Miromatrix Medical Inc. - Annual Report: 2022 (Form 10-K)

Table of Contents

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 2022

OR

For the transition period from                          to                         

Commission file number: 001-40518

Miromatrix Medical Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (952) 942-6000

Securities Registered Pursuant to Section 12(b) of the Act:

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐    No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐    No ☑

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 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.

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.1D-1(b). ☐

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

The aggregate market value of the registrant’s common stock, excluding shares beneficially owned by affiliates, computed by reference to price at which the registrant’s common stock was last sold as of June 30, 2022 was $73,529,097.

As of March 24, 2023, there were 27,233,263 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by Part III is incorporated by reference from the Company’s definitive Proxy Statement for the Annual Meeting of Stockholders, or an amendment to this Form 10-K, which the Company intends to file with the SEC within 120 days after the fiscal year end covered by this report.

​

​

Table of Contents

TABLE OF CONTENTS

​

​

i

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K for the year ended December 31, 2022 (this “Form 10-k”) contains forward-looking statements concerning our business, operations and financial performance and conditions, as well as our plans, objectives and expectations for our business operations and financial performance and condition. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “positioned,” “potential,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. In addition, statements that “we believe” or similar statements reflect our beliefs and opinions on the relevant subject. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. Forward-looking statements are not a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this report. These factors include:

You should read the matters described in “Risk Factors” and the other cautionary statements made in this Form 10-K as being applicable to all related forward-looking statements wherever they appear in this Form 10-K. We cannot assure you that the forward-looking statements in Form 10-K will prove to be accurate and therefore you are encouraged not to place undue reliance on forward-looking statements. You should read this Form 10-K completely. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

ii

Table of Contents

We caution readers not to place undue reliance on any forward-looking statement that speaks only as of the date made and to recognize that forward-looking statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described under the caption “Risk Factors” in Part I, Item 1A, of this Form 10-K, as well as others that we may consider immaterial or do not anticipate at this time. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. Our expectations reflected in our forward-looking statements can be affected by inaccurate assumptions that we might make or by known or unknown risks and uncertainties, including those described under the caption “Risk Factors” in Part I, Item 1A, of this Form 10-K. The risks and uncertainties described under the caption “Risk Factors” in Part I, Item 1A, of this Form 10-K are not exclusive and further information concerning us and our business, including factors that potentially could materially affect our financial results or condition, may emerge from time to time. We assume no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. We advise stockholders and investors to consult any further disclosures we may make on related subjects in our subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all other subsequent reports that we file with or furnish to the U.S. Securities and Exchange Commission (the “SEC”).

​

​

iii

Table of Contents

PART I

Unless otherwise stated or the context otherwise indicates, references to “Miromatrix,” the “Company,” “we,” “our,” “us” or similar terms refer to Miromatrix Medical Inc.

Unless otherwise stated or the context otherwise indicates, references to Baxter, CareDx, DaVita and Mount Sinai refer to Baxter International Inc., CareDx, Inc., DaVita Inc. and the Mount Sinai Health System, respectively.

Item 1. Business.

Overview

We are a life sciences company pioneering a novel technology for bioengineering fully transplantable organs to help save and improve patients’ lives. Founded in 2009, we are one of a small group of companies at the forefront of developing alternatives to human-donor organ transplants, and within this small group of companies there are important differences between the technologies being developed. Our proprietary technology is a scalable platform that uses a two-step method of decellularization and recellularization designed to remove the porcine cells from the organs obtained from pigs and replace them with unmodified human cells. Our initial development focus is on bioengineering livers and kidneys, and our technology platform is also applicable to bioengineering other organs including hearts, lungs and pancreases. We have collaborations with Baxter, CareDx, the Mayo Clinic, Mount Sinai and the Texas Heart Institute, and we have received strategic investments from Baxter, CareDx and DaVita.

We believe we are uniquely positioned and that our technology has multiple potential benefits:

​

Table of Contents

Our Strategy

Our goal is to develop bioengineered organs and be the first to market with alternatives to human-donor organ transplants. The key elements of our strategy include:

Our Bioengineered Organ Technology Platform

Our technology platform encompasses two proprietary steps referred to as decellularization and recellularization. Decellularization is a process that is designed to remove the porcine cells from the organs obtained from pigs to create a purified acellular extracellular matrix (“ECM”). Recellularization is a process that re-seeds the ECM with unmodified human cells inside individual bioreactors. Throughout this two-step process, the organ is perfused with a gentle solution to purify and re-seed the ECM while preserving the mechanical structures and vascular networks. Our technology platform was originally developed by researchers at the University of Minnesota (the “University”), and we have an exclusive license agreement with them.

A landmark publication by Nature Medicine described perfusion decellularization as a technique to generate acellular whole organ matrices. Since then, several notable publications such as Journal of Hepatology, Nature Communications Biology, Nature Biomedical Engineering, Nature Medicine, Nature Biotechnology and Transplant Proceedings have reported the use of the Company’s perfusion decellularization technology as the basis of their animal studies in multiple whole organs including livers, kidneys, hearts, lungs and pancreases. The animal organ matrices studied in these articles were subsequently re-seeded with various cell types, including human cells, using the Company’s perfusion recellularization technology. An important conclusion of these studies is that they each resulted in the creation of functional cellular phenotypes and increased cellular viability on the ECMs which is critical to bioengineering an organ. These third-party studies provide a large body of data supporting the merits of our technology.

Decellularization

Decellularization is a process that removes the porcine cells from the organs obtained from pigs to create a purified acellular ECM. Organs are notoriously complex to decellularize and reproduce synthetically because they are dense with vasculature. Our novel decellularization process solves for the challenging anatomy of organs by cannulating the native vasculature and perfusing the organ with a gentle cleaning solution which maximizes the surface areas exposed to the detergent. This process purifies the organs while preserving the mechanical structures and vascular networks and allows for a very effective and efficient decellularization process that can be completed in less than 24 hours. Following decellularization, the organ goes through a series of washes to remove the detergent and disinfect the ECM over a period of two to three days. The result is a completely purified and preserved native scaffold that can be stored for up to 12 months, containing the appropriate microenvironment required for the introduction of organ- specific unmodified human cells.

Table of Contents

Decellularization of Porcine Liver

Figure: These images show: (i) a porcine liver prior to being decellularized, (ii) a porcine liver eight hours into the decellularization process and (iii) a porcine liver twenty-four hours into the decellularization process. These images have been provided to demonstrate the decellularization process, and are not protypes for our BEL product candidate, and do not represent results from a clinical trial.

Recellularization

Recellularization is a process that incorporates perfusion to re-seed the ECM with unmodified human cells inside individual bioreactors. We source the human cells from human kidneys and livers not placed for transplant. We have agreements with several Organ Procurement Organizations (“OPOs”) to secure our supplies of human kidneys and livers. We have successfully demonstrated the ability to isolate the required cells from even highly compromised organs and these isolated cells are either directly seeded, or cultured and expanded in proprietary media, which we believe will enable us to recellularize multiple ECMs from one human organ. The recellularized organ matures in a bioreactor where it is continuously perfused with nutrient-rich media and oxygenated under normal physiological conditions. Our entire recellularization process can be completed in two to four weeks depending on the organ type. Our finished bioengineered organs will be able to be transplanted utilizing the same techniques and equipment as current organ transplantation procedures, which we believe could prove favorable in the adoption of our products.

Our Bioengineered Organ Pipeline

All of our bioengineered organ transplant programs utilize our proprietary technology platform. Our product pipeline was developed by leveraging data and learnings from prior programs to inform our development decisions for future programs. The first programs we developed are Miromesh and Miroderm, which are commercialized for hernia repair and wound care applications, respectively. Both products received 510(k) clearances from the FDA and are not classified or regulated as xenotransplants. Both products are derived from porcine livers and utilize our proprietary perfusion decellularization process to create an ECM implant. These products have been on the market for over seven years and have been implanted in thousands of patients since then. Over that time, we have completed three post-market clinical studies and we believe this provides valuable safety data to leverage in the development of our current pipeline. In June 2019, we decided to focus all of our resources on bioengineering human organ transplants, so we licensed Miromesh and Miroderm to a business named Reprise Biomedical, Inc (“Reprise”). In March 2021, we divested the entirety of our equity ownership in Reprise and continue to collect royalties relating to the licensing of these products.

As Miromesh and Miroderm utilize our decellularization process and are not regulated as xenotransplants, and our recellularization process incorporates unmodified human cells, we believe our bioengineered organs should not be regulated as xenotransplants. Our current expectation for our bioengineered organs is that they will be regulated as biologics or potentially combination products. We believe that either classification will lead to a more efficient regulatory pathway than if they were to be classified as xenotransplants.

The FDA defines xenotransplantation as any procedure that involves the transplantation, implantation or infusion into a human recipient of either (a) live cells, tissues, or organs from a nonhuman animal source, or (b) human body fluids, cells, tissues or organs that have had ex vivo contact with live nonhuman animal cells, tissues or organs. The guidance also specifically states that xenotransplantation does not include transplantation, implantation or other use of acellular animal tissues. During our decellularization process, we remove all animal cells and the acellular scaffold is recellularized with unmodified human cells, which we believe will lead regulators to determine that our bioengineered organs are not

Table of Contents

xenotransplants. However, neither the FDA nor any other regulator has informed us what classification our product candidates will be regulated as. Further, as part of our regulatory pathway we will need to seek an exemption from the FDA for the current Good Tissue Practices (“cGTP”) prohibition against pooling cells from two or more donors during manufacturing.

Our Bioengineered Organ Pipeline

Bioengineered External Liver Assist Product

MiroliverELAP is our External Liver Assist Product (“ELAP”) and is designed to provide liver dialysis for acute liver failure patients. The ELAP System consists of an external perfusion system and our bioengineered liver (“BEL”) that will reside outside of the human body to provide temporary liver support to patients with acute liver failure. MiroliverELAP is our lead bioengineered liver program and we believe miroliverELAP represents our nearest term opportunity to advance one of our bioengineered organ programs into human clinical trials. We believe this will be the first-ever clinical trial designed to assess the ability of a BEL to deliver critical liver function in humans.

We published two important studies providing additional proof of concept supporting our BELs. One of the studies was published in a 2019 publication of Nature Biomedical Engineering and demonstrated the ability to revascularize a decellularized liver scaffold with human vascular cells and sustain perfusion in a large animal recovery model. In 2021, the second study was published in Nature Communications Biology and builds on the previous study by implanting a liver scaffold seeded with human endothelial cells and porcine hepatocytes into a pig donor recipient and showed hepatic function and sustained blood perfusion. The success of these preclinical studies supports our intentions to commence human trials for our ELAP product candidate.

Table of Contents

Demonstrated Ex Vivo Liver Function

Figure: BELs seeded and cultured with endothelial cells and primary hepatocytes demonstrate liver specific function through the production of Albumin and Urea, and the clearance of ammonia in a challenge assay during bench testing.

Another significant milestone was our ability to demonstrate liver functionality following the addition of liver hepatocytes. During bench testing, we demonstrated the ability of the recellularized grafts to perform key liver functions, including albumin production, urea synthesis and an important liver function, ammonia clearance. These studies have been completed with porcine and human hepatocytes. Our optimization efforts have led to an increase in hepatocytes seeded into the livers to over 10 billion, which we can consistently manufacture and consider to be a key clinical threshold.

In the fourth quarter of 2022, we submitted our miroliverELAP IND application to the FDA. In response to the IND application, we received a clinical hold letter from the FDA in January 2023 identifying certain nonclinical and clinical deficiencies and requesting responsive information, including, among other things, new toxicology studies in an appropriate animal model, biocompatibility studies, as well as various validations to be provided in our IND application. We plan to submit our complete response to the clinical hold letter to the FDA in the second half of 2023. If our complete response addresses the deficiencies to the FDA’s satisfaction and does not raise new concerns regarding risks to subjects, we expect the FDA will lift the clinical hold and we then intend to initiate a first-in-human clinical trial shortly thereafter.  

Bioengineered Kidney Program

Mirokidney is our fully implantable bioengineered kidney (“BEK”) intended to treat patients with end-stage renal disease (“ESRD”) that was awarded the Kidney X prize from the Department of Health and Human Services and the American Society of Nephrology in 2019. In 2022, our BEKs successfully demonstrated urine production and protein retention. We believe this is the first time a BEK has produced urine and plan to publish these findings in the near future. Our mirokidney is bioengineered through the recellularization of a decellularized porcine kidney with human endothelial cells (vascular) and human renal specific cells, including key cells of the glomerulus (mesangial cells and podocytes) and nephron (proximal and distal tubule cells, thin and thick limb Loop of Henle cells, and collecting duct cells). The BEK can be connected directly into the host’s circulatory system using a heterotopic kidney transplant (“HKT”) procedure where the native kidneys are left in place and a single kidney is grafted into the vasculature. HKT procedures are the standard of care for kidney transplants and are generally considered to pose less safety risks to patients than orthotopic implants. The BEK will be considered for replacement of a diseased or malfunctioning native kidney in patients who have reached the limits of other medical therapies and lack access to a human-donor transplantable kidney due to chronic kidney disease (“CKD”) or ESRD. CKD and ESRD are often the result of diabetes, hypertension, glomerulonephritis, cystic kidney disease or other common conditions. We anticipate the BEK will be studied for supplementation of diseased or malfunctioning native kidneys in adults and for its ability to support life sustaining hemi-filtration.

Table of Contents

Demonstrated Kidney Vascular Patency in Preclinical Models

Figure: OLT of human endothelialized BEK grafts in a pig model. Adult pigs underwent unilateral nephrectomy followed by OLT of endothelialized kidney grafts. An anastomosed BEK graft is shown before and after reperfusion. Compilation of follow-up angiographies performed on a kidney graft through Day 14 demonstrate continuous perfusion of the implant revascularized BEK. These images have been provided to demonstrate the process of transplanting BEK grafts, and the corresponding results in follow-up angiograms, and are not prototypes of our BEK.

In a study performed in conjunction with transplant surgeons at Mount Sinai Hospital we demonstrated key functional aspects for our BEKs including long-term patency of a revascularized kidney after implantation in a large animal model. The first key finding of this study is that we demonstrated our ability to revascularize a decellularized porcine kidney and utilize the metabolic marker of GCR as a predictor of revascularization, which will serve as an important manufacturing control. The GCR is directly correlated to the ability of the BEK to remain patent. Second, we demonstrated that revascularized BEKs, based on predictive GCR rates, were able to be heterotopically transplanted into our large animal model with direct renal artery and vein anastomosis, highlighting the similarities to normal kidney transplantation. Our transplanted revascularized kidneys maintained whole kidney perfusion over 14 days as measured by angiograms and demonstrated the ability to withstand physiological pressures and flow. Maintaining perfusion in our transplanted revascularized kidneys in a normal transplant model was a key milestone and solves an issue which has inhibited the advancement of bioengineering organs and complex tissues. In separate bench testing studies, we have further demonstrated early kidney function, including creatinine clearance.

Following the successful revascularization of the kidney, we focused on the recellularization of the glomerular and nephron structures within the kidney. We achieved this milestone by demonstrating our ability to procure, isolate, and seed revascularized BEKs with both human and porcine kidney cells, human renal specific cells for the glomerulus (Mesangial Cells and Podocytes) and nephron (proximal and distal tubule cells, thin and thick limb Loop of Henle cells, and collecting duct cells). Isolated tubule epithelial cells were seeded into decellularized localized to nephron tubules and collecting ducts and demonstrated a >50% matrix coverage after 14 days. This heterogenous mixture of kidney parenchymal cells proliferated, expressed E-cadherin with a tubular epithelial morphology and more importantly, acquired a ciliated brush border, a key hallmark of mature and functioning proximal tubules.

Table of Contents

Demonstrated Nephron Recellularization

Figure: Tubule epithelial cells were seeded localized to nephron tubules and collecting ducts as detected by positive E-cadherin staining. Total coverage increased from ~10% to ~50% after 14 days of continuous perfusion within the BEK with active proliferation as characterized by positive Ki67+ staining. Electron microscopy of the tubules demonstrated the presence of ciliated brush border, a key hallmark of mature and functioning proximal tubules cilia formation (arrows).

Isolated human kidney cells seeded into the decellularized matrix with expression of epithelial cellular adhesion molecule (“EpCAM”) indicative of a distal tubule or collecting duct phenotype and expression of the proximal tubule markers aquaporin-1 (“AQP1”) and type I gamma-glutamyltransferase (“GGT1”) with positive Ki67 co-expression of the latter indicating proliferation of primary proximal tubule cells in recellularized BEK. Additional studies have demonstrated the ability to localize endothelial and epithelial cells to the glomerulus with site specific orientation.

