due to uncertainty regarding coverage and reimbursement for OMNI procedures[323] - Provisions in corporate charter documents (e.g., classified board, no cumulative voting, board's ability to issue preferred stock) and Delaware law (Section 203) could make an acquisition more difficult and limit stockholder influence[329][330] Item 1B. Unresolved Staff Comments This section states that there are no unresolved staff comments - There are no unresolved staff comments[332] Item 1C. Cybersecurity The company has an enterprise-wide cybersecurity program to manage risks, with no material incidents reported to date - The company has an enterprise-wide cybersecurity program, overseen by the Nominating and Corporate Governance Committee and led by the Vice President of Information Technology, to manage cybersecurity risks[333][334] - Key elements of the cybersecurity program include continuous monitoring and defense, third-party software risk assessment, an incident response plan, cybersecurity training programs, and a compliance policy[336] - To date, the company is not aware of any cybersecurity threats or incidents that have materially affected its business strategy, results of operations, or financial condition[336] Item 2. Properties The company leases corporate headquarters in Menlo Park, California, and additional office space in Southlake, Texas - The corporate headquarters are in Menlo Park, California, leasing approximately 11,000 square feet of office, R&D, engineering, and laboratory space, with the lease expiring October 31, 2026[337] - An additional 2,000 square feet of office space is leased in Southlake, Texas, primarily for the commercial team, with the lease expiring May 15, 2026[337] Item 3. Legal Proceedings The company is involved in a patent infringement lawsuit against Ivantis and Alcon, with a $34 million jury verdict in its favor - The company filed a patent infringement lawsuit against Ivantis, Inc. and Alcon Inc. in September 2021, alleging infringement of multiple U.S. patents by the Hydrus® Microstent[338] - On April 26, 2024, a jury awarded the company a positive verdict of $34 million, comprising $5.5 million in lost profits damages and $28.5 million in royalty damages[338] - Post-trial motions are pending, and the judgment will be subject to appeal; the company is currently unable to predict the outcome or reasonably estimate the potential financial impact[338] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable[340] PART II This section covers market information for common equity, financial condition, results of operations, and market risk disclosures Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock is listed on Nasdaq, with no cash dividends declared, and no equity repurchases in 2024 - The company's common stock has been listed on The Nasdaq Global Select Market under the symbol "SGHT" since July 15, 2021[343] - As of February 27, 2025, there were approximately 9 holders of record of the company's common stock[344] - The company has never declared or paid cash dividends and currently intends to retain all available funds and future earnings to fund business operations, development, and expansion[347] Item 6. [Reserved] This item is reserved and contains no information - This item is reserved[351] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, liquidity, and capital resources for 2024 and 2023, highlighting key operational factors Overview Sight Sciences focuses on glaucoma and dry eye, with 2024 revenue impacted by reimbursement challenges and competition - Sight Sciences' mission is to develop transformative, interventional technologies for eyecare, focusing on glaucoma and dry eye disease[353] - Surgical Glaucoma revenue was $75.9 million in 2024 (95% of total), and Dry Eye revenue was $4.0 million (5% of total)[360] - Surgical Glaucoma revenue was relatively flat in 2024 due to reimbursement challenges and increased competition; Dry Eye demand decreased in Q4 2024 due to a price increase aimed at establishing broader reimbursement[361][362] - As of December 31, 2024, the company had $120.4 million in cash and cash equivalents and an accumulated deficit of $346.3 million[365] Factors Affecting Our Business and Results of Operations Business results are influenced by product development, reimbursement rates, market usage, and macroeconomic conditions like tariffs - Product development focuses on continuous innovation, with the OMNI Edge (designed to increase viscoelastic delivery) planned for market release in the first half of 2025[367][369] - Reimbursement rates and coverage are critical; Final LCDs (effective November 