We are pioneering a new class of therapy with our bioengineered organs, and similar to innovators of other new classes of therapies we are working closely with the FDA to establish our regulatory pathway. In order to achieve our goal of submitting our complete response to the clinical hold letter to the FDA in the second half of 2023 and initiating a first-in-human clinical trial for miroliverELAP shortly after IND clearance, we will reallocate resources previously intended for miroliver and mirokidney, our fully implantable bioengineered liver and kidney programs, to miroliverELAP, which will likely delay the preclinical development of miroliver and mirokidney. Our next anticipated milestone for mirokidney is the submission of a pre-IND request.

Bioengineered Liver Program

Miroliver is our fully implantable bioengineered liver intended to treat patients with acute and chronic liver failure that we have been developing in collaboration with the Mayo Clinic. This program is an orthotopic liver transplantation (“OLT”) where the native liver is completely removed and replaced with our miroliver. The miroliver is bioengineered by recellularizing a decellularized porcine liver with human endothelial cells (vascular), hepatocytes and accessory cells (liver cells), and cholangiocytes (bile duct cells), which can be anastomosed directly into the host’s circulatory system. Our miroliver will be considered for replacement of a diseased or malfunctioning native liver in patients who have reached the limits of other medical therapies and lack access to a transplantable liver due to acute liver failure, complications of cirrhosis, liver-based metabolic disease, systemic complications of chronic liver disease, and chronic liver disease.

Table of Contents

Surgical Implantation of a Revascularized Liver Graft in a Large Animal

Figure: The surgical implantation and perfusion of our revascularized BEL into a pig model demonstrating the ability to surgically implant the graft and achieve active perfusion by the recipient. This study was performed at the Mayo Clinic. These images have been provided to demonstrate the process of surgically implanting a BEL and are not prototypes of the BEL that we expect to use for human clinical trials.

In a 2019 study published in Nature Biomedical Engineering, we completed a large animal study that demonstrated the ability to revascularize a decellularized liver scaffold with human vascular cells and sustain perfusion in a large animal recovery model. This study highlighted three key milestones: (1) demonstrated sustained patency which has been a significant vascular challenge inhibiting bioengineering of organs; (2) demonstrated the ability to non-destructively monitor the revascularization process, an important step in manufacturing and quality control, and this was achieved through monitoring metabolic function during the bioreactor phase by monitoring the glucose consumption rate (“GCR”); and (3) demonstrated the ability of the introduced endothelial cells to upregulate the expression of liver specific endothelial cell markers and detection of fenestrations, a hallmark attribute of liver sinusoidal endothelium, demonstrating the potential ability of the decellularized matrix to provide the appropriate cellular signals or cues.

In a 2021 study published in Nature Communications Biology, we completed the first ever heterotopic implant of our BEL transplant into a large animal. The transplant was part of a preclinical study in collaboration with researchers at the Mayo Clinic, designed to assess the initial transplantation and functionality of a bioengineered liver in an acute liver failure model. It utilized decellularized porcine liver scaffolds recellularized with human vascular cells and porcine hepatocytes, which were implanted into pigs suffering acute liver failure. The study included five pigs, of which three were implanted with a liver scaffold seeded with human vascular cells and porcine hepatocytes. All pigs were monitored for up to 48 hours, during which time the transplanted organ showed critical performance metrics, including the ability to sustain blood flow and key liver function both before and after transplantation. These post-operative results address the critical vascular challenge in tissue engineering that has previously inhibited advancement in this field. The results showed that the pigs that received the BELs maintained detectable hepatic health in the graft, sustained blood perfusion, and demonstrated early liver function post transplantation.

Successful Bile Duct Seeding and Staining

Figure: Localization and cell specific expression of key cholangiocyte markers following their seeding into BEL grafts. Cells were detected with the following markers: EpCam, a general epithelial marker, Cytokeratin 19 (CK19)- a general cholangiocyte marker, Cytokeratin 7 (CK7)-a cholangiocyte marker localized to larger bile ducts, Alpha-tubulin which stains the presences of a key cholangiocyte feature and GGT- a transmembrane glycoprotein localized to the luminal surface. All sections were counterstained with DAPI a nuclear stain.

Table of Contents

Our fully transplantable miroliver includes the recellularization of the biliary system which is achieved through the seeding of bile duct cells (cholangiocytes) directly into the bile duct. The BEL utilized in our ELAP does not require cholangiocytes. We have demonstrated the ability to isolate, culture, expand and seed cholangiocytes. We achieved a key milestone by demonstrating site specific localization and the appropriate phenotypic expression within our BEL grafts. Seeded cholangiocytes were identified within the biliary tree with high levels of expression of the general cholangiocyte marker, Cytokeratin 19 (CK19), along with the appropriate cuboidal morphology and polarization. Cytokeratin 7 (CK7), which is localized to larger bile ducts was present in the larger ducts but absent in smaller ones. Impressively, alpha-tubulin, which stains the presences of a key cholangiocyte feature, the central cilia, was localized in the lumen. Lastly, Gamma-glutamyltransferase (“GGT”) was localized to the luminal surface of the bile ducts. Collectively, the positive staining and site- specific localization of key markers confirm our ability to recellularize the biliary tree.

We are pioneering a new class of therapy with our bioengineered organs, and similar to innovators of other new classes of therapies we are working closely with the FDA to establish our regulatory pathway. In order to achieve our goal of submitting our complete response to the clinical hold letter to the FDA in the second half of 2023 and initiating a first-in-human clinical trial for miroliverELAP shortly after IND clearance, we will reallocate resources previously intended for miroliver and mirokidney, our fully implantable bioengineered liver and kidney programs, to miroliverELAP, which will likely delay the preclinical development of miroliver and mirokidney. Our next anticipated milestone for miroliver is the submission of a pre-IND request.

Potential Future Programs

Currently, we are directing nearly all of our resources towards the development of our miroliverELAP and mirokidney programs, and to a lesser degree our miroliver program. In the future, we may decide to develop additional programs on our own or in collaboration with other organizations or institutions. For example, our bioengineered human organ technology platform has broad applicability to other organs such as hearts, lungs and pancreases (for the treatment of diabetes).

Beyond the applicability of our technology platform in other organs, we may explore the merits of using stem cells to recellularize our decellularized organs. This could include the use of induced pluripotent stem cells (“iPSCs”) that would either be patient derived (autologous) or derived from a universal donor (allogeneic). Among other benefits, we believe the use of iPSCs could potentially eliminate the need for immunosuppression, provide benefits such as making the recellularized organ more patient-specific in the case of an autologous approach, as well making the manufacturing process more efficient in the case of an autologous approach.

In addition, we believe our technology and intellectual property has applicability to bioengineered partial organs, including heart valves, glands, tissues and bones.

Table of Contents

Market

Organ transplantation is one of the largest unmet medical needs facing the world today. According to the Global Observatory on Donation and Transplant (“GODT”), in 2021 there were 144,302 organ transplant procedures performed globally and 42,217 performed in the U.S. within our addressable markets. Kidney and liver transplants make up over 80% of the transplant procedures performed and they are the initial target markets for our bioengineered organ product candidates. Below is a summary of the organ transplants performed in 2021 and the U.S. organ transplant waitlist as of February 19, 2023.

​

For each organ type, the organ transplant numbers only represent patients who were fortunate enough to receive a transplant and do not represent the entirety of potential demand. According to the U.S. Department of Health and Human Services, in early 2023 the organ transplant waitlist in the U.S. was 113,297 and kidneys and livers made up 95% of that total. Additional demand for organ transplants may come from severely ill patients who currently do not qualify for an organ transplant waitlist because their disease stage isn’t severe enough to be allocated a transplantable organ. If additional supply of transplantable organs were available, such as our bioengineered organ product candidates, we believe the demand for organ transplants could increase significantly.

Kidney

​

According to the Centers for Disease Control and Prevention (“CDC”), it is estimated that 37 million people in the U.S. have kidney disease and most of these cases are undiagnosed. Chronic kidney disease (“CKD”) and end stage renal disease (“ESRD”) can be treated, but damage to the kidney cannot be repaired or reversed. Because CKD and ESRD are irreversible, once a patient begins dialysis they will remain on dialysis until they receive a transplant or they die. United States Renal Data System (“USRDS”) estimates over 550,000 patients in the U.S. receive dialysis, and the median wait time for a kidney transplant is 49.2 months. Five-year survival rates for patients receiving dialysis are less than 50%, compared to over 80% for kidney transplant recipients.    

The costs associated with dialysis are staggering: Medicare-related spending for CKD and ESRD patients exceeded $125 billion in 2020 and the American Journal of Transplantation estimates each kidney transplant could save the health care system over $1.5 million. According to a 2021 white paper from Optum, Inc., monthly dialysis costs as much as $23,000 per patient. The report highlights that compared to dialysis, kidney transplantation leads to higher patient survival, improved quality of life and lower costs to the healthcare system. It also emphasizes that the benefits of preemptive transplants are widely recognized; defined as transplants that occur before patients progress to ESRD. For patients living with CKD, receiving a kidney transplant before they need to start dialysis allows them to stay healthier and live longer than if they were to receive a transplant after their kidneys fail.

If approved, we believe our mirokidney product candidate could provide a viable treatment for patients suffering from ESRD and CKD while also providing significant cost savings to the health care system.

Table of Contents

Liver

Unlike ESRD patients who can survive for years on kidney dialysis as they await a kidney transplant, there is currently not a similarly effective solution for end stage liver disease (“ESLD”) patients. There have been technologies developed referred to as liver dialysis but they have not proved successful because they primarily filter the blood but do not replicate the hundreds of other functions the liver performs. The liver performs many complex functions in the body including protein production, metabolization, production of bile to digest fat and absorb vitamins, storage of vitamins, regulation of blood clotting, removal of bacteria from the blood to fight infection, and removal of toxic byproducts of medications and alcohol.

Chronic Liver Failure

According to the Cleveland Clinic, it is estimated that 30 million people in the U.S. have some type of liver disease and 5.5 million Americans have chronic liver disease or cirrhosis. There are many different causes of liver disease including viral infections, excessive alcohol consumption, unhealthy diet, inherited genetic diseases, autoimmune disorders and cancer. Chronic liver disease can be managed with medications and lifestyle changes if it has not progressed to ESLD. Once it progresses to ESLD a liver transplant is typically the best treatment option.

If our miroliver product candidate gains approval we believe it could provide a viable treatment for patients suffering from ESLD who ultimately require a transplant.

Acute Liver Failure

Approximately 80,000 patients are hospitalized in the U.S. each year with acute forms of liver failure, acute on chronic liver failure and severe acute alcoholic hepatitis, collectively “ALF”. ALF refers to a rapid loss of liver function - days or weeks – often in a person who has no history of preexisting liver disease. Common causes include hepatitis viruses, drugs such as acetaminophen and excessive alcohol use. ALF can cause serious complications including excessive bleeding and pressure on the brain, making it a medical emergency that requires hospitalization. Patients suffering from ALF often receive liver dialysis treatments which are intended to provide support until the patient’s liver realizes spontaneous recovery or as a bridge to liver transplant. Liver dialysis has historically been associated with the challenges described in the previous paragraph, and the outcomes for ALF patients are estimated to be 45% spontaneous recovery, 25% liver transplantation and 30% death without transplant.

If approved, we believe our miroliverELAP product candidate could better replicate the functions of a human liver than currently available liver dialysis treatment options which could lead to a significantly higher percentage of spontaneous recoveries. Additionally, if our miroliver product candidate gains approval we believe it could provide a viable treatment for patients suffering from ALF who ultimately require a transplant.

Competition

The life sciences industry is characterized by the rapid development of technologies, intense competition and a strong emphasis on intellectual property. We believe that our technologies, approach, strategy, scientific capabilities, know-how and experience provide us with competitive advantages in our target markets. We are striving to be first to market with our product candidates and we expect substantial competition over time. We also believe the organ transplant market is unique because it is one of the largest unmet medical needs facing the world today and therefore many companies may enjoy commercial success with their products, regardless of technology modality, upon gaining regulatory approval. We compete in two primary market segments: External Liver Assist and Whole Organ Transplant.

External Liver Assist Technologies

With respect to miroliverELAP, we are not aware of any commercialized or in-development external liver assist systems utilizing bioengineered organs. There are companies who have developed liver dialysis products and others may be in development, however we believe our miroliverELAP bioengineered organ technology could better replicate the functions of a human liver than currently available liver dialysis treatment options.

Table of Contents

Whole Organ Transplant Technologies

We segment the whole organ transplant marketplace into three primary technologies: bioengineering, xenotransplantation and 3D printing. We categorize our miroliverELAP, miroliver and mirokidney product candidates as bioengineering.

Some of our competitors, either alone or with their collaborators, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals, and marketing approved products than we do. As a result, our competitors may discover, develop, license, or commercialize products before or more successfully than we do.

Collaborations and Partnerships

Mayo Clinic

In 2011, we entered into a license agreement with the Mayo Clinic, and have thereafter entered into subsequent amendments (as amended, the “Mayo Agreement”), pursuant to which we and the Mayo Clinic have agreed to collaborate to test and evaluate the viability of the transplantation of a recellularized liver. Specifically, the collaboration aims to evaluate the effectiveness of a transplanted recellularized liver in a recipient large animal, along with determining the most effective conditions and techniques for re-seeding the liver. We are responsible for delivering the recellularized liver to the Mayo Clinic, whose surgeons are responsible for the transplantation and evaluation of the recellularized liver. The Mayo Clinic will own all rights to any inventions or discoveries solely developed pursuant to the Mayo Agreement, however, we have the exclusive right to license any such inventions or discoveries. To date, we have completed hepatocyte isolations, created surgical transplant models, generated transplant data from the BEL published in Nature Biomedical Engineering, and submitted the data pertaining to initial liver function, which is for publication.

Mount Sinai

In 2015, we entered into a collaboration agreement with Mount Sinai Hospital, whereby we have developed a large animal kidney transplantation model to demonstrate continuous blood flow through a perfusion decellularized and recellularized transplanted kidney. Utilizing this model, we have achieved transplantation of numerous revascularized kidneys by the surgeons at Mount Sinai. Neither party is subject to any royalty or milestone obligations. The agreement may be terminated by either party upon thirty days written notice to the other party, and is set to expire in September of 2023. Any inventions, patentable or not, conceived during the course of the collaboration shall be owned solely by either Mount Sinai or us, to the extent reduced to practice by such party’s employees. However, (i) we shall be granted an

Table of Contents

irrevocable, non-exclusive, royalty-free license to use such inventions conceived solely by Mount Sinai employees for our non-commercial, internal research activities; provided that we shall not be granted such license over surgical techniques developed solely by Mount Sinai employees and (ii) Mount Sinai shall be granted an irrevocable, non-exclusive, royalty free license to use such inventions conceived solely by our employees for its internal research and teaching purposes. We and Mount Sinai shall jointly own any inventions conceived by employees of both parties.

Texas Heart Institute

In 2013, we entered into a sub-license agreement with the Texas Heart Institute (“THI”), and have thereafter entered into subsequent amendments thereto (as amended, the “THI License Agreement”), pursuant to which we have granted THI an exclusive sub-license to our intellectual property related to the transplantation of the heart organ in human beings, whereby perfusion decellularization and/or perfusion recellularization has been utilized in any portion of the creation or manufacture of such whole heart organ. Under this agreement, THI is required to achieve certain milestones by certain dates, and the failure to do as much provides us with the right to terminate the THI License Agreement. These milestones require THI to, among other things: (i) develop the cardiac decellularization and recellularization process, resulting in a functional recellularized heart, (ii) complete preclinical studies demonstrating the efficacy and safety of a whole heart transplantation in large animals using perfusion technology and (iii) to file an IND submission for a phase 1 trial and complete a FHI clinical trial. Once the first- in-human clinical trial is completed, all licensing rights will revert from THI back to us and THI will receive a 5.0% royalty on all of our commercial sales of products related to the transplantation of the heart organ in humans using the perfusion decellularization and recellularization process. Further, to the extent we fail to meet any of our milestones after the licensing rights have reverted from THI back to us, and are provided written notice by THI of such failure, and fail to cure such failure in 60 days, the sub-license will revert back to THI, subject to a 10.0% royalty due to us on all of THI’s commercial sales of products related to the transplantation of the heart organ in human beings using the perfusion decellularization and recellularization process. The THI License Agreement may be terminated upon a breach of the agreement or our or THI’s bankruptcy, and shall have no further effect on a patent-by-patent basis, once the applicable patent term has expired. Additionally, if THI fails to meet any milestone, we may terminate their sub-license rights, however, to the extent we are granted FDA approval within three years of such termination, THI will retain their 5.0% royalty right. If we do not obtain such approval within three years, all licenses, sublicenses and royalty obligations under the agreement shall immediately terminate. To date, progress has been achieved on the initial recellularization of the bioengineered heart.