2024) restrict multiple MIGS procedures, and the company is actively seeking equitable reimbursement for TearCare[371][373] - Maximizing product usage involves establishing OMNI as a standard of care, differentiating SION for specific surgeon needs, and improving patient access and market education for TearCare[376][377][378][379] - Macroeconomic conditions, including U.S. tariffs (20% as of March 2025) on Chinese imports, will negatively impact gross margins due to a significant portion of products being manufactured in China[381] Components of Our Results of Operations This section details the primary drivers of revenue, cost of goods sold, gross margin, and operating expenses - Revenue is primarily derived from Surgical Glaucoma (OMNI, SION) and Dry Eye (TearCare) product sales, influenced by demand, reimbursement rates, and competition[383][384] - Cost of goods sold consists mainly of amounts paid to third-party manufacturers, manufacturing overhead, and reserves for excess, obsolete, and non-sellable inventory[385] - Gross margin is affected by segment mix, average selling prices, reimbursement rates, production volumes, manufacturing costs, and macroeconomic conditions, including tariffs[387] - Research and development (R&D) expenses, primarily for product development and clinical studies, are expected to increase as the company invests in active clinical trial programs and new products[388] - Selling, general and administrative (SG&A) expenses, covering sales, marketing, and corporate functions, are expected to increase with commercial expansion and new product launches[389][390] Results of Operations (Comparison of the Years Ended December 31, 2024 and 2023) Total revenue decreased by 1.5% in 2024, primarily due to a significant decline in Dry Eye segment revenue Consolidated Results of Operations | Metric | 2024 (thousands) | 2023 (thousands) | Change ($ thousands) | Change (%) | |---|---|---|---|---| | Revenue | | | | | | Surgical Glaucoma | $75,902 | $74,310 | $1,592 | 2.1% | | Dry Eye | $3,964 | $6,746 | $(2,782) | (41.2)% | | Total Revenue | $79,866 | $81,056 | $(1,190) | (1.5)% | | Cost of Goods Sold | | | | | | Surgical Glaucoma | $9,448 | $8,830 | $618 | 7.0% | | Dry Eye | $2,133 | $3,051 | $(918) | (30.1)% | | Total Cost of Goods Sold | $11,581 | $11,881 | $(300) | (2.5)% | | Gross Profit | | | | | | Surgical Glaucoma | $66,454 | $65,480 | $974 | 1.5% | | Dry Eye | $1,831 | $3,695 | $(1,864) | (50.4)% | | Total Gross Profit | $68,285 | $69,175 | $(890) | (1.3)% | | Gross Margin | | | | | | Surgical Glaucoma | 87.6% | 88.1% | -0.5% | | | Dry Eye | 46.2% | 54.8% | -8.6% | | | Total Gross Margin | 85.5% | 85.3% | 0.2% | | | Operating Expenses | | | | | | Research and development | $17,991 | $17,556 | $435 | 2.5% | | Selling, general and administrative | $100,826 | $108,893 | $(8,067) | (7.4)% | | Total Operating Expenses | $118,817 | $126,449 | $(7,632) | (6.0)% | | Net Loss | $(51,507) | $(55,547) | $4,040 | (7.3)% | - Total revenue decreased by 1.5% to $79.9 million in 2024, primarily due to a 41.2% decrease in Dry Eye revenue ($2.8 million) resulting from fewer SmartHubs and SmartLids sales following a price increase[396] - Selling, general, and administrative (SG&A) expenses decreased by $8.1 million (7.4%) in 2024, mainly due to a $5.3 million decrease in personnel expenses, $1.7 million in marketing, and $1.6 million in legal expenses, partially offset by a $2.4 million increase in stock-based compensation[401] Cash Flows Net cash used in operating activities significantly decreased in 2024, with financing activities providing $5.0 million Consolidated Cash Flow Summary | Metric | 2024 (thousands) | 2023 (thousands) | |---|---|---| | Net cash used in operating activities | $(22,351) | $(47,184) | | Net cash used in investing activities | $(385) | $(791) | | Net cash provided by financing activities | $4,964 | $1,104 | | Net decrease in cash | $(17,772) | $(46,871) | - Net cash used in operating activities decreased significantly from $47.2 million in 2023 to $22.4 million in 2024, driven by a lower net loss and favorable changes in operating assets and liabilities[406] - Net cash provided by financing activities in 2024 was $5.0 million, primarily from $39.5 million in proceeds from the Hercules Loan Agreement, partially offset by the $35.4 million repayment of the MidCap Loan Agreement[410] Liquidity and Capital Resources The company had $120.4 million in cash and equivalents and $40.0 million outstanding under the Hercules Loan Agreement as of December 31, 2024 - As of December 31, 2024, the company had $120.4 million in cash and cash equivalents and $40.0 million outstanding under the Hercules Loan Agreement[412] - The Hercules Loan Agreement provides a maximum $65.0 million credit facility, with $40.0 million funded by December 2024, and additional tranches contingent on performance milestones and lender approval[411] - The Hercules Loan Agreement has a maturity date of July 1, 2028, with an interest-only period of 30-36 months, and a floating interest rate (10.35% at December 31, 2024)[416] - The prior MidCap Term Loan Agreement was terminated and fully repaid in January 2024, resulting in a $2.0 million loss on debt extinguishment[404][516] Off-Balance Sheet Arrangements The company does not have any off-balance sheet arrangements - The company does not have any off-balance sheet arrangements[422] Critical Accounting Estimates Key accounting estimates include stock-based compensation, allowance for credit losses, and inventory obsolescence - Critical accounting estimates include stock-based compensation (fair value of options using Black-Scholes model, RSUs at closing price), allowance for credit losses, inventory excess and obsolescence, and useful lives of property and equipment[424][425][426] - These estimates are based on historical experience and current conditions, but actual results may differ materially[424] Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations, with a hypothetical 1.0% change not expected to be material - The company's exposure to interest rate risk is primarily confined to its cash and cash equivalents and its outstanding credit agreement[428] - As of December 31, 2024, the company had $120.4 million in cash, cash equivalents, and investments, consisting of bank deposits, money market funds, and U.S. treasury bills[428] - With $40.0 million outstanding under the Hercules Loan Agreement at a floating interest rate of 10.35% as of December 31, 2024, a hypothetical 1.0% change in interest rates would not have a material impact on the financial statements[429] Item 8. Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for 2024 and 2023, including notes Consolidated Balance Sheets | Asset/Liability/Equity | 2024 (thousands) | 2023 (thousands) | |---|---|---| | Cash and cash equivalents | $120,357 | $138,129 | | Accounts receivable, net | $10,786 | $14,289 | | Inventory, net | $6,325 | $7,849 | | Total current assets | $139,774 | $162,871 | | Total assets | $142,839 | $166,651 | | Total current liabilities | $15,468 | $12,252 | | Long-term debt, net | $39,356 | $31,708 | | Total liabilities | $55,316 | $46,436 | | Total stockholders' equity | $87,523 | $120,215 | Consolidated Statements of Operations and Comprehensive Loss | Metric | 2024 (thousands) | 2023 (thousands) | |---|---|---| | Revenue | $79,866 | $81,056 | | Cost of goods sold | $11,581 | $11,881 | | Gross profit | $68,285 | $69,175 | | Research and development | $17,991 | $17,556 | | Selling, general and administrative | $100,826 | $108,893 | | Loss from operations | $(50,532) | $(57,274) | | Net loss and comprehensive loss | $(51,507) | $(55,547) | | Net loss per share, basic and diluted | $(1.03) | $(1.14) | Consolidated Statements of Cash Flows | Cash Flow Activity | 2024 (thousands) | 2023 (thousands) | |---|---|---| | Net cash used in operating activities | $(22,351) | $(47,184) | | Net cash used in investing activities | $(385) | $(791) | | Net cash provided by financing activities | $4,964 | $1,104 | | Net change in cash and cash equivalents | $(17,772) | $(46,871) | | Cash and cash equivalents at end of period | $120,357 | $138,129 | Note 1. The Company and Nature of Business Sight Sciences is an ophthalmic medical device company with an accumulated deficit of $346.3 million as of December 31, 2024 - Sight Sciences, Inc. is an ophthalmic medical device company focused on surgical and non-surgical technologies for glaucoma (OMNI, SION) and dry eye disease (TearCare)[454] - As of December 31, 2024, the company had an accumulated deficit of $346.3 million and recorded a net loss of $51.5 million for the year then ended[455] - The company believes its cash and cash equivalents and other existing liquidity sources will fund operations for at least 12 months, but additional financing may be required if financial performance does not improve[456] Note 2. Summary of Significant Accounting Policies Financial statements adhere to US GAAP, requiring estimates, and the company relies on third-party manufacturers - The financial statements are prepared in accordance with US GAAP, requiring management to make estimates and assumptions for reported amounts, including allowance for credit losses, inventory obsolescence, and fair