University of Minnesota

In 2010, we entered into an exclusive patent license agreement with the University of Minnesota (“the University”), and have thereafter entered into subsequent amendments thereto (as amended, the “EPLA”). The EPLA grants us an exclusive license over the decellularization and recellularization of organs and tissues, among other processes and products, and such patents provide us with exclusivity in numerous jurisdictions, including, but not limited to, the U.S., throughout Europe, China, Australia and Japan. We entered into an amendment to the EPLA on September 15, 2016, which transferred the ownership, right, title and interest in all of the licensed patents under the EPLA to the Company. Under the EPLA, the Company is required to make annual minimum royalty payments to the University totaling the greater of $500,000 and the sum of 6.5% of net sales of any licensed products. Further, to the extent we license any products developed under the EPLA to an assignee, we shall provide payment in the amount of 25% of such royalties received by such assignee to the University. We also pay the University an annual maintenance fee of $5,000. There are no milestone payments due under the EPLA. As of December 31, 2022, we have paid the University $1,138,063 under the EPLA. The EPLA and the royalties due thereunder will continue in full force and effect on a product-by-product and country-by-country basis until the licensed patents are no longer valid. Further, the EPLA does not have any termination provisions. We entered into an amendment to the EPLA on February 21, 2021, which allows us to defer the payment of any difference between the $500,000 minimum annual payment and what was actually provided to the University for each of calendar years 2020 and 2021 and such difference shall be added to the minimum sum required for calendar years 2022 and 2023, respectively.

Reprise Biomedical, Inc.

Concurrently with the spin-out of Reprise in 2019, we entered into a patent and know-how license agreement with Reprise, and have thereafter entered into subsequent amendments thereto (as amended, the “Reprise License Agreement”), which entitles us to an annual payment from Reprise equal to the greater of $500,000 and 6.5% of all sales of products

Table of Contents

utilizing our decellularization technology, including, but not limited to, Miromesh and Miroderm, and which grants them an exclusive license over any acellular products derived from our perfusion decellularization technology, which does not include: (i) decellularized whole organs, (ii) all non-clinical applications or (iii) use in 3D printing applications. There are no milestone or other payments due under the Reprise License Agreement. Reprise provided us with total royalties of $953,470 during the year ended December 31, 2022 and $33,066 during the year ended December 31, 2021 under the Reprise License Agreement. The revenue recorded during the year ended December 31, 2022 represents the royalty due from Reprise for the calendar years 2020 and 2022. We also recorded a long-term receivable of $466,934 for the year ended December 31, 2022 related to the 2021 minimum royalty due from Reprise, but due to the uncertainty regarding collectability, it was determined the contract did not meet the requirements of Accounting Standards Codification (“ASC”) 606, therefore we fully reserved against the receivable. We recorded a long-term receivable of $920,404 for the year ended December 31, 2021 related to the 2020 and 2021 minimum royalty due from Reprise, but due to the uncertainty regarding collectability at that time, it was determined the contract did not meet the requirements of Accounting Standards Codification (“ASC”) 606, therefore we did not record revenues or a receivable. The Reprise License Agreement continues in full force and effect on a product-by-product and country-by-country basis until the licensed patents are no longer valid, unless earlier terminated. The obligation to pay royalties under the Reprise License Agreement will continue until the earlier of (a) the expiration of the term of the agreement or (b) November 28, 2028. We may terminate the Reprise License Agreement, (i) in the event of a breach, (ii) if Reprise fails to make any payment due under the agreement and does not cure such non- payment within the applicable time period and (iii) in the event of Reprise’s bankruptcy. Further, we entered into an amendment to the Reprise License Agreement on February 21, 2021, which allows Reprise to defer the payment of any difference between the $500,000 minimum annual payment and what was actually provided to us for each of calendar years 2020 and 2021 and such difference shall be added to the minimum sum required for calendar years 2022 and 2023, respectively.

Baxter International Inc.

On February 1, 2023, we announced a collaborative research agreement with Baxter International Inc. (“Baxter”) to help support additional treatment options for patients with acute liver failure in need of liver support therapies. As part of the collaboration, we will use our miroliverELAP product candidate with Baxter’s PrisMax system. Baxter’s PrisMax system is designed and utilized today for the delivery of continuous renal replacement therapy and other therapies, while providing hospitals the flexibility to meet the unique demands of the intensive care unit. Baxter has modified their PrisMax software and consumables to run the miroliverELAP treatments during the Phase 1 clinical trial.

Intellectual Property

We strive to protect and enhance the proprietary technologies, inventions and improvements that we believe are important to our business, including seeking, maintaining and defending patent rights, whether developed internally or licensed from third parties. Our policy is to seek to protect our proprietary position by, among other methods, pursuing and obtaining patent protection in the U.S. and in jurisdictions outside of the U.S. related to our proprietary technology, inventions and improvements that are important to the development and implementation of our business. We intend to rely on data exclusivity, market exclusivity and patent term extensions when available, including any relevant exclusivity through supplementary protection certificates.

Patents

We own numerous patents and/or patent applications which relate to our material products, including patents and/or patent applications with respect to miroliver, mirokidney, mirolung, miroheart, miropancreas, perfusion decellularization, perfusion recellularization, revascularization, acellular matrix and the use of stem cells. Although in the aggregate our intellectual property is of material importance to our business, we do not believe that any single patent is of material importance to our product portfolio. As of December 31, 2022, we wholly own or exclusively license 10 issued U.S. patents and 13 pending U.S. patent applications relating to our products and process. The U.S. patents are expected to expire between 2026 and 2038. We also wholly own or exclusively license 134 foreign patents and 30 pending foreign patent applications relating to our products and process. The foreign patents are expected to expire between 2026 and 2036.

The pending patent applications, if issued, are expected to expire between 2026 and 2040, without accounting for potential patent term extensions and adjustments.

Table of Contents

We expect to seek 5-year patent term extension (“PTE”) under the 1984 Drug Price Competition and Patent Restoration Act, also known as the Hatch-Waxman Act (the “ACT”). The ACT allows the extension of the term of a patent claiming a product that requires regulatory approval prior to being sold. The determination as to whether PTE should be granted is made by the U.S. Patent and Trademark Office (“PTO”), in consultation with the regulatory agency responsible for approval of the product. See “Government Regulation — U.S. Patent Term Restoration and Marketing Exclusivity” for more details related to the limitations and guidelines surrounding PTEs under the ACT.

Additional protection may be sought through FDA exclusivity under the Orphan Drug Exclusivity of 7 years or under the Patient Protection and Affordable Care Act of 2010 of 12 years.

Employees

As of March 20, 2023, we had 76 full-time employees. None of our employees are represented by a collective bargaining agreement and we have never experienced a work stoppage. We believe we have good relationships with our employees.

Properties

We lease our corporate headquarters in Eden Prairie, Minnesota which houses all of our employees as well as our research and development and in-house manufacturing capabilities. Our headquarters totals approximately 42,000 square feet, including 11,000 square feet dedicated to in-house manufacturing. We believe our in-house manufacturing facility provides us with adequate capacity to manufacture our bioengineered organs while controlling our development timelines and production quality through clinical trials.

Manufacturing and Suppliers

We maintain approximately 11,000 square feet of in-house manufacturing capabilities within our corporate headquarters where we produce all of our bioengineered organs. This facility has a capacity to manufacture over 1,000 bioengineered organs per year. This facility will be maintained to current good manufacturing practices (“cGMP”) manufacturing facility according to 21 CFR 210/211. We believe our in-house manufacturing facility provides us with adequate capacity to manufacture our bioengineered organs while controlling our development timelines and production quality through clinical trials.

We source the porcine raw materials for our bioengineered organs from two suppliers that we have long-term relationships with. We have relationships with several OPOs to source human kidneys and livers not placed for transplant in order to isolate organ specific cells that we utilize to recellularize the ECM for our bioengineered organs. We also source certain cells from commercially available cell lines.

Government Regulation

Our research and development activities and the manufacturing and marketing of our products are subject to the laws and regulations of governmental authorities in the U.S. and other countries in which our products may be marketed. Specifically, in the U.S., the FDA regulates drugs, biologics and medical devices and requires new product approvals or clearances to assure safety and effectiveness of these products. Governments in other countries have similar requirements for testing and marketing. In the U.S., in addition to meeting FDA regulations, we are also subject to other federal laws, such as the Occupational Safety and Health Act and the Environmental Protection Act, as well as certain state laws.

The FDA does not regulate vascularized human organs for transplantation.  The FDA regulates human cells or tissues intended for implantation, transplantation, infusion or transfer into a human recipient. These are referred to as human cells, tissue, and cellular and tissue-based products, or HCT/Ps, and are regulated under Title 21 Code of Federal Regulations, Part 1271.  HCT/Ps that contain live cells, tissues or organs from a nonhuman animal source, or require human body fluids, cells, tissues or organs to have ex vivo contact with live nonhuman animal cells, tissues or organs are regulated as xenotransplants. Our biologic products do not contain, or require ex vivo contact with, live cells, tissues or organs from a nonhuman animal source therefore our products are not subject to regulation as xenotransplants.  Some HCT/Ps are not required to be licensed or approved by the FDA providing they are (i) minimally manipulated, (ii) intended only for homologous use, (iii) do not involve the combination of cells or tissues with other articles and (iv) do not have a primary

Table of Contents

functional effect that is systemic or dependent on metabolic activity of living cells, unless it is autologous. If the HCT/Ps do not meet these criteria, they are subject to licensing or approval by the FDA before they can be marketed. Our products do not meet these criteria and therefore are subject to licensing or approval. We anticipate that our miroliverELAP will be regulated as a cross-labeled combination biologic/device product. We also anticipate that our bioengineered mirokidney will be regulated as a single entity combination product that uses primary human kidney cells, a biologic constituent, within a porcine derived extra cellular matrix, a device constituent. It is highly likely our bioengineered miroliver will be regulated in the same manner as our mirokidney. Primary human cells provide the primary mode of action in our products and therefore the Center for Biologic Evaluation and Research will have jurisdiction and be the primary review center. Our products will also require approved BLAs to be marketed in the U.S. Additionally, commercial production of our biologic products needs to occur in FDA-registered facilities in compliance with cGTP requirements for biologics.

Regulatory Process

The FDA regulates biologics under the Federal Food, Drug, and Cosmetic Act (“FFDCA”) and the Public Health Service Act (“PHSA”), and their implementing regulations. Obtaining approval of a BLA for a new biological product is a lengthy process leading from development of a new product through preclinical and clinical testing. This process takes a number of years and the expenditure of significant resources.

The FFDCA and other federal and state statutes and regulations govern the research, testing, manufacture, safety, labeling, storage, record-keeping, approval, distribution, use, adverse event reporting, advertising and promotion of our products. Noncompliance with applicable requirements can result in civil penalties, recall, injunction or seizure of products, refusal of the government to approve our marketing applications or to allow us to enter into government supply contracts, withdrawal of previously approved applications and criminal prosecution.

Product Approval

In order to obtain an FDA license for, or approval of, a new biological product or a new combination medical device biological product regulated as a biological product, sponsors must submit proof of safety, purity and potency. In most cases, such proof entails extensive nonclinical, also known as preclinical, studies in animal models and well-controlled clinical trials in human subjects. Although not explicitly part of the statutory standard for a BLA, when FDA reviews a therapeutic biologic, it evaluates whether the application has provided substantial evidence of effectiveness. The testing, preparation of necessary applications and processing of those applications by the FDA is expensive, may take several years to complete and could have uncertain outcomes. The FDA regulatory review and approval process is complex and can result in requests for additional data, increased development cost, time to market delays, or preclude us from bringing to market new products. The FDA may also require post- marketing studies and risk evaluation and mitigation strategies (“REMS”) as conditions to approval. These requirements will add to the cost of regulatory compliance and the cost to sell our products, due to complex distribution and restricted commercial operations. Product approvals may be withdrawn if compliance with applicable regulations is not maintained or if safety issues are identified during routine safety monitoring following commercialization.

Adequate and well-controlled clinical studies are required by the FDA for approval of a BLA. To conduct a clinical trial in the U.S., the study sponsor is required to submit an IND application, including the study protocol, prior to commencing human clinical trials. The submission must be supported by data, typically including the results of nonclinical, manufacturing and laboratory testing. The conduct of the nonclinical tests must comply with Good Laboratory Practice (“cGLP”). Long-term nonclinical testing, such as animal reproductive toxicity and carcinogenicity, is conducted if warranted, and its results are submitted to the IND to support a future BLA. Following the initial submission of the IND, the FDA has 30 days to review the application and raise safety and other clinical trial issues through a partial or full clinical hold. If questions or objections are not raised within that period, the clinical trial may commence according to the investigational protocol submitted to the FDA and following Institutional Review Board (IRB) approvals for each of the clinical sites where the study will be conducted. Protocol amendments need to be submitted and approved by the FDA prior to implementation. Clinical studies can also be conducted outside of the U.S. with or without a U.S. IND. However, a clinical trial application (CTA) or IND is required to be submitted to the local competent regulatory authority to begin conducting human clinical trials. The CTA has similar data requirements to those of an IND.

Table of Contents

For products that are regulated as biologics, the FDA requires: (i) nonclinical animal testing to establish a safety profile and/or a starting dose for initiation of clinical trials in humans; (ii) submission to the FDA of an IND application, which must become effective prior to the initiation of human clinical trials; (iii) adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of the product for its intended use; (iv) submission to the FDA of a BLA; and (v) review and approval of the BLA as well as pre-approval inspections of the manufacturing facilities by the FDA.

Human clinical trials are typically conducted in three sequential phases that may sometimes overlap:

Post-approval clinical trials, sometimes referred to as post-marketing trials, or Phase 4 clinical trials, may be conducted after initial marketing approval. These trials may be required by the FDA as a condition of approval and are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up. The FDA has express statutory authority to require post- market clinical trials. All of these trials must be conducted in accordance with good clinical practice (“GCP”) requirements in order protect the health and safety of human subjects and for the data to be considered reliable for regulatory purposes.

During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, and clinical trial investigators. Annual progress reports detailing the results of the clinical trials must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA and the investigators for serious and unexpected adverse events; any findings from other studies, tests in laboratory animals or in vitro testing that suggest a significant risk for human subjects; or any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after the sponsor’s initial receipt of the information.

Phase 1, Phase 2, and Phase 3 clinical trials may not be completed successfully or within any specified period, or at all. Regulatory authorities, a data safety monitoring board or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the participants are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biological product has been associated with unexpected serious harm to patients.

A drug being studied in clinical trials may be made available to individual patients in certain circumstances. Pursuant to the 21st Century Cures Act, or Cures Act, which was signed into law in December 2016, the manufacturer of an investigational drug for a serious disease or condition is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for individual patient access to such investigational drug. This requirement applies on the later of 60 calendar days after the date of enactment of the Cures Act or the first initiation of a Phase 2 or Phase 3 trial of the investigational drug.

Table of Contents

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the physical characteristics of the biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. To help reduce the risk of the introduction of adventitious agents with the use of biological products, the PHSA Act emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality, potency, and purity of the final biological product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.

After completion of the required clinical testing, a BLA is prepared and submitted to the FDA. FDA review and approval of the BLA is required before marketing of the product may begin in the U.S. The BLA must include the results of all nonclinical, clinical, and other testing and a compilation of data relating to the quality and manufacture of the product, including chemistry, manufacture, and controls, to demonstrate the safety, purity and potency, of the product based on these results. If the product is deemed a combination product then the agency will also review the other constituent part during the application review. The cost of preparing and submitting a BLA is substantial. Under federal law, the submission of most BLAs is subject to an application user fee, as well as an annual prescription drug product program user fee, which may total several million dollars and are increased annually.

The FDA has 60 days from its receipt of a BLA to determine whether the application will be filed based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. Once the submission is filed, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of BLAs, including to review 90 percent of standard BLAs within 10 months from the date the application is filed. The FDA can refer applications for novel biologics, or biologics which present difficult questions of safety or efficacy, to an advisory committee-typically a panel that includes clinicians and other experts-for review, evaluation, and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving a BLA, the FDA will typically inspect one, or more, clinical sites to assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at which the biologic is manufactured, or tested, as part of a pre-license inspection. The FDA will not approve the product unless it verifies that compliance with requirements for cGMP is satisfactory and the BLA contains data that demonstrate that the biologic is safe, pure and potent and provide substantial evidence of effectiveness for the intended use.

Based upon our expectation that the cellular component of the miroliverELAP System and the bioengineered organ transplant products would be considered cellular products regulated by the FDA as biological products, the FDA also will not approve our products if the manufacturer is not in compliance with the current cGTP. These are FDA regulations that govern the methods used in, and the facilities and controls used for, the manufacture of HCT/Ps, which are human cells or tissues intended for implantation, transplant, infusion, or transfer into a human recipient. The primary intent of the cGTP requirements is to ensure that cell and tissue-based products are manufactured in a manner designed to prevent the introduction, transmission and spread of communicable disease. FDA regulations also require tissue establishments to register and list their HCT/Ps with the FDA and, when applicable, to evaluate donors through screening and testing. To assure cGMP, cGTP, cGLP and cGCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.