value of stock option grants[459][460] - The company relies on third-party contract manufacturers and a limited number of single-source suppliers for its commercial products, creating concentration of supply chain risk[463] - Revenue is recognized at the point in time when control of promised goods transfers to customers, measured at the amount of consideration expected to be received, including estimates of variable consideration[479] - The company is an "emerging growth company" and "smaller reporting company," allowing for exemptions from certain reporting requirements and extended transition periods for new accounting standards[494] Note 3. Fair Value Measurements Financial instruments are categorized into a three-level fair value hierarchy based on input observability - The company categorizes financial instruments into a three-level fair value hierarchy based on the observability of inputs (Level 1: quoted prices in active markets; Level 2: observable inputs; Level 3: unobservable inputs)[499][500][501][502] - Cash and cash equivalents include Level 1 investments in U.S. treasury securities ($106.5 million in 2024) and money market funds ($6.4 million in 2024)[503] - Outstanding debt ($39.4 million in 2024) is classified as Level 2, and unissued common stock warrants are classified as Level 3 liabilities, valued using the Black-Scholes option pricing method[504][505] Note 4. Balance Sheet Components This note details the composition of property and equipment, accrued liabilities, and other noncurrent liabilities Property and Equipment, Net | Category | 2024 (thousands) | 2023 (thousands) | |---|---|---| | Tools and equipment | $1,991 | $2,010 | | Computer equipment and software | $37 | $37 | | Furniture and fixtures | $402 | $323 | | Leasehold improvements | $38 | $38 | | Construction in process | $1,218 | $859 | | Less: Accumulated depreciation | $(2,106) | $(1,627) | | Property and equipment, net | $1,580 | $1,640 | Accrued and Other Current Liabilities | Category | 2024 (thousands) | 2023 (thousands) | |---|---|---| | Accrued expenses | $2,113 | $1,639 | | Current portion of lease liabilities | $533 | $573 | | Short term interest payable | $344 | $375 | | Other accrued liabilities | $1,107 | $1,187 | | Total accrued and other current liabilities | $4,097 | $3,774 | Other Noncurrent Liabilities | Category | 2024 (thousands) | 2023 (thousands) | |---|---|---| | Noncurrent portion of lease liabilities | $473 | $914 | | Other noncurrent liabilities | $19 | $38 | | Long term interest payable | $0 | $1,524 | | Total other noncurrent liabilities | $492 | $2,476 | Note 5. Debt In January 2024, the company entered into a $65.0 million Hercules Loan Agreement, with $40.0 million funded - In January 2024, the company entered into the Hercules Loan Agreement for a maximum $65.0 million credit facility, with $40.0 million funded by December 2024[510][511] - The Hercules Loan Agreement has a maturity date of July 1, 2028, with an interest-only period of 30-36 months, and a floating annual interest rate (10.35% at December 31, 2024)[512] - The company issued warrants to purchase 135,686 shares and 26,095 shares of common stock to the lenders in conjunction with the loan tranches[513] Debt Outstanding | Category | 2024 (thousands) | 2023 (thousands) | |---|---|---| | Term loan | $40,000 | $35,000 | | Total principal payments due | $40,000 | $35,000 | | Less: debt discount related to warrant liability and issuance costs | $(644) | $(1,073) | | Total amounts outstanding | $39,356 | $33,927 | | Less: Current portion, net of discount | $0 | $(2,219) | | Long-term debt | $39,356 | $31,708 | Future Principal Payments Due | Year | Amount (thousands) | |---|---| | 2025 | $0 | | 2026 | $9,198 | | 2027 | $19,941 | | 2028 | $10,861 | | Thereafter | $0 | | Total repayments | $40,000 | Note 6. Commitments and Contingencies The company has operating lease obligations and was awarded a $34 million jury verdict in patent litigation - The company has various operating lease obligations, including for its corporate headquarters, with a weighted-average remaining lease term of 1.8 years as of December 31, 2024[519][522] Future Minimum Lease Payments | Year | Amount (thousands) | |---|---| | 2025 | $618 | | 2026 | $497 | | Total future minimum lease payments | $1,115 | | Less: imputed interest | $(109) | | Present value of future minimum lease payments | $1,006 | | Less: current portion of operating lease liability | $(533) | | Operating lease liabilities - noncurrent | $473 | - The company was awarded a $34 million jury verdict in a patent infringement lawsuit against Alcon/Ivantis in April 2024, but the outcome is subject to post-trial motions and appeal[523][524] Note 7. Stockholders' Equity The company's certificate of incorporation authorizes 200 million common shares, with 50.9 million outstanding as of December 31, 2024 - The company's certificate of incorporation authorizes 200,000,000 common shares and 10,000,000 preferred shares; as of December 31, 2024, 50,937,999 common shares were issued and outstanding[441][529] - In 2024, the company issued common stock warrants to Hercules Capital, classified as equity, and unissued warrants are recorded as Level 3 liabilities[531][534] Note 8. Equity Incentive Plans The company operates the 2021 Incentive Award Plan and an Employee Stock Purchase Plan, with $17.1 million in stock-based compensation in 2024 - The company operates the 2021 Incentive Award Plan, granting stock options and restricted stock units (RSUs), and an Employee Stock Purchase Plan (ESPP)[536][552] - Stock options generally vest over four years, and RSUs vest over four years in equal installments[537][538] - Total stock-based compensation expense was $17.1 million for the year ended December 31, 2024, and $14.6 million for 2023[557] Stock Option Activity | Metric | Number of Shares | Weighted-Average Exercise Price | |---|---|---| | Outstanding, Dec 31, 2023 | 4,980,190 | $9.00 | | Grants | 7,377 | $4.43 | | Forfeited/cancelled | (316,075) | $10.87 | | Exercised | (207,104) | $1.22 | | Outstanding, Dec 31, 2024 | 4,464,388 | $9.23 | Restricted Stock Unit Activity | Metric | Number of Shares | Weighted-Average Grant Date Fair Value Per Share | |---|---|---| | Outstanding, Dec 31, 2023 | 2,721,361 | $7.61 | | Grants | 3,344,312 | $4.46 | | Forfeited/cancelled | (477,172) | $6.61 | | Vested | (1,246,683) | $6.41 | | Outstanding, Dec 31, 2024 | 4,341,818 | $5.57 | Note 9. Net Loss per Share Attributable to Common Stockholders Basic and diluted net loss per share was $(1.03) in 2024 and $(1.14) in 2023 Net Loss Per Share | Metric | 2024 | 2023 | |---|---|---| | Net loss attributable to common stockholders (thousands) | $(51,507) | $(55,547) | | Weighted-average shares outstanding, basic and diluted | 50,134,104 | 48,628,940 | | Net loss per share, basic and diluted | $(1.03) | $(1.14) | - Basic and diluted net loss per share attributable to common stockholders was $(1.03) in 2024 and $(1.14) in 2023[559] - Potentially dilutive securities (options, RSUs, common stock warrants) were excluded from the computation of diluted net loss per share because their inclusion would have been anti-dilutive due to the company's net loss position[559] Note 10. Income Taxes The company has a full valuation allowance against net deferred tax assets due to historical operating losses - The company uses the asset and liability method of accounting for income taxes and has a full valuation allowance against net deferred tax assets due to historical operating losses[490][562] Provision for Income Taxes | Category | 2024 (thousands) | 2023 (thousands) | |---|---|---| | Federal | $0 | $0 | | Foreign | $236 | $110 | | State | $0 | $0 | | Provision for income taxes | $236 | $110 | Deferred Tax Assets | Category | 2024 (thousands) | 2023 (thousands) | |---|---|---| | Net operating loss carryforwards | $69,105 | $60,753 | | Deferred compensation | $8,669 | $5,547 | | Capitalized research and development expenses | $6,085 | $4,566 | | Research and development credits | $3,361 | $2,357 | | Operating lease liability | $263 | $388 | | Provision for bad debt | $180 | $310 | | Fixed assets | $168 | $137 | | Disallowed interest expense carryover | $0 | $830 | | Other | $79 | $148 | | Gross deferred tax assets | $87,910 | $75,036 | | Less: Valuation allowance | $(87,666) | $(74,655) | | Deferred tax assets, net of valuation allowance | $244 | $381 | - As of December 31, 2024, federal net operating loss carryforwards were approximately $269.2 million ($254.4 million generated after January 1, 2018, subject to an 80% taxable income limitation) and state net operating loss carryforwards were approximately $245.0 million[562] Note 11. Segment Information The company manages its business through two reportable operating segments: Surgical Glaucoma and Dry Eye - The company's Chief Executive Officer, as the Chief Operating Decision Maker (CODM), manages the business through two reportable operating segments: Surgical Glaucoma and Dry Eye[566] - The CODM uses segment gross profit to assess operating performance and make resource allocation decisions; operating expenses are not reviewed or allocated separately for segments[567][568] - Substantially all of the company's revenue is generated