After the FDA evaluates the BLA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response letter means that the BLA will not be approved in its present form and generally outlines the deficiencies in the submission. Complete responses may require substantial additional testing, or information, in order for the FDA to reconsider the application. If and when those deficiencies have been addressed to the FDA’s satisfaction, the FDA will issue an approval letter. The agency will review such resubmissions in two or six months depending on the type of information included. The FDA approval is never guaranteed, and the FDA may refuse to approve a BLA if the regulatory requirements are not satisfied.

An approval letter authorizes commercial marketing of the biologic with specific prescribing information for specific indications. The approval for a biologic may be significantly more limited than requested in the application, including limitations on the specific diseases and dosages or the indications for use, which could restrict the commercial value of the product. The FDA may also require that certain contraindications, warnings, or precautions be included in the product labeling. In addition, as a condition of BLA approval, the FDA may require a REMS to help ensure that the benefits of the

Table of Contents

biologic outweigh the potential risks. REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use (“ETASU”). ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a REMS with a biologic can materially affect the potential market and profitability of the biologic. Moreover, product approval may require, as a condition of approval, substantial post-approval testing and surveillance to monitor the biologic’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory requirements and standards is not maintained or problems are identified following initial marketing.

Under current requirements, facilities manufacturing biological products for commercial distribution must be registered with the FDA. In addition to the preclinical studies and clinical trials, the BLA includes a description of the facilities, equipment and personnel involved in the manufacturing process. A biologics license, which is the product’s approval, is granted on the basis of inspections of the applicant’s facilities in which the primary focus is on compliance with cGMP and the ability to consistently manufacture the product in the facility in accordance with the BLA. If the FDA finds the results of the inspection unsatisfactory, it may decline to approve the BLA, resulting in a delay in production and commercialization of products.

Regulation of Combination Products in the U.S.

Certain products may be comprised of components, or constituent parts, that would normally be regulated under different types of regulatory authorities and frequently by different centers at the FDA. These products are known as combination products. Specifically, under regulations issued by the FDA, a combination product may be:

Under the FFDCA, the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a combination product. That determination is based on the “primary mode of action” of the combination product. Thus, if the primary mode of action of a device-biologic combination product is attributable to the biologic product, the FDA center responsible for premarket review of the biologic product would have primary jurisdiction for the combination product. The FDA has also established an Office of Combination Products to address issues surrounding combination products and provide more certainty to the regulatory review process. That office serves as a focal point for combination product issues for agency reviewers and industry. It is also responsible for developing guidance and regulations to clarify the regulation of combination products, and for assignment of the FDA center that has primary jurisdiction for review of combination products where the jurisdiction is unclear or in dispute.

Regenerative Advanced Therapies

As part of the Cures Act, Congress amended the FFDCA to create a pathway to facilitate development and expedite review of regenerative advanced therapies, which are intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition and include cell therapies, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products. Regenerative advanced therapies do not include those human cells, tissues, and cellular and tissue-based products regulated solely under section 361 of the PHSA Act and 21

Table of Contents

CFR Part 1271. A sponsor may request that the FDA designate a product as a regenerative medicine advanced therapy concurrently with or at any time after submission of an IND. The FDA has 60 calendar days to determine whether the product meets the criteria, including whether there is preliminary clinical evidence indicating that the product has the potential to address unmet medical needs for a serious or life-threatening disease or condition. A BLA for a regenerative medicine advanced therapy may be eligible for priority review or accelerated approval through surrogate or intermediate endpoints reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites. Therapies with a Regenerative Medicine Advanced Therapy (“RMAT”) designation will be eligible for accelerated approval through, as appropriate:

Another benefit of RMAT designation is that it creates the possibility to meet post-approval requirements beyond the standard, controlled clinical trial. Post-approval requirements can possibly be met through:

Finally, the designation also includes early interactions with the FDA to discuss any potential surrogate or intermediate endpoint to be used to support accelerated approval.

FDA Post-Approval Requirements

Maintaining substantial compliance with applicable federal, state, local, and foreign statutes and regulations requires the expenditure of substantial time and financial resources. Rigorous and extensive FDA regulation of biological products, devices and combination products continues after approval, particularly with respect to cGMP. We will rely, and expect to continue to rely, on third parties to manufacture or supply certain components, equipment, disposable devices, testing and other materials used in our manufacturing process for any products that we commercialize or may commercialize. Manufacturers of our products are required to comply with applicable requirements in the cGMP regulations, including quality control and quality assurance and maintenance of records and documentation. We cannot be certain that we or our present or future suppliers will be able to comply with the cGMP and other FDA regulatory requirements. Other post-approval requirements applicable to biological products and certain combination products include reporting of cGMP deviations that may affect the identity, potency, purity and overall safety of a distributed product, record-keeping requirements, monitoring and reporting of adverse effects, reporting updated safety and efficacy information, periodic reporting requirements and complying with electronic record and signature requirements. Similarly, there are a number of post-marketing requirements for devices, including medical device reporting regulations that require manufacturers to report to the FDA if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; and corrections and removal reporting regulations that require manufacturers to report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FFDCA that may present a risk to health. Additionally, devices must comply with the cGMP requirements that are set forth in the FDA’s Quality System Regulation, including complaint handling and corrective and preventative actions.

After a BLA is approved, the biological product also may be subject to official lot release. As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot. The FDA also may perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for distribution by the manufacturer. In addition, the FDA

Table of Contents

conducts laboratory research related to the regulatory standards on the safety, purity, and potency of biological products. After approval of biologics, manufacturers must address any safety issues that arise, are subject to recalls or a halt in manufacturing, and are subject to periodic inspection after approval.

Further, for BLAs, changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new BLA or BLA supplement before the change can be implemented. A BLA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing BLA supplements as it does in reviewing BLAs. Similarly, changes to approved or cleared devices may require FDA’s premarket review.

Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements, by us or our suppliers, may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions and adverse publicity. FDA sanctions could include refusal to approve pending applications or supplements, license revocation, withdrawal of an approval, clinical hold, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.

Biological product and medical device manufacturers and other entities involved in the manufacture and distribution of approved biological products, devices and combination products are required to register their facilities with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. In addition, changes to the manufacturing process or facility generally require prior FDA approval before being implemented and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval, with certain exceptions.

Pediatric Research Equity Act

Under the Pediatric Research Equity Act (“PREA”), a BLA or BLA supplement claiming a new indication must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective, for a new product, new indication or dosage form. The intent of PREA is to compel sponsors whose products have pediatric applicability to study those products in pediatric populations, rather than ignoring pediatric indications for adult indications that could be more economically desirable. The FDA may grant deferrals for submission of data or full or partial waivers. By its terms, PREA does not apply to any biological product for an indication for which orphan designation has been granted, unless the FDA issues regulations saying otherwise. Because the FDA has not issued any such regulations, submission of a pediatric assessment is not required for an application to market a product for an orphan-designated indication, and waivers are not needed at this time. However, if only one indication for a product has orphan designation, a pediatric assessment may still be required for any applications to market that same product for the non-orphan indication(s).

U.S. Patent Term Restoration and Marketing Exclusivity

Depending upon the timing, duration, and specifics of the FDA approval of the use of our current or future product candidates, some of our U.S. patents may be eligible for limited PTE under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments. Patent term restoration can compensate for time lost during product development and the regulatory review process by returning up to five years of patent life for a patent that covers a new product or its use. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The period of patent term restoration is generally one-half the time between the effective date of an IND (falling after issuance of the patent) and the submission date of a BLA, plus the time between the submission date of the BLA and the approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence. Only one patent applicable to an approved biological product is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The application for patent term extension is subject to approval by the United States Patent and Trademark Office, or PTO, in consultation with the FDA.

Table of Contents

A biological product can obtain pediatric market exclusivity in the U.S. This six-month exclusivity, which runs from the end of other exclusivity protection, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.

Biosimilars

The Patient Protection and Affordable Care Act, or the Affordable Care Act, includes the Biologics Price Competition and Innovation Act of 2009. That Act created an approval pathway authorizing the FDA to approve biosimilars and interchangeable biologics, which could allow competitors to reference future data from our product candidates for which we receive marketing approval and increase the risk that our product candidates may face competition sooner than anticipated. Biosimilars are biological products which are “highly similar” to a previously approved biologic product or “reference product” and for which there are no clinically meaningful differences between the biosimilar product and the reference product in terms of the safety, purity, and potency as shown through analytical studies, animal studies and a clinical study or studies. For the FDA to approve a biosimilar product as interchangeable with a reference product, the agency must find that the biosimilar product can be expected to produce the same clinical results as the reference product and, for products administered multiple times, the biosimilar and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. A reference biologic is granted 12 years of exclusivity from the time of first licensure of the reference product.

Advertising and Promotion

The FDA closely regulates the post-approval marketing and promotion of biologics and devices including regulating through standards and regulations for direct-to-consumer advertising and promotional activities involving the internet. The agency also prohibits the off-label promotion of biologics, devices and combination products, and provides guidance on industry-sponsored scientific and educational activities to ensure that these activities are not promotional. Any claims we make for our products in advertising or promotion must be appropriately balanced with important safety information and otherwise adequately substantiated. Failure to comply with these requirements can result in adverse publicity and significant penalties, including the issuance of untitled or warning letters directing a company to correct deviations from FDA standards, corrective advertising, a requirement that future advertising and promotional materials be pre-cleared by the FDA, injunctions, and federal and state civil and criminal investigations and prosecutions.

While doctors are free to prescribe any product approved by the FDA for use, a company can only make claims relating to safety and effectiveness of a biological product or device that are consistent with the FDA approval or clearance, and the company is allowed to actively market and promote a biological product or device only for the particular use and treatment approved or cleared by the FDA.

Table of Contents

Orphan Drug

Under the Orphan Drug Act, the FDA may grant orphan designation to drugs or biologics intended to treat a rare disease or condition, generally a disease or condition that affects fewer than 200,000 individuals in the U.S., or affects more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the cost of developing and making available the drug or biologic in the U.S. for such disease or condition will be recovered from sales in the U.S. of such drug or biologic. Orphan drug designation must be requested to and granted by the FDA before submitting a BLA. Among the benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA application user fee. After the FDA grants orphan drug designation, the generic identity of the biologic and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. However, the first applicant to receive FDA approval for a particular product to treat a particular disease with FDA orphan drug designation is entitled to a seven-year exclusive marketing period in the U.S. for that product, for that indication. During the seven-year exclusivity period, the FDA may not approve any other applications to market the same drug for the same disease, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the holder of the orphan exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan product to meet the needs of patients with the disease or condition for which the biologic was designated. Orphan drug exclusivity, which would most likely run concurrently with the exclusivity, if any, received from the time of first licensure of a reference product, does not prevent the FDA from approving a different biologic for the same disease or condition, or the same biologic for a different disease or condition.

Anti-Kickback and False Claims Laws

In the U.S., the research, manufacturing, distribution, sale and promotion of biological products and devices are subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services, other divisions of the U.S. Department of Health and Human Services (e.g., the Office of Inspector General), the U.S. Department of Justice, state Attorneys General, and other federal, state and local government agencies. For example, sales, marketing and scientific/educational grant programs must comply with the FFDCA, Anti- Kickback Statute, as amended, the False Claims Act, as amended, the Patient Protection and Affordable Care Act, as amended, the privacy regulations promulgated under the Health Insurance Portability and Accountability Act (“HIPAA”), and similar state laws. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws.

The Anti-Kickback Statute makes it illegal for any person, including a biological product manufacturer (or a party acting on its behalf) to knowingly and willfully solicit, receive, offer, or pay any remuneration that is intended to induce the referral of business, including the purchase or order of an item for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. Violations of this law are punishable by up to five years in prison, criminal fines, administrative civil money penalties, and exclusion from participation in federal healthcare programs. In addition, many states have adopted laws similar to the Anti-Kickback Statute. Some of these state prohibitions apply to the referral of patients for healthcare services reimbursed by any insurer, not just federal healthcare programs such as Medicare and Medicaid. Due to the breadth of these federal and state anti- kickback laws and the potential for additional legal or regulatory change in this area, it is possible that our sales and marketing practices and/or our relationships with physicians might be challenged under anti- kickback laws, which could harm us. Because we have commercialized and intend to continue to commercialize products that could be reimbursed under a federal healthcare program and other governmental healthcare programs, we have developed a comprehensive compliance program that establishes internal controls to facilitate adherence to the rules and program requirements to which we are subject.

The federal False Claims Act prohibits anyone from, among other things, knowingly presenting, or causing to be presented, for payment to federal programs (including Medicare and Medicaid) claims for items or services, including biological products, that are false or fraudulent. Although we would not submit claims directly to payers, manufacturers can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label. In addition, our activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state, and third-party reimbursement for our products, and the sale and marketing of our products, are subject to scrutiny under this law. For example,

Table of Contents

pharmaceutical companies have been prosecuted under the federal False Claims Act in connection with their off-label promotion of drugs. Penalties for a False Claims Act violation include three times the actual damages sustained by the government, plus mandatory civil penalties of between $11,181 and $22,363 for each separate false claim, the potential for exclusion from participation in federal healthcare programs, and, although the federal False Claims Act is a civil statute, conduct that results in a False Claims Act violation may also implicate various federal criminal statutes. If the government were to allege that we were, or convict us of, violating these false claims laws, we could be subject to a substantial fine and may suffer a decline in our stock price. In addition, private individuals have the ability to bring actions under the federal False Claims Act and certain states have enacted laws modeled after the federal False Claims Act.

There are also an increasing number of state laws that require manufacturers to make reports to states on pricing and marketing information. Many of these laws contain ambiguities as to what is required to comply with the laws. In addition, a provision of the Patient Protection and Affordable Care Act, referred to as the Sunshine Act, requires biological product manufacturers to track and report to the federal government certain payments or other transfers of value made to physicians and teaching hospitals in the previous calendar year. These laws may affect our sales, marketing, and other promotional activities by imposing administrative and compliance burdens on us. In addition, given the lack of clarity with respect to these laws and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent state and federal authorities.

International Regulation

In addition to regulations in the U.S., a variety of foreign regulations govern clinical trials, development, commercial sales, manufacturing, and distribution of product candidates. The marketing authorization approval process and requirements vary from country to country, as do product classifications. Particularly in the area of regenerative medicines, the regulatory pathways may be unclear. The review timelines may be longer or shorter than that required for FDA approval. As of right now, the Company is focused on product development in the U.S. and has not spent significant time or resources exploring product development in any country other than the U.S.

Pharmaceutical Coverage, Pricing, and Reimbursement

In the U.S. and other countries, sales of any products for which we receive regulatory approval for commercial sale will depend in part on the availability of reimbursement from third-party payers, including government health administrative authorities, managed care providers, private health insurers, and other organizations. Third-party payers are increasingly examining the medical necessity and cost effectiveness of medical products and services in addition to safety and efficacy and, accordingly, significant uncertainty exists as to the reimbursement status of newly approved therapeutics. Third-party reimbursement adequate to enable us to realize an appropriate return on our investment in research and product development may not be available for our products.

Environmental Matters

Our operations require the use of hazardous materials, including biological materials, which subjects us to a variety of federal, state and local environmental and safety laws and regulations. Some of these regulations provide for strict liability, or holding a party potentially liable without regard to fault or negligence. We could be held liable for damages and fines should contamination of the environment or individual exposure to hazardous substances occur. In addition, we could be subject to significant fines for failure to comply with applicable environmental, health and safety requirements. We cannot predict how changes in laws or new regulations will affect our business, operations or the cost of compliance.

Legal Proceedings

We may be subject to legal proceedings and claims in the ordinary course of business. We cannot predict the results of any such disputes, and despite the potential outcomes, the existence thereof may have an adverse material impact on us due to diversion of management time and attention as well as the financial costs related to resolving such disputes.

Table of Contents

Corporate Information

Our website is located at www.miromatrix.com. The information contained on or connected to our website is not a part of this Form 10-K. We have included our website address as a factual reference and do not intend it to be an active link to our website.

We make available, free of charge, through our website materials we file or furnish to the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), including our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and amendments to those reports. These materials are posted to our website as soon as reasonably practicable after we electronically file them with or furnish them to the SEC. You can also read our SEC filings over the Internet at the SEC’s website at www.sec.gov.

​

​

​

Table of Contents

Item 1A. Risk Factors

Risk Factors Summary

The following is a summary of our principal risks that could have an adverse effect on our business, financial condition, results of operation and stock price.

​

Risks Related to Our Business and Operations

Risks Related to the Development and Commercialization of our Products

Table of Contents

Risks Related to Intellectual Property

Risks Related to Governmental Regulation

Risks Related to Our Common Stock

Table of Contents

Risks Related to Our Business and Operations

We have limited cash resources and will likely require additional financing to achieve commercialization of our products.

We believe that in order to be successful, we must grow and expand our operations. We will likely require substantial additional capital in the future to further our research and development efforts and other operating activities to develop products that can be commercialized to generate revenue. Delays in obtaining additional funding could adversely affect our ability to move forward with our business plans.

We have historically relied upon proceeds from the issuance of equity securities to fund our business and operations. In the future, we may seek additional capital through a combination of equity offerings, debt financings and strategic collaborations. If we raise additional funds through the issuance of equity or debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges senior to those of existing stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates or grant licenses on terms that are not favorable to us. Our ability to obtain additional financing will be subject to many factors, including market conditions, our operating performance and investor sentiment. If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates, restrict our operations or obtain funds by entering into agreements on unattractive terms, which would likely have a material adverse effect on our business, financial condition, results of operations and may cause the market price of our common stock to decline.

We received a clinical hold from the FDA on miroliverELAP IND and if the clinical hold is not resolved, or not resolved in accordance with our expected timeframe, our business could be materially and adversely affected.

In November 2022, we submitted our miroliverELAP IND application to the FDA and in January 2023, we received a formal clinical hold letter from the FDA stating that the IND application for miroliverELAP was placed on clinical hold prior to the initiation of patient dosing. The clinical hold letter identified certain nonclinical and clinical deficiencies and requested responsive information, including, among other things, new toxicology studies in an appropriate animal model, biocompatibility studies, as well as various validations to be provided in our IND submission. We have evaluated the deficiencies identified in the clinical hold letter, and we plan to submit a complete response to the FDA. If we are unable to submit a complete response letter during the second half of 2023 as expected, or our complete response to the clinical hold does not address the deficiencies to the FDA’s satisfaction or raises new concerns regarding risks to subjects, the clinical hold will not be lifted in accordance with our expected timeframe at that time, or simply will not be lifted, and we will not be able to begin our first-in-human clinical trial for miroliverELAP. If the FDA maintains the clinical hold, we will be required to develop information to respond to the deficiencies in the new clinical hold letter, which will take additional time and resources. Any such delay in the initiation of our first-in-human clinical trial may result in significant delay, scale back or discontinuance of the development or commercialization of miroliverELAP, and would likely have a material adverse effect on our business, financial condition, results of operations and may cause the market price of our common stock to decline.

We have incurred significant net losses since inception and we expect to incur net losses for the foreseeable future.

We have and expect to continue to incur significant research and development and other expenses related to our ongoing operations. For the years ended December 31, 2022 and 2021, we had net losses of $29,959,997 and $14,670,756, respectively. As of December 31, 2022, we had an accumulated deficit of $104,011,911. We have devoted substantially all of our resources and efforts to research and development and we expect that it will be many years before we generate revenue from product sales from our whole organ program, and we may never generate revenue. Even if we commercialize one of our whole organ product candidates, we expect to continue to develop additional product candidates and incur expenses. If we are unable to achieve or sustain profitability, we may face significant challenges in financing our business and accomplishing our strategic objectives, either of which would have a material adverse effect on our business, financial condition and results of operations and may cause the market price of our common stock to decline.

Table of Contents

We have identified material weaknesses in our internal control over financial reporting which, if not remediated, could result in material misstatements of our financial statements.

In connection with the preparation and audits of our financial statements for the year ended December 31, 2022, we identified material weaknesses (as defined under the Exchange Act and by the auditing standards of the U.S. Public Company Accounting Oversight Board (“PCAOB”)) in internal control over financial reporting that pertain to significant control gaps mainly driven by the small size of our accounting and finance staff. As a result, there is significant lack of appropriate segregation of duties. We also do not have written policies and procedures for accounting and financial reporting, which contributed to the lack of a formalized process or controls for management’s timely review and approval of financial information. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As we continue to evaluate and take actions to improve our internal control over financial reporting, we may determine to take additional actions to address control deficiencies or determine to modify certain of the remediation measures described above.

If we are unable to remediate our existing or any future material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, and we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, in addition to applicable stock exchange listing requirements As a result, investors may lose confidence in our financial reporting, and our share price may decline. We also could become subject to investigations by the Nasdaq Capital Market (“Nasdaq”), the SEC, or other regulatory authorities.

Our financial results may fluctuate significantly and may not fully reflect the underlying performance of our business.

Our quarterly and annual results of operations may vary significantly in the future, and period-to-period comparisons of our operating results may not be meaningful. Accordingly, the results of any one quarter or period should not be relied upon as an indication of future performance. Our quarterly and annual financial results may fluctuate as a result of a variety of factors, many of which are outside our control. Factors that may cause fluctuations in our quarterly and annual results include:

Because our quarterly and annual results may fluctuate, period-to-period comparisons may not be the best indication of the underlying results of our business. These fluctuations may also increase the likelihood that we will not meet our forecasted performance, which could negatively affect the market price for our common stock.

All of our operations are currently conducted at one location and any disruption at this facility could materially and adversely affect our businesses.

Because of the level of precision and quality required for our operations, we currently conduct and intend to conduct all of our manufacturing and preclinical work in-house at our own facility for the foreseeable future. Our facility and equipment would be costly to replace and could require substantial lead time to repair or replace. The facility may be harmed or rendered inoperable by natural or man-made disasters which may render it difficult or impossible for us to perform our research, development and commercialization activities for some period of time. The inability to perform those activities may result in the loss of certain opportunities or harm to our reputation. Although we possess insurance for damage to our property and the disruption of our business, this insurance may not be sufficient to cover all of our potential losses and this insurance may not continue to be available to us on acceptable terms, or at all.

Table of Contents

Our results of operations could be materially harmed if the addressable markets for our future products are smaller than we estimate.

Our estimates of the annual total addressable markets for our products under development are based on a number of internal and third-party estimates, as well as assumed prices at which we can sell our future products. While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. As a result, our estimates of the annual total addressable market for our product candidates may prove to be incorrect. If the price at which we can sell future products, or the annual total addressable market for our product candidates is smaller than we have estimated, it could have an adverse impact on our business. Moreover, our product candidates have a limited shelf life and will expire if not timely used. To ensure adequate inventory supply once commercialized, we will need to forecast inventory needs based on forecasted markets, which could be negatively affected by many factors, including product introductions by competitors, an increase or decrease in surgeon demand for our products or for products of our competitors, our failure to accurately manage our growth strategy, our failure to accurately forecast surgeon acceptance of new products, and unanticipated changes in general market conditions or regulatory matters.

Our ability to maintain our competitive position depends on our ability to attract and retain senior management and other highly qualified personnel.

We are highly dependent on our senior management and other key personnel. Our success depends in part on our continued ability to attract, retain and motivate highly qualified senior management and attract, retain and motivate qualified employees, including sales and marketing professionals, clinical specialists and other highly skilled personnel. Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms, or at all. If we are not successful in attracting and retaining highly qualified personnel, it would have a material adverse effect on our business, financial condition and results of operations. The loss of highly qualified employees could result in delays in product development and commercialization and harm our business.

Although we have entered into employment agreements with our chief executive officer and chief financial officer, either may terminate his employment with us at any time. The replacement of any of our key personnel likely would involve significant time and costs and may significantly delay or prevent the achievement of our business objectives and could therefore have an adverse effect on our business. We also do not maintain “key man” insurance policies on the lives of these individuals or the lives of any of our other employees.

Changing circumstances and market conditions, some of which may be beyond our control, could impair our ability to access our existing cash and cash equivalents and to timely pay key vendors and others.

We regularly maintain significant amounts of cash and cash equivalents at financial institutions that are not insured in excess of federally insured limits. Accounts we hold at banking institutions are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”), up to $250,000. Recently, a large financial institution was placed into receivership with the FDIC, which resulted in all funds held at that institution to be temporarily inaccessible by its customers. While we did not have any relationship with the large financial institution that was placed into receivership, if other financial institutions with whom we have banking relationships enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, we may be unable to access, and we may lose, some or all of our existing cash and cash equivalents to the extent those funds are not insured or otherwise protected by the FDIC. In addition, in such circumstances, we might not be able to timely pay key vendors and others. Any delay in our ability to access our cash and cash equivalents (or the loss of some or all of such funds) or to timely pay key vendors and others could have a material adverse effect on our operations and cause us to need to seek additional capital sooner than planned.

Our business and operations would suffer in the event of computer system failures, cyberattacks or a deficiency in our cybersecurity.

Despite the implementation and maintenance of various security measures, our internal computer systems, and those of third parties on which we rely, are vulnerable to damage from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyberattacks or cyber-intrusions over the Internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization. The risk of a security breach or

Table of Contents

disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. If such an event were to occur, it could lead to the loss, destruction, alteration, prevention of access to, disclosure, dissemination of, or damage or unauthorized access to, our data (including trade secrets or other confidential information, intellectual property, proprietary business information and personal data), and cause interruptions in our operations, resulting in a material disruption of our product development and commercialization. For example, the loss or alteration of research or clinical trial data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Additionally, such events could lead to an interruption in our supply chain for the development and manufacturing of our product candidates, as well as related materials, and could significantly impact development and commercialization timelines and capabilities. If our information systems or a third-party’s information systems on which we rely suffer severe damage, disruption or shutdown and issues are not resolved in a timely manner, we could experience delays in reporting our financial results. To the extent that any disruption or security breach was to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur material legal claims and liability and damage to our reputation, and the further development or commercialization of our product candidates could be delayed, resulting in substantial additional expenses.

We currently have no marketing and sales organization. If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell our products, we may not be able to generate future product revenue.

We have no internal sales, marketing or distribution capabilities. If any of our product candidates ultimately receives regulatory approval, we expect to establish a direct marketing and sales force with technical expertise and supporting distribution capabilities to commercialize each such product in major markets, which will be expensive and time consuming. There are significant risks involved in building and managing a sales organization, including our ability to hire, retain and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel and effectively manage a geographically dispersed sales and marketing team. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of these products. We may also choose to collaborate with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems. We may not be able to enter into collaborations or hire consultants or external service providers to assist us in sales, marketing and distribution functions on acceptable financial terms, or at all. In addition, our product revenues and our profitability, if any, may be lower if we rely on third parties for these functions than if we were to market, sell and distribute any products that we develop ourselves. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we are not successful in commercializing our products, either on our own or through arrangements with one or more third parties, we may not be able to generate any future product revenue and our business would be harmed.

Our business may be adversely affected by global health epidemics, including the COVID-19 pandemic.

The outbreak of COVID-19 and government measures taken in response to the pandemic have had a significant impact, both direct and indirect, on businesses and commerce, including our company, and may continue to significantly impact our business in the future. In particular, worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services has fallen. As a result of the COVID-19 pandemic, we have experienced disruptions and may continue to experience disruptions that could severely impact our preclinical studies and business development plan, including:

Table of Contents

Additionally, while the economic impact brought by and the duration of the COVID-19 pandemic are difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce our ability to access capital, which could negatively affect our short- and long-term liquidity. In addition, the impact of the COVID-19 pandemic could exacerbate other risks we face, including those described elsewhere in “Risk Factors.”

If we generate taxable income, our ability to use our net operating loss carryforwards and other tax attributes to offset applicable taxes may be subject to limitations.

We have incurred net losses since our inception, and expect to continue to incur operating losses for the foreseeable future. At December 31, 2022, our federal net operating loss carryforward (“NOL”) was approximately $40,500,000 and our state NOLs were approximately $20,700,000. If not utilized, our existing NOLs will begin to expire in 2031. Even if we generate taxable income before the NOLs expire, our ability to use NOLs and other tax attributes (including any research and development credit carryforwards) to offset future taxable income or reduce taxes may be subject to limitations. In general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” ​(generally defined as a greater than 50% cumulative change by value in its equity ownership of certain stockholders over a rolling three-year period) is subject to an annual limitation on its ability to utilize its pre-change NOLs and other tax attributes. Similar provisions of state tax law may also limit the use of our state NOLs and other tax attributes. We have not performed an analysis to determine whether our past issuances of stock and other changes in our stock ownership may have resulted in one or more ownership changes under the Code. In addition, we may experience an ownership change in the future as a result of changes in our stock ownership, many of which may be in the public market and outside our control. We have not taken and do not currently intend to take any steps to prohibit changes in our stock ownership in order to avoid such an ownership change.

In addition to any limitation imposed by Section 382 of Code, the use of NOLs arising after December 31, 2017 generally is limited to a deduction of 80% of taxable income for the corresponding taxable year. NOLs arising after December 31, 2017, with certain exceptions that did not apply at the time of our initial public offering (“IPO”), may not be carried back to previous taxable years, but may be carried forward indefinitely.

If an ownership change or other limitation on our ability to use NOLs has occurred in the past or occurs in the future, we may not be able to use a material portion of our NOLs and other tax attributes to offset future taxable income or taxes, if any, which could have a material adverse effect on our financial condition and cash flows.

Risks Related to the Development and Commercialization of our Products

We currently do not have, and may never develop, any FDA-approved, licensed or commercialized products and we may never be able to commercialize our technology.

We do not currently have any FDA-approved, licensed or commercialized products. We have not yet sought regulatory approvals for any of our whole organ product candidates in the U.S. or in any foreign market. Our lead product candidates are still in pre-clinical development and have never been tested in humans, with our recellularized kidney product candidate having only been subject to bench testing. Our interpretation of data and results from the studies we have completed to date do not ensure that we will be able to initiate human clinical trials or achieve positive results in future clinical trials. In addition, pre-clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their products performed satisfactorily in pre-clinical studies have nonetheless failed to replicate results in clinical trials. Significant additional research and development activity and clinical testing are required before we will have a chance to achieve a viable product for commercialization from such candidates. Our research and development efforts remain subject to all the risks associated with the development of new biopharmaceutical products and treatments, including but not limited to unanticipated technical or other problems and the possible insufficiency of funds needed in order to complete development of these product candidates. As further described below, safety, regulatory and efficacy issues, clinical hurdles or other challenges may result in delays and cause us to incur additional expenses that would increase our losses. If we cannot complete, or if we experience significant delays in developing, our products for use in potential commercial applications, particularly after incurring significant expenditures, our business may fail, and investors may lose the entirety of their investment.

Table of Contents

The successful discovery, development, manufacturing, and sale of biologics is a long, expensive, and uncertain process and carries unique risks and uncertainties.

The successful development, manufacturing, and sale of biologics is a long, expensive, and uncertain process and the process has unique risks and uncertainties. We are not permitted to market our product candidates in the U.S. until we receive approval of a biologics license application (“BLA”) from the FDA, or in any foreign countries until we receive the requisite approval from such countries. Biological products are subject to extensive regulation by the FDA and other regulatory authorities in the U.S. and other countries, which regulations differ from country to country. For example, access to and supply of necessary biological materials, such as cell lines, may be limited and governmental regulations restrict access to and govern the transport and use of such materials. In addition, the testing, development, approval, manufacturing, distribution, and sale of biologics is subject to applicable provisions of the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act and regulations issued thereunder that are often more complex and extensive than the regulations applicable to other pharmaceutical products or to medical devices. Manufacturing biologics, especially in large quantities, is often complicated and may require the use of innovative technologies. Such manufacturing also requires specifically designed and validated facilities and sophisticated quality assurance and quality control procedures. Biologics are also frequently costly to manufacture because production inputs are derived from living animal or plant material, and some biologics cannot be made synthetically. Failure to successfully discover, develop, manufacture, and sell biologics could adversely impact our business, operating results, and financial condition.

Further, to successfully commercialize our product candidates, we also will be required to expand, train and manage our employee base, particularly skilled technical, management and marketing personnel within a short time period. We will also be required to scale our manufacturing capabilities, and eventually, once our product candidates are cleared for commercial use, our sales and marketing capabilities. Rapid growth also would require an increase in the level of responsibility for both existing and new management and would require us to implement and improve operational, financial and management information procedures and controls. Our inability to adequately manage growth could have a material adverse effect on our business and prospects.

We may experience delays in commencing and successfully completing our clinical trials.

We may experience delays in initiating our clinical trials, which could significantly increase our product development costs and delay product commercialization. The commencement of clinical trials may be delayed for a variety of reasons, including the delays in:

In addition, because our miroliverELAP will contain human cells from more than one donor, if we are unable to obtain an exemption from the FDA for the cGTP prohibition against pooling cells from two or more donors during manufacturing, we would be unable to initiate clinical trials of our BEL. Further, given that our clinical trials will be conducted with patients in advanced disease states, there is a risk that unexpected deaths could halt the clinical trial process. Even if we are able to commence clinical trials and our initial clinical trials are successful, we are required to conduct additional clinical trials to establish our product candidates’ safety, purity and potency before submitting a BLA. Success in early phases of pre-clinical and clinical trials does not ensure that later clinical trials will be successful, and interim results of a

Table of Contents

clinical trial do not necessarily predict final results. A failure of one or more of our clinical trials can occur at any stage of testing. Moreover, there is no guarantee that our clinical trials will be successful or that we will continue clinical development in support of such approvals.

Our product candidates utilize biological components obtained from animals that could prevent or restrict their development and commercialization.