from sales in the United States[569] Segment Revenue, Cost of Goods Sold, and Gross Profit | Metric | 2024 (thousands) | 2023 (thousands) | |---|---|---| | Revenue | | | | Surgical Glaucoma | $75,902 | $74,310 | | Dry Eye | $3,964 | $6,746 | | Total Revenue | $79,866 | $81,056 | | Cost of goods sold | | | | Surgical Glaucoma | $9,448 | $8,830 | | Dry Eye | $2,133 | $3,051 | | Total Cost of goods sold | $11,581 | $11,881 | | Gross profit | | | | Surgical Glaucoma | $66,454 | $65,480 | | Dry Eye | $1,831 | $3,695 | | Total Gross profit | $68,285 | $69,175 | Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure This section states that there are no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in and disagreements with accountants on accounting and financial disclosure[572] Item 9A. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024 - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2024[574] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2024, based on the COSO framework[576] - There were no material changes in internal control over financial reporting identified during the fiscal year ended December 31, 2024[578] Item 9B. Other Information No directors or officers adopted, terminated, or modified Rule 10b5-1 trading arrangements in Q4 2024 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended December 31, 2024[583] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - This item is not applicable[584] PART III This section provides information on directors, executive officers, corporate governance, and executive compensation Item 10. Directors, Executive Officers and Corporate Governance This section provides biographical information for the company's executive officers and directors - Key executive officers include Paul Badawi (CEO), David Badawi (CTO), Alison Bauerlein (CFO), Matthew Link (CCO), Jeremy Hayden (CLO), Brenton Taylor (EVP Operations), and Manohar Raheja (EVP R&D)[587][588][589][590][591][592][593] - The Board of Directors includes Staffan Encrantz, Brenda Becker, Tamara Fountain, Erica Rogers, Donald Zurbay, and Catherine Mazzacco[595][596][597][598][599][600][601] - The company has adopted a written Code of Business Conduct and Ethics and an Insider Trading Compliance Policy[602][603] Item 11. Executive Compensation Executive compensation information will be included in the company's 2025 Annual Meeting of Stockholders proxy statement - Executive compensation information will be included in the 2025 Proxy Statement[605] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership information will be included in the company's 2025 Annual Meeting of Stockholders proxy statement - Security ownership information will be included in the 2025 Proxy Statement[606] Item 13. Certain Relationships and Related Transactions, and Director Independence Information on related transactions and director independence will be included in the company's 2025 Annual Meeting of Stockholders proxy statement - Information on certain relationships and related transactions, and director independence, will be included in the 2025 Proxy Statement[607] Item 14. Principal Accountant Fees and Services Principal accountant fees and services information will be included in the company's 2025 Annual Meeting of Stockholders proxy statement - Principal accountant fees and services information will be included in the 2025 Proxy Statement[608] PART IV This section lists exhibits and financial statement schedules, and addresses the Form 10-K Summary Item 15. Exhibits and Financial Statement Schedules This section lists financial statements, schedules, and a detailed exhibit index - The section includes the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations and Comprehensive Loss, Stockholders' Equity, Cash Flows, and Notes to Financial Statements[611] - All financial statement schedules are omitted because they are not applicable or the amounts are immaterial or the required information is presented in the financial statements and notes thereto[611] - The Exhibit Index details various corporate documents, equity incentive plans, employment agreements, supply agreements, and the Loan and Security Agreement with Hercules Capital Inc[616][617] Item 16. Form 10-K Summary This item states that there is no Form 10-K Summary - This item is not applicable[613] SIGNATURES The report is duly signed by the company's executive officers and Board of Directors on March 7, 2025 - The report is duly signed on behalf of Sight Sciences, Inc. by its President, Chief Executive Officer, Chief Financial Officer, and members of the Board of Directors on March 7, 2025[621][623][624]