Our current product candidates use biological components obtained from animals, including our decellularized porcine scaffold. As a result, our product candidates could be deemed to involve xenotransplantation (transplantation from animals to humans). No xenotransplantation clinical trials have occurred to date and based on FDA guidance, we believe the regulatory approval process for xenotransplantation would be extremely complex and difficult. There are also regulatory and safety concerns surrounding the risk of infectious agents and possible transmission to the general population through xenotransplantation. Although we believe our technology overcomes the primary challenges associated with genetically modified xenotransplants, mainly because our product candidates are revascularized using living human cells as opposed to genetically modifying the genome of a pig, the FDA and other regulatory authorities may find our product candidates are xenotransplants and are thus subject to regulations and other laws regarding xenotransplantation. The additional regulations governing xenotransplantation could delay or prevent our ability to receive regulatory approval or commercialize our product candidates.

Our product candidates may be considered combination products, which would result in additional regulation and associated risks.

The FDA may view a bioengineered organ as a combination product comprised of an HCT/P and a medical device. In this case, each component of the product candidate would be subject to FDA requirements for that type of component. As a result, FDA approval of a product candidate classified as a combination product may require multiple marketing applications, such application determination determined on a case-by-case basis. If we are required to submit multiple marketing applications, we could experience delays due to regulatory timing constraints and uncertainties in the product development and approval process, as well as coordination between different centers within the FDA responsible for review of the different components of the combination product.

If we encounter difficulties enrolling patients in our future clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

Even if we are permitted to begin clinical trials, we may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with their protocols will depend, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until its conclusion. We may encounter difficulties enrolling subjects in our future clinical trials due, in part, to defined inclusion and exclusion criteria, effect on their transplant list status, and reluctance to try an unproven therapy, among other reasons. Any future clinical trials for our organ program will involve major surgeries, which some members of the relevant patient populations may be hesitant to undertake. If we are unable to enroll patients in future clinical trials, in accordance with our planned timelines, it could constitute a significant setback to our product development and path to commercializing our product candidates.

We may be unable to process organ products in quantities sufficient for clinical trials or a commercial launch.

We may encounter difficulties in producing our organ products. Processing of tissue and organs involves strict adherence to complex manufacturing and storage protocols and procedures. Future difficulties may arise that limit our production capability and delay progress in our clinical trials.

Moreover, we have no current experience in manufacturing our fully recellularized whole organs for human patients and we are not aware of any party that manufactures products similar to ours. As a result, if we are not able to successfully manufacture our products, it would have a material adverse effect on our business and cause us to cease operations.

Table of Contents

Our supply of raw materials for use in preclinical activities and manufacturing our product candidates may be vulnerable to disruption.

Our process includes cellular and acellular components. Disruptions from suppliers for the starting porcine materials, decellularization chemicals, cell culture media, cell culture supplies, laboratory supplies, cell culture media components, release testing analytical components or other raw materials utilized in our development and manufacturing could constitute a significant setback to our product development and path to commercializing our product candidates.

Even if we obtain approval of our product candidates, our biologic products may be subject to competition from biosimilars.

Even if we are able to successfully develop biologics in the future, the Biologics Price Competition and Innovation Act created a framework for the approval of biosimilars in the U.S. that could allow competitors to reference data from any future biologic products for which we receive marketing approvals. In addition, companies are developing biosimilars in other countries that could compete with any biologic products that we develop. If competitors are able to obtain marketing approval for biosimilars referencing any biologic products that we develop, our products may become subject to competition from such biosimilars, with the attendant competitive pressure and consequences.

In addition, there is a risk that any of our product candidates regulated as a biologic and licensed under a full BLA, would not qualify for FDA exclusivity or that such exclusivity could be shortened due to congressional action or otherwise, potentially creating the opportunity for competition sooner than anticipated. The extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

Moreover, the biologics industry is characterized by rapid and significant change. There can be no assurance that other companies will not succeed in developing or marketing devices and products that are more effective than any products that we may offer in the future or that would render any such products obsolete or noncompetitive. Additionally, new surgical procedures, medications and other therapies could be developed that replace or reduce the importance of our future products. Accordingly, our success will depend in part on our ability to respond quickly to medical and other changes through the development and introduction of new products. Product development involves a high degree of risk, and there can be no assurance that our new product development efforts will result in any commercially successful products.

We may be unable to compete successfully with larger competitors in our highly competitive industries.

While we are not aware of any other company developing bioengineered whole organs based on perfusion decellularization and recellularization, we believe our technology will compete with other technologies including xenotransplants, immersion decellularization, 3D printing and direct implantation of animal organs, as well as other therapeutic (i.e., non-transplant) options for the indications which we attempt to address. Certain companies with these products and technologies are significantly larger than us and have much greater financial, marketing and other resources than we do. Accordingly, we may not be able to compete successfully against existing or new competitors which would have a material adverse effect on our business.

If we are able to commercialize any of our product candidates, their commercial success will largely depend upon attaining significant market acceptance.

Even if we are able to receive regulatory approval for one or more of our product candidates, our ability to execute our growth strategy, achieve commercial success and become profitable will depend upon the adoption by hospitals, surgeons and patients of our bioengineered organs. We cannot predict how quickly, if at all, our products will be accepted or, if accepted, how frequently they will be used. Our bioengineered organs may never gain broad market acceptance among the medical community for some or all of our indications. The market for regenerative medicine technology is relatively new, subject to rapid innovation and remains uncertain. Further, our perfusion technology is a new approach for processing and developing organs.

Failure to achieve or maintain market acceptance and/or market share would limit our ability to generate revenue and would have a material adverse effect on our business, financial condition and results of operations. Further, if we cannot

Table of Contents

build and maintain strong working relationships with these professionals and seek their advice and input on our product candidates, the development and marketing of our future products could suffer, which could have a material adverse effect on our business, financial condition and results of operations.

We rely on third parties for our product candidate development activities.

We rely on third parties to conduct certain preclinical development activities and we intend to rely on third parties to conduct any clinical trials we undertake in the future. We may not be able to secure and maintain relationships with these third parties for preclinical and clinical development studies on acceptable terms and our reliance on these third parties reduces our control over these activities. We are responsible for ensuring that each of our preclinical development activities and our clinical trials are conducted in accordance with the applicable U.S. federal and state laws and foreign regulations, general investigational plan and protocols. However, other than any contracts with these third parties, we have no direct control over these researchers or contractors, as they are not our employees. Our reliance on third parties that we do not control does not relieve us of these responsibilities and requirements. These third parties also may have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our preclinical development activities or our clinical trials in accordance with regulatory requirements or our stated protocols, we may not be able to or be delayed in receiving marketing approvals for our products or successful commercialize our products. These third parties may be subject to various types of sanctions by the FDA or other government or regulatory authorities for failing to meet the applicable requirements imposed on such third parties. As a result, the third parties may not be able to fulfill their contractual obligations, and the results obtained from such third parties regarding preclinical and clinical research may not be accepted by the FDA to support the marketing approval of our product candidates. If the third parties or their employees become debarred by the FDA, we cannot use the research data derived from their services to support the marketing approval of our products. Finally, these third parties may be acquired by other entities, change their business plans or strategies or go out of business, thereby preventing them from meeting their contractual obligations to us. Our success depends on conducting preclinical and clinical trials successfully through commercialization, and therefore, any failure by a third-party in this regard would have a material adverse effect on our business.

Risks Related to Intellectual Property

Our commercial success will depend in large part on our ability to obtain and maintain intellectual property protections.

Our commercial success will depend in large part on our ability to obtain and maintain patent, trademark, trade secret and other intellectual property protection of our new organ candidates and other technology, methods used to manufacture them and methods of treatment, as well as successfully defending our patent and other intellectual property rights against third-party challenges. It is difficult and costly to protect and enforce intellectual property rights, and we may not be able to ensure the same for every product. Our ability to stop unauthorized third parties from making, using, selling, offering to sell, importing or otherwise commercializing our new organ candidates is dependent upon the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities.

If we are unable to obtain or maintain patent protection with respect to a product candidate, or if the scope of the patent protection secured is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours and our ability to commercialize that product candidate may be adversely affected.

The patent prosecution process is expensive, time-consuming, and complex, and we may not be able to file, prosecute, maintain, enforce, or license all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition, we may not pursue or obtain patent protection in all relevant markets. It is also possible that we will fail to identify patentable aspects of our research and development output in time to obtain patent protection. Although we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, any such party may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection. In addition, our ability to obtain and maintain valid and enforceable patents depends on whether the differences between our inventions and the prior art allow our inventions to be patentable over the prior art. Furthermore, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make the

Table of Contents

inventions claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such inventions.

We also cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will be valid and enforceable and provide sufficient protection from competitors. Any patents that we own or in-license may be challenged, narrowed, circumvented, or invalidated by third parties. Consequently, we do not know whether any new organ candidates we may develop will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner.

Our patents and patent applications contain claims directed to new organ candidates, as well as methods directed to making new organ candidates, intermediates in the making of new organ candidates, the use of such new organ candidates, and other technologies. Method-of-use patents do not prevent a competitor or other third-party from developing or marketing an identical product for an indication that is outside the scope of the patented method. Moreover, with respect to method-of-use patents, even if competitors or other third parties do not actively promote their product for our eventual targeted indications or uses for which we may obtain patents, providers may recommend that patients use these products off-label, or patients may do so themselves.

In addition, given the amount of time required for the development, testing, and regulatory review of new organ candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. Moreover, some of our owned patents and patent applications may in the future be co-owned by us with third parties. If we are unable to obtain an exclusive license to such third-party co-owners’ interest in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any such co-owners of our patents in order to enforce such patents against third parties, and such cooperation may not be provided to us. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.

We may also be subject to claims that former employees, collaborators, or other third parties have an interest in our patents or patent applications or other intellectual property as an inventor or co-inventor. If we are unable to obtain an exclusive license to any such third-party co-owners’ interest in such patent applications, such co-owners may be able to license their rights to other third parties, including our competitors. In addition, we may need the cooperation of any such co-owners to enforce any patents that issue from such patent applications against third parties, and such cooperation may not be provided to us.

Our foreign intellectual property rights are not exhaustive.

We have intellectual property for our new organ candidates in many key markets such as the U.S. and Europe. However, we do not have intellectual property rights in every country throughout the world. Filing, prosecuting, and defending patents on new organ candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the U.S., and Europe can be less extensive than those in the U.S. In addition, the laws of foreign countries do not protect intellectual property rights to the same extent as federal and state laws of the U.S. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the U.S., or from selling or importing products made using our inventions in and into the U.S. or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as that in the U.S. These products may compete with our new organ candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any of our licensors is forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations, and prospects may be adversely affected.

Table of Contents

We have entered and may enter into license agreements for intellectual property rights in the future and if we fail to comply with our obligations in such agreements or otherwise experience disruptions to our business relationships with our licensors or research and development partners, we could lose license rights that are important to our business.

We cannot provide any assurances that third-party patents do not exist which might be enforced against our current technology, resulting in either an injunction prohibiting our manufacture or future sales, or, with respect to our future sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties monetary damages, including treble damages and attorneys’ fees, each of which could be significant. It is possible that our ability to commercialize some new organ candidates in the U.S. and abroad may be adversely affected if we cannot obtain a license to any potentially relevant third-party patents on commercially-reasonable terms that would allow us to make an appropriate return on our investment. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. As such, we could be forced, including by court order, to cease developing, manufacturing, and commercializing the infringing technology or new organ candidates. Thus, we may be required to expend significant time and resources to redesign our technology, new organ candidates, or the methods for manufacturing them or to develop or license replacement technology, or we may need to abandon development of the relevant program or product candidate, all of which may not be feasible on a technical or commercial basis and could have a material adverse effect on our business, financial condition, results of operations, and prospects. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar material adverse effect on our business, financial condition, results of operations, and prospects.

The intellectual property landscape pertaining to live new organs is in constant flux.

The field of new organs is still in its infancy. Due to the intense research and development that is taking place by several companies, including us and our competitors, in this field, the intellectual property landscape is evolving and in flux, and it may remain uncertain for the coming years. There may be significant intellectual property related litigation and proceedings relating to intellectual property and proprietary rights in the future.

Our commercial success depends upon our ability and the ability of future collaborators to develop, manufacture, market, and sell any new organ candidates that we may develop and use our proprietary technologies without infringing, misappropriating, or otherwise violating the intellectual property and proprietary rights of third parties. The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights as well as administrative proceedings for challenging patents, including interference, derivation, inter partes review, post grant review, and reexamination proceedings before the United States Patent and Trademark Office (“USPTO”) or oppositions and other comparable proceedings in foreign jurisdictions. We may in the future be subject to and may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights including interference proceedings, post-grant review, inter partes review, and derivation proceedings before the USPTO and similar proceedings in foreign jurisdictions such as oppositions before the European Patent Office. Numerous U.S. and foreign issued patents and pending patent applications that are owned by third parties may exist in the fields in which we are developing our new organ candidates and they may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit.

Defense of third-party claims of infringement of misappropriation, or violation of intellectual property rights involves substantial litigation expense and would be a substantial diversion of management and employee time and resources from our business. Some third-parties may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations or could otherwise have a material adverse effect on our business, financial condition, results of operations and prospects. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments and there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation, and if securities analysts or investors perceive these announcements or disclosures to be negative, it could have a substantial adverse effect on the price of our common stock. Any of the foregoing events could have a material adverse effect on our business, financial condition, results of operations and prospects.

We may choose to challenge the patentability of claims in a third-party’s U.S. patent by requesting that the USPTO review the patent claims in re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). If we challenge and

Table of Contents

subsequently fail to obtain a favorable result at the USPTO, European Patent Office or other patent office then we may be exposed to litigation by a third-party alleging that the patent may be infringed by our new organ candidates or other proprietary technologies.

Obtaining and maintaining our patent protection depends on compliance with various procedural and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees, and various other government fees on patents and applications are due to be paid to the USPTO and foreign patent agencies outside of the U.S. over the lifetime of our patents and applications. The USPTO and foreign patent agencies require compliance with several procedural, documentary, fee payment, and other similar provisions during the patent application process. While an inadvertent lapse can ordinarily be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations, however, in which non-compliance can result a partial or complete loss of patent rights in the relevant jurisdiction. Were a noncompliance event to occur, our competitors might be able to enter the market with similar or identical products or technology, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

If we do not obtain a patent term extension for a patent, our business may be materially harmed.

Depending upon the timing, duration and specifics of any FDA licensing of any new organ candidates we may develop, one or more of our U.S. patents may be eligible for limited patent term extension (“PTE”). Analogous extensions of patent term may be available upon marketing approval in other jurisdictions. The PTE term of up to five years is awarded as compensation for patent term lost during the FDA regulatory review process. However, even if we were to seek a PTE or corresponding extension of patent term in other jurisdictions, it may not be granted because of, for example, the failure to exercise due diligence during the testing phase or regulatory review process, the failure to apply within applicable deadlines, the failure to apply prior to expiration of relevant patents, or any other failure to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we are unable to obtain PTE or a corresponding extension of patent term in other jurisdictions, or the term of any such extension is less than we request, our competitors may be able to launch competing products earlier than anticipated following our patent expiration, and our business, financial condition, results of operations, and prospects could be materially harmed.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to seeking patents for our technology and new organ candidates, we also rely on know-how and trade secret protection, as well as confidentiality agreements, non-disclosure agreements and invention assignment agreements with our employees, consultants and third-parties, to protect our confidential and proprietary information, especially where we do not believe patent protection is appropriate or obtainable.

It is our policy to require our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors, and other third parties to execute confidentiality agreements upon the commencement of employment or consulting relationships with us. These agreements provide that all confidential information concerning our business or financial affairs developed by or made known to the individual or entity during the course of the party’s relationship with us is to be kept confidential and not disclosed to third parties, except in certain specified circumstances. However, we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary technology and processes. Any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time-consuming, and the outcome is unpredictable.

In addition to contractual measures, we try to protect the confidential nature of our proprietary information through other appropriate precautions, such as physical and technological security measures. However, trade secrets and know-how can be difficult to protect. These measures may not, for example, in the case of misappropriation of a trade secret by an employee or third-party with authorized access, provide adequate protection for our proprietary information. Our security measures may not prevent an employee or consultant from misappropriating our trade secrets and providing them

Table of Contents

to a competitor, and any recourse we might take against this type of misconduct may not provide an adequate remedy to protect our interests fully. In addition, trade secrets may be independently developed by others in a manner that could prevent us from receiving legal recourse. If any of our confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any of that information was independently developed by a competitor, our competitive position could be harmed.

Third parties may assert that our employees, consultants, or advisors have wrongfully used or disclosed confidential information or misappropriated trade secrets.

As is common in the biotechnology and pharmaceutical industries, we may employ individuals that are currently or were previously employed at universities, research institutions or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants, and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Also, in the future we may be subject to claims that these individuals are violating non-compete agreements with their former employers. We may then have to pursue litigation to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and, if securities analysts or investors perceive these results to be negative, that perception could have a substantial adverse effect on the price of our common stock. This type of litigation or proceeding could substantially increase our operating losses and reduce our resources available for development activities, and we may not have sufficient financial or other resources to adequately conduct this type of litigation or proceedings.

Risks Related to Government Regulation

The development and commercialization of biopharmaceutical products is subject to extensive regulation, and the regulatory approval processes of the FDA are lengthy, time-consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates on a timely basis if at all, our business will be substantially harmed.

The clinical development, manufacturing, labeling, packaging, storage, recordkeeping, advertising, promotion, export, import, marketing, distribution, adverse event reporting, including the submission of safety and other post-marketing information and reports, and other possible activities relating to our product candidates are subject to extensive regulation. In the U.S., marketing approval of biologics requires the submission of a BLA to the FDA, and we are not permitted to market any product candidate in the U.S. until we obtain approval from the FDA of the BLA for that product candidate. A BLA must be supported by extensive clinical and preclinical data, as well as extensive information regarding pharmacology, chemistry, manufacturing, and controls. Outside the U.S., many comparable foreign regulatory authorities employ similar approval processes.

We have not previously submitted a BLA to the FDA or similar regulatory approval filings to comparable foreign authorities, for any product candidate, and we cannot be certain that any of our product candidates will receive regulatory approval. We are not permitted to market our product candidates in the U.S. or in other countries until we receive approval of a BLA from the FDA or marketing approval from applicable regulatory authorities outside the U.S. Obtaining approval of a BLA can be a lengthy, expensive, and uncertain process, and we have no experience with the preparation of a BLA submission for marketing approval. Further, the FDA has not yet granted approval for any whole organ using our perfusion technology or any whole organ biologic, and to our knowledge, a clinical trial has never been conducted using a bioengineered organ in humans before, which we believe may increase the complexity, uncertainty and length of the regulatory approval process. Further, if the FDA was to categorize our bioengineered organ products as xenotransplants, the length of the regulatory approval process could be extended. In addition, the FDA has the authority to require a risk evaluation and mitigation strategies plan as part of a BLA or after approval, which may impose further requirements or restrictions on the distribution or use of an approved biologic, such as limiting prescribing to certain physicians or medical

Table of Contents

centers that have undergone specialized training, limiting treatment to patients who meet certain safe-use criteria and requiring treated patients to enroll in a registry.

Our product candidates could fail to receive regulatory approval for many reasons, including the following:

This lengthy approval process, as well as the unpredictability of future clinical trial results, may result in our failing to obtain regulatory approval to market any of our product candidates, which would significantly harm our business, results of operations, and prospects. The FDA and comparable foreign regulatory authorities have substantial discretion in the approval process, and determining when or whether regulatory approval will be obtained for any of our product candidates. As a result, we may be required to conduct additional preclinical studies, alter our proposed clinical trial designs, or conduct additional clinical trials to satisfy the regulatory authorities in each of the jurisdictions in which we hope to conduct clinical trials and develop and market our products, if approved. Further, even if we believe the data collected from clinical trials of our product candidates are promising, such data may not be sufficient to support approval by the FDA or any comparable foreign regulatory authority.

In addition, even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

Even if our product candidates obtain regulatory approval, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense. Additionally, our product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.

If the FDA or a comparable foreign regulatory authority approves any of our product candidates, the manufacturing processes, testing, labeling, packaging, distribution, import, export, adverse event reporting, storage, advertising, promotion, and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current cGMPs, cGTPs and GCPs for any clinical trials that we conduct post-approval, all of which may result in significant expense and limit our ability to commercialize such products. In addition, any regulatory approvals that we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product candidate.

Table of Contents

Manufacturers and manufacturers’ facilities are required to comply with extensive FDA and comparable foreign regulatory authority requirements, including ensuring that quality control and manufacturing procedures conform to cGMP regulations, as well as, for the manufacture of certain of our product candidates, the FDA’s cGTPs for the use of human cellular and tissue products to prevent the introduction, transmission or spread of communicable diseases. As such, we and our contract suppliers and manufacturers, if any, will be subject to continual review and inspections to assess compliance with cGMPs, cGTPs and adherence to commitments made in any approved marketing application. Accordingly, we and others with whom we work must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, quality control, and distribution.

If there are changes in the application of legislation or regulatory policies, or if problems are discovered with a product or our manufacture of a product, or if we or one of our distributors, licensees or co-marketers fails to comply with regulatory requirements, the regulators could take various actions. These include issuing warning letters or untitled letters, imposing fines on us, imposing restrictions on the product or its manufacture, and requiring us to recall or remove the product from the market. The regulators could also suspend or withdraw our marketing authorizations, requiring us to conduct additional clinical trials, change our product labeling, or submit additional applications for marketing authorization. If any of these events occurs, our ability to sell such product may be impaired, and we may incur substantial additional expense to comply with regulatory requirements, which could materially adversely affect our business, financial condition, and results of operations.

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, such regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things:

Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from our products, if approved. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results will be adversely affected.

Compliance with current and future governmental regulations regarding the treatment of animals used in research could increase our operating costs or impact the commercialization of our technology.

Certain laws and regulations require us to test our product candidates on animals before initiating clinical trials involving humans. In addition, we are subject to federal law that covers the treatment of certain animals used in research. Currently, federal law imposes a wide variety of specific regulations that govern the humane handling, care, treatment and transportation of certain animals by producers and users of research animals, most notably relating to personnel, facilities, sanitation, cage size, feeding, watering and shipping conditions. Third parties with whom we contract are subject to registration, inspections and reporting requirements. Furthermore, some states have their own regulations, including general anti-cruelty legislation, which establish certain standards in handling animals. If we or any of our contractors fail to comply with regulations concerning the treatment of animals used in research, we may be subject to fines and penalties and adverse publicity, and our operations could be adversely affected.

Table of Contents

Moreover, animal testing activities have been the subject of controversy and adverse publicity. Animal rights groups and other organizations and individuals have attempted to stop animal testing activities by pressing for legislation and regulation in these areas and by disrupting these activities through protests and other means. To the extent the activities of these groups are successful, our research and development activities may be interrupted, delayed, or become more expensive.

Even if we are able to commercialize any product candidate, coverage and adequate reimbursement may not be available or such product candidate may become subject to unfavorable pricing regulations or third-party coverage and reimbursement policies, which would harm our business.

The regulations that govern regulatory approvals, pricing, and reimbursement for biologics such as our product candidates vary widely from country to country. Some countries require approval of the sale price of a product before it can be marketed. In many countries, the pricing review period begins after marketing approval is granted. In some foreign markets, product pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain regulatory approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenues we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain regulatory approval.

Our ability to commercialize any products successfully also will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from third-party payors, such as government authorities, private health insurers, and other organizations. Even if we succeed in bringing one or more products to the market, these products may not be considered cost-effective, and the amount reimbursed for any products may be insufficient to allow us to sell our products on a competitive basis. Because our programs are in the early stages of development, and in particular due to the novel nature of our technology, we are unable at this time to determine their cost effectiveness or the likely level or method of coverage and reimbursement. Increasingly, the third-party payors who reimburse patients or healthcare providers are requiring that companies provide them with predetermined discounts from list prices, and are seeking to reduce the prices charged or the amounts reimbursed for drug products. If the price we are able to charge for any products we develop, or the coverage and reimbursement provided for such products, is inadequate in light of our development and other costs, our return on investment could be affected adversely.

Further, no uniform policy for coverage and reimbursement exists in the U.S., and coverage and reimbursement can differ significantly from payor to payor. Third-party payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. Decisions regarding the extent of coverage and amount of reimbursement to be provided for any product candidates that we develop will be made on a payor-by-payor basis. One payor’s determination to provide coverage for a biologic does not assure that other payors will also provide coverage and adequate reimbursement for the biologic. Additionally, a third-party payor’s decision to provide coverage for a therapy does not imply that an adequate reimbursement rate will be approved.

We face potential liability related to protection of the privacy of personal information, including health information we utilize in the development of our product candidates.

We and our partners and vendors are subject to various federal, state, and foreign data protection laws and regulations. If we fail to comply with these laws and regulations, we may be subject to litigation, regulatory investigations, enforcement notices, enforcement actions, fines, and criminal or civil penalties, as well as negative publicity, reputational harm, and a potential loss of business.

In the U.S., numerous federal and state laws and regulations, including state data breach notification laws and federal and state data privacy laws and regulations that govern the collection, use, disclosure, and protection of health information and other personal information apply to our operations and the operations of our partners. For example, most healthcare providers, including research institutions from which we obtain patient health information, are subject to data privacy and security regulations promulgated under HIPAA, as amended by the Health Information Technology for Economic and

Table of Contents

Clinical Health Act of 2009. Depending on the facts and circumstances, we could be subject to significant penalties if we violate HIPAA. For example, under HIPAA, we could potentially face substantial criminal or civil penalties if we knowingly receive protected health information from a HIPAA-covered healthcare provider or research institution that has not satisfied HIPAA’s requirements for disclosure of such health information, or otherwise violate applicable HIPAA requirements related to the protection of such information. Even when HIPAA does not apply, failing to take appropriate steps to keep consumers’ personal information secure may constitute a violation of the Federal Trade Commission Act.

Certain of the research materials we use in our research and development efforts are derived from human sources, which potentially contain sensitive identifiable personal information regarding the donor. In addition, once we commence clinical trials, we may maintain sensitive identifiable personal information, including health information, that we receive throughout the clinical trial process, in the course of our research collaborations, and directly from individuals (or their healthcare providers) who enroll in our patient assistance programs. As such, we may become subject to further obligations under HIPAA. In addition, our collection of personal information generally (e.g., of employees currently and/or of patients in the future) may subject us to state data privacy laws governing the processing of personal information and requiring notification of affected individuals and state regulators in the event of a breach of such personal information. Numerous laws relating to data privacy and security have been proposed at the state and federal level, and if passed, such laws may have potentially conflicting requirements that would make compliance challenging, require us to expend significant resources to come into compliance, and restrict our ability to process certain personal information. New legislation proposed or enacted in various other states will continue to shape the data privacy environment nationally. Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to confidential, sensitive and personal information than federal, international or other state laws, and such laws may differ from each other, which may complicate compliance efforts.

We are likely to be required to expend significant capital and other resources to ensure ongoing compliance with applicable data privacy and security laws. Claims that we have violated individuals’ privacy rights or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend, and could result in adverse publicity that could harm our business. Moreover, even if we take all necessary action to comply with legal and regulatory requirements, we could be subject to a data breach or other unauthorized access of personal information, which could subject us to fines and penalties, as well as litigation and reputational damage.

Risks Related to Our Common Stock

The price of our common stock may be volatile and you may lose all or part of your investment.

The market price of our common stock has historically and is likely to be highly volatile and may fluctuate substantially due to many factors. In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may significantly affect the market price of our common stock, regardless of our actual operating performance.

In addition, in the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price. Securities litigation brought against us following volatility in our stock price, regardless of the merit or ultimate results of such litigation, could result in substantial costs, which would hurt our financial condition and operating results and divert management’s attention and resources from our business.

We are an emerging growth company and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, as amended (“JOBS Act”), and we may take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” In particular, while we are an “emerging growth company” ​(i) we will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, (ii) we will be exempt from any rules that could be adopted by the PCAOB requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial statements, (iii) we will be subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (iv) we will not

Table of Contents

be required to hold nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments not previously approved.

We may remain an emerging growth company until as late as December 31, 2026, the fiscal year-end following the fifth anniversary of the completion of our IPO, though we may cease to be an “emerging growth company” earlier under certain circumstances, including if (i) we have more than $1.235 billion in annual revenue in any fiscal year, (ii) the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 or (iii) we issue more than $1.0 billion of non-convertible debt over a three-year period.

The exact implications of the JOBS Act are still subject to interpretations and guidance by the SEC and other regulatory agencies, and we cannot assure you that we will be able to take advantage of all of the benefits of the JOBS Act. In addition, investors may find our common stock less attractive to the extent we rely on the exemptions and relief granted by the JOBS Act. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline or become more volatile.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our securities may be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business. We do not control these analysts. As a newly public company, we may be slow to attract research coverage and the analysts who publish information about our common stock will have had relatively little experience with us or our business and products, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding our stock price, our stock price could decline. If one or more of these analysts cease coverage of us or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline and result in the loss of all or a part of your investment in us.

Provisions in our corporate charter documents and under Delaware law could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. As our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. These provisions provide, among other things, that:

Table of Contents

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State of Delaware (“DGCL”), which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

Our amended and restated certificate of incorporation provides for a choice of forum for substantially all disputes between us and our stockholders.

Our amended and restated certificate provides that the Court of Chancery of the State of Delaware will be the exclusive forum, to the fullest extent permitted by law, for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or amended and restated bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine, subject to certain limited exceptions including any actions arising under the Securities Act or Exchange Act. This provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.

Alternatively, if a court were to find the choice of forum provision contained in the Company’s amended and restated bylaws to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with resolving such action in other jurisdictions.

Our amended and restated certificate of incorporation and amended and restated bylaws further provide that the federal district courts of the U.S. will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act or Exchange Act. The Securities Act, however, creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act.

​

Item 1B. Unresolved Staff Comments.

None.

​

Item 2. Properties.

We lease our corporate headquarters in Eden Prairie, Minnesota, which houses our research and development operations and office space, and currently totals approximately 42,000 square feet including approximately 11,000 square feet dedicated to in-house manufacturing.

We believe that our current facilities meet our current needs through clinical trials. We may seek to evaluate additional or alternate space for our operations in the future. We believe appropriate facilities will be readily available on commercially reasonable terms.

Table of Contents

Item 3. Legal Proceedings.

We are not currently party to any material legal proceedings. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We cannot predict the results of any such disputes, and despite the potential outcomes, the existence thereof may have an adverse material impact on us due to diversion of management time and attention as well as the financial costs related to resolving such disputes. We believe that we have obtained adequate insurance coverage or rights to indemnification in connection with potential legal proceedings that may arise.

Item 4. Mine Safety Disclosures.

None.

​

Table of Contents

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock has been listed on the Nasdaq Capital Market under the symbol “MIRO” since June 24, 2021. As of March 24, 2023, there were 193 holders of record of our common stock.

Dividends

We have never paid cash dividends on any of our securities. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and, therefore, we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors, subject to various factors, including applicable laws, our results of operations, financial condition, future prospects and any other factors deemed relevant by our board of directors. Investors should not purchase our common stock with the expectation of receiving cash dividends.

Use of Proceeds from the Initial Public Offering of Common Stock

On June 28, 2021, we completed our initial public offering on common stock (the “IPO”) in which we sold 5,520,000 shares of common stock at a public offering price of $9.00 per share. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to the Company’s registration statement on Form S-1 (File No. 333-256649), as amended, which was declared effective on June 23, 2021 pursuant to Rule 462(b) under the Securities Act. Craig-Hallum Capital Group acted as sole managing underwriter for the IPO.

We received net proceeds of approximately $44.5 million from the IPO, after paying $342,500 of fees and expenses of Craig-Hallum Capital Group. We are using the net proceeds from the IPO as follows:

Recent Sales of Unregistered Equity Securities

None.

Purchases of Equity Securities by the Company

​

Table of Contents

Item 6. [Reserved].

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the notes to those financial statements included elsewhere in this Form 10-K. In addition to historical financial information, the following discussion contains forward-looking statements based upon our current plans, expectations and beliefs that involve risks, uncertainties and assumptions. Our actual results may differ materially from those described in or implied by these forward-looking statements as a result of many factors, including those set forth under the caption “Risk Factors” in Part 1, Item 1A, of this Form 10-K and in other parts of this Form 10-K. Please read “Special Note Regarding Forward-Looking Statements” included at the beginning of Part I of this Form 10-K for additional information.

Overview

We are a life sciences company pioneering a novel technology for bioengineering fully transplantable organs to help save and improve patients’ lives. Founded in 2009, we are one of a small group of companies at the forefront of developing alternatives to human-donor organ transplants, and within this small group of companies there are important differences between the technologies being developed. Our proprietary technology is a scalable platform that uses a two-step method of decellularization and recellularization designed to remove the porcine cells from the organs obtained from pigs and replace them with unmodified human cells. Our initial development focus is on bioengineering livers and kidneys, and our technology platform is also applicable to bioengineering other organs including hearts, lungs and pancreases. We have collaborations with the Mayo Clinic, Baxter, CareDx, Mount Sinai and the Texas Heart Institute, and have received strategic investments from Baxter, CareDx and DaVita.

Substantially all of our revenue to date has been generated by sales of and royalties we received from our biologic surgical products Miromesh and Miroderm, which we spun out as Reprise effective June 30, 2019. We subsequently divested our minority ownership stake in Reprise in March 2021. We continue to receive a royalty on the sales of these products by Reprise. We received $953,470 and $33,066 in royalties from Reprise for the years ended December 31, 2022 and 2021, respectively.

Our product pipeline consists of three programs, as described below:

In the fourth quarter of 2022, we filed an IND application for our miroliverELAP to the FDA. In response to the IND application, we received a clinical hold letter from the FDA in January 2023 identifying certain nonclinical and clinical deficiencies and requesting responsive information, including, among other things, new toxicology studies in an appropriate animal model, biocompatibility studies, as well as various validations to be provided in our IND application. We plan to submit our complete response to the clinical hold letter to the FDA in the second half of 2023. If our complete response addresses the deficiencies to the FDA’s satisfaction and does not raise new concerns regarding risks to subjects, we expect the FDA will lift the clinical hold and we then intend to initiate a first-in-human, phase 1 clinical trial shortly thereafter. We will reallocate resources previously intended for miroliver and mirokidney, our fully implantable bioengineered liver and kidney programs, to miroliverELAP, which will likely delay the preclinical development of miroliver and mirokidney.

Table of Contents

Our revenue for the year ended December 31, 2022 was $953,470, consisting entirely of licensing revenue. Our net loss for the same year was $29,959,997. We have not been profitable since inception and as of December 31, 2022, we had an accumulated deficit of $104,011,911.

Components of Our Results of Operations

Licensing Revenue

For the periods presented, all of our revenue consists of licensing revenue pursuant to our license agreement with Reprise. Revenue pursuant to this agreement is recognized at the later of (i) when the related sales occur after the minimum guarantee is satisfied, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). In the fourth quarter of 2022, we recognized revenue for the 2020 and 2022 minimum royalty from Reprise, as facts and circumstances had changed regarding the collectability of the royalties under the license agreement. Due to future uncertainty regarding the collectability of the 2021 minimum royalty from Reprise, we determined the contract did not meet the requirements of Accounting Standards Codification (“ASC”) 606, therefore we did not record revenues or a receivable.

Cost of Goods Sold

Cost of goods sold relates to our license agreement with the University, pursuant to which we owe the University royalties on our revenues, which are subject to annual minimum payments.

Gross Profit (Loss)

Our gross profit (loss) is calculated by subtracting our cost of goods sold from our revenue.

Research and Development Expenses

Research and development expenses consist primarily of engineering, product development, consulting services, materials, depreciation and other costs associated with products and technologies in development. These expenses include payroll and related expenses, consulting expenses, laboratory supplies, and amounts incurred under certain collaborative agreements. Expenditures for research and development activities are charged to operations as incurred.

We expect research and development expenses in absolute dollars to increase in the future as we develop our product candidates. We expect research and development expenses as a percentage of revenue to vary over time depending on the level and timing of new product development initiatives.

Regulatory and Clinical Expenses

Regulatory and clinical expenses include costs for developing our regulatory and clinical study strategies for our product candidates. These expenses include payroll and related expenses and consulting expenses.

Over time we expect our regulatory and clinical expenses to increase in absolute dollars as we develop our product candidates and move through various regulatory processes. We expect our regulatory and clinical expenses to decrease as a percentage of revenue primarily as, and to the extent, our revenue grows.

Quality Expenses

Quality expenses relate to costs of systems and procedures to develop a manufacturing facility that is compliant with Current Good Manufacturing Practices. These expenses include payroll and related expenses. We expect our quality expenses in absolute dollars to increase in future years as we continue to develop the process and systems needed to produce our product candidates.

Table of Contents

General and Administrative Expenses

General and administrative expenses include costs for our executive, accounting and human resources functions. Costs consist primarily of payroll and related expenses, professional service fees related to accounting, legal and other contract and administrative services and related infrastructure expenses.

We expect that our general and administrative expenses in absolute dollars will increase as we expand our headcount to support our growth and incur additional expenses related to operating as a public company, including director and officer insurance coverage, legal costs, accounting costs, costs related to exchange listing and costs related to SEC compliance and investor relations.

Interest Income

Interest income consists of interest earned on our cash and cash equivalents and U.S. Treasury securities.

Interest Expense

Interest expense consists of interest under our loan agreements. See “— Liquidity and Capital Resources.”

Results of Operations

Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021

Licensing Revenue

Licensing revenue was $953,470 for the year ended December 31, 2022 and $33,066 for the year ended December 31, 2021, an increase of $920,404, or 2,783.5%. The licensing revenue is a result of the licensing agreement with Reprise. The licensing revenue recognized for the year ended December 31, 2022 represents the minimum royalties due from Reprise for 2020 and 2022. The remainder of minimum royalties due from Reprise for 2021 has been deferred to 2023. Due to the uncertainty regarding the collectability of the 2021 minimum royalties from Reprise, we determined the contract did not meet the requirements of ASC 606, therefore we did not record revenues or a receivable.

Table of Contents

Cost of Goods Sold

Cost of goods sold was $500,000 for both the year ended December 31, 2022 and 2021. Cost of goods sold relates to the minimum royalty due to the University under our license agreement.

Gross Profit (Loss)

Gross profit was $453,470 for the year ended December 31, 2022, compared with gross loss of $466,934 for the year ended December 31, 2021, an increase of $920,404, or 197.1%. The gross profit position for the year ended December 31, 2022 resulted from the recognition of the 2020 and 2022 minimum royalties due from Reprise. The gross loss position for the year ended December 31, 2021 resulted from the uncertainty of collecting the deferred minimum royalty from Reprise that made the contract not meet the requirements of ASC 606, therefore, we fully reserved against the minimum royalty.

Research and Development

Research and development expenses were $18,303,386 for the year ended December 31, 2022 and $10,755,959 for the year ended December 31, 2021, an increase of $7,547,427, or 70.2%. The increase was primarily due to lab supply increase of $3,398,536, headcount increase which resulted in an increase in payroll expense of $1,966,112, consulting expense increase of $1,251,262, contract pre-clinical cost increase of $636,316, depreciation expense increase of $365,251. The increase was partially offset by a decrease in office and other expense of $70,050.

Regulatory and Clinical

Regulatory and clinical expenses were $1,646,162 for the year ended December 31, 2022 and $551,494 for the year ended December 31, 2021, an increase of $1,094,668, or 198.5%. The increase was primarily due to headcount increase which resulted in an increase in payroll expense of $640,804 as well an increase in regulatory consulting and contracting expense of $370,365.

Quality Expenses

Quality expenses were $2,148,483 for the year ended December 31, 2022 and $547,129 for the year ended December 31, 2021, an increase of $1,601,354, or 292.7%. The increase was primarily due to lab supply increase of $753,732, headcount increase which resulted in an increase in payroll expense of $406,160 and consulting expense increase of $417,091.

General and Administrative

General and administrative expenses were $8,719,869 for the year ended December 31, 2022 and $4,643,473 for the year ended December 31, 2021, an increase of $4,076,396, or 87.8%. The increase was primarily due to headcount increase which resulted in an increase in payroll expense of $1,949,032, depreciation expense increase of $575,273, office expense increase of $567,371, insurance expense increase of $513,490, legal and accounting expense increase of $167,642 and public company expense increase of $133,978. These increases can primarily be attributed to the cost of being a public company.

Interest Income

Interest income was $333,469 for the year ended December 31, 2022 and $1,973 for the year ended December 31, 2021, an increase of $331,496. The increase was primarily due to U.S. Treasury securities purchased during the second quarter of 2022 with cash received from our IPO.

Interest Expense

Interest expense was $47,732 for the year ended December 31, 2022 and $613,882 for the year ended December 31, 2021, a decrease of $566,150, or 92.2%. The decrease was primarily due to the interest expense on the

Table of Contents

convertible promissory note previously issued to Cheshire MD Holdings, LLC (the “Cheshire Note”) being converted to equity in June 2021, and therefore there was no interest expense related to the Cheshire Note in 2022 compared to 2021.

Amortization of Discount on Note

Amortization expense related to the Cheshire Note was $0 for the year ended December 31, 2022 and $62,638 for the year ended December 31, 2021. The decrease was due to the Cheshire Note being converted to equity in June 2021, and therefore there was no amortization expense related to the Cheshire Note in 2022 compared to 2021.

Change in Fair Value of Derivative

The change in fair value of the embedded derivative related to the Cheshire Note was $0 for the year ended December 31, 2022 and $246,962 for the year ended December 31, 2021. The decrease in the change in fair value of the embedded derivative was due to the Cheshire Note being converted to equity in June 2021.

Research Grants

Research grants were $118,696 for the year ended December 31, 2022 and $393,034 for the year ended December 31, 2021. The decrease in research grants was primarily due to reaching the end of our research grant, resulting in lower grant funds.

Equity Loss in Affiliate

Equity loss in affiliate was $0 for the year ended December 31, 2022 and $223,633 for the year ended December 31, 2021. We sold our remaining ownership interest in Reprise in March 2021, eliminating the need to record any such losses for future periods, including the year ended December 31, 2022.

Gain on Sale of Equity Investment

We recognized a gain of $1,983,912 related to the sale of 1,800,000 shares of common stock of Reprise in March 2021.

Gain on Debt Extinguishment

We recognized a gain on the extinguishment of debt of $568,505 for the year ended December 31, 2021 related to the forgiveness of our loan under the Small Business Administration’s Paycheck Protection Program.

Liquidity and Capital Resources

We have incurred net losses since our inception. We incurred a net loss of $29,959,997 for the year ended December 31, 2022. As of December 31, 2022, we had an accumulated deficit of $104,011,911.

We expect to incur additional losses in the near future, and we expect our expenses to increase substantially in connection with our ongoing activities, particularly as we continue to develop our bioengineered organs, as we conduct clinical trials and other studies for our bioengineered organs, seek regulatory clearances or approvals for miroliverELAP, mirokidney and miroliver continue preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and to invest in our infrastructure to support our future manufacturing and other activities. We expect to incur additional costs associated with operating as a public company in the U.S. The timing and amount of our operating expenditures will depend largely on our ability to, among other things:

Table of Contents

Liquidity

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. To date, we have primarily financed our operations through equity and debt financings, including public offerings of our common stock, as well as research grants. We believe that our existing cash and cash equivalents will enable us to fund our operating expenses through the second quarter of 2024. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. As of December 31, 2022, we had cash and cash equivalents of $5,208,005 and short-term investments of $19,989,489.

Until such time, if ever, as we can generate substantial revenue from sales of our bioengineered organs, we expect to finance our cash needs through a combination of equity offerings and debt financings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Additional capital may not be available when needed, on reasonable terms, or at all, and our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, curtail or discontinue our product development or future commercialization efforts, or grant rights to develop and market products that we would otherwise prefer to develop and market ourselves.

Debt Financing

In January 2012, we signed a promissory note with the University for $405,559. The promissory note bears interest at 3% per annum, compounded monthly. The note matured on December 31, 2022. We were required to make monthly principal and interest payments of $7,737 until the note was paid in full. In connection with the promissory note, we issued the University warrants to purchase 80,000 shares of our common stock at an exercise price of $1.69. As of December 31, 2022 and 2021, the principal outstanding on this loan was $0 and $83,849, respectively.

In May 2015, we entered into a loan agreement with the Minnesota Department of Employment and Economic Development under which we borrowed $250,000. The loan was unsecured and did not bear interest. The loan was due in a lump sum payment on April 1, 2022. As of December 31, 2022 and 2021, the balance outstanding on this loan was $0 and $250,000, respectively.

In January 2019, we issued the University a promissory note in the amount of $385,997 in satisfaction of our minimum royalty obligation under the licensing agreement with the University for the year ended December 31, 2018. The note bears interest at 6% per annum, compounded annually, and is due on January 31, 2025. In addition, we issued the University a 10-year warrant to purchase 20,587 shares of our common stock at an exercise price of $3.75 per share. As of both December 31, 2022 and 2021, the principal outstanding on this loan was $385,997.

Equity Distribution Agreement

On July 1, 2022, we entered into an Equity Distribution Agreement with Piper Sandler & Co. (“Piper Sandler”). The Equity Distribution Agreement provides that, upon the terms and subject to the conditions set forth therein, we may issue and sell through Piper Sandler, acting as the sales agent, shares of our common stock having an aggregate offering price

Table of Contents

of up to $50.0 million. We have no obligation to sell any such shares under the Equity Distribution Agreement. The sale of the shares of our common stock by Piper Sandler, if any, will be effected pursuant to a Registration Statement on Form S-3, filed with the SEC on July 1, 2022 and declared effective on July 11, 2022 (the “Registration Statement”). We did not issue any shares under the Equity Distribution Agreement during the year ended December 31, 2022.

Shelf Registration Statement

We filed a Shelf Registration Statement with the SEC on July 1, 2022 which was declared effective on July 11, 2022. The Registration Statement registered the offer and sale of an indeterminate number of shares of common stock and preferred stock, an indeterminate principal amount of debt securities and an indeterminate number of warrants to purchase common stock, preferred stock, and various series of debt securities and/or warrants to purchase any of such securities, having an aggregate initial offering price of $200.0 million.

Public Offering

In March 2023, we completed a public offering pursuant to which we sold an aggregate of 6,250,000 shares of our common stock at a public offering price of $1.60 per share to certain investors. The offering closed on March 10, 2023, resulting in net proceeds of approximately $8.8 million, after deducting underwriting discounts and commissions and other offering expenses. Piper Sandler acted as the book-running manager and Craig-Hallum Capital Group acted as the lead manager for the offering.

We will continue to incur additional costs of operating as a public company. Based on our current business plan, we believe that our existing cash resources will be sufficient to meet our capital requirements and fund our operations through the second quarter of 2024. If these sources are insufficient to satisfy our liquidity requirements, we may seek to sell additional common equity or debt securities, or enter into a new credit facility. If we raise additional funds by issuing equity securities, our stockholders would experience dilution and any new equity securities could have rights, preferences and privileges superior to those of holders of our common stock. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. We cannot be assured that additional equity or debt financing will be available on terms favorable to us or our stockholders, or at all. If we are unable to obtain adequate financing, we may be required to delay the development, commercialization and marketing of our product candidates.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods presented:

Operating Activities

Net cash used in operating activities consisted of net losses adjusted for certain non-cash items and changes in operating assets and liabilities.

During the year ended December 31, 2022, net cash used in operating activities was $26,682,581 and reflected (i) the net loss of $29,959,997, (ii) net non-cash items of $2,189,437, including $1,151,473 of stock-based compensation, $1,108,431 of depreciation and amortization expense, amortization of premium/discount on investments of $36,636 and $758 of loss on disposal of property and equipment, partially offset by non-cash interest income of $107,861, and (iii) a net cash inflow from changes in balances of operating assets and liabilities of $1,087,979. The most significant item

Table of Contents

comprising the changes in balances of operating assets and liabilities was the tenant improvement receivable reimbursement of $1,256,950.

During the year ended December 31, 2021, net cash used in operating activities was $14,809,229 and reflected (i) the net loss of $14,670,756, (ii) net non-cash items of ($1,577,238), including a gain on sale of stock of $1,983,912 and $563,397 related to the forgiveness of a paycheck protection program loan, partially offset by $622,159 of stock-based compensation, $167,907 of depreciation and amortization, $223,633 in equity loss in affiliate, and (iii) a net cash inflow from changes in balances of operating assets and liabilities of $1,438,765. The most significant item comprising the changes in balances of operating assets and liabilities was a higher balance of accounts payable and accrued expenses of $1,066,718.

Investing Activities

For the year ended December 31, 2022, net cash used in investing activities was $21,089,282, driven by purchases of investments of $26,026,125 and property and equipment purchases of $1,063,157, partially offset by proceeds from maturity of investments of $6,000,000.

For the year ended December 31, 2021, net cash used in investing activities was $1,383,116, as a result of purchases of property and equipment of $3,383,116 that was partially offset by the sales of Reprise stock that provided $2,000,000 of cash.

Financing Activities

For the year ended December 31, 2022, net cash provided by financing activities was $168,337, primarily driven by proceeds from stock warrant exercises of $414,098 and proceeds from stock option exercises of $379,297, partially offset by payments on long-term debt of $333,849, payments on offering costs of $232,899, payments on financing lease obligations of $54,959 and employee taxes paid for shares withheld of $3,351.

For the year ended December 31, 2021, net cash provided by financing activities was $65,359,581, primarily as a result of the sale of common and preferred stock.

Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operation is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Items subject to estimates based on judgments include, but are not limited to; the valuation of options and warrants to purchase capital stock and the determination of the valuation allowance associated with deferred tax assets. Actual results could differ from these estimates and such differences could affect the results of operations in future periods.

Our significant accounting policies are described in Note 1 to our audited financial statements in Part II, Item 8 of this Form 10-K. Some of these accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of our financial statements.

Stock-Based Compensation

Stock Options

We recognize compensation costs related to stock options granted to employees and non-employees based on the estimated fair value of the awards on the date of grant, net of estimated forfeitures. We estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair value of the stock-based awards is expensed on a straight-line basis over the vesting period of the respective award.

Table of Contents

As a result of our Black-Scholes option fair value calculations, we recognized stock-based compensation expense of $671,628 and $514,318 for stock options during the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, total compensation cost related to unvested stock options not yet recognized in the financial statements was $1,744,777, which will be recognized over the next four years. We expect to continue to grant stock options in the future, and to the extent that we do, our stock-based compensation expense recognized in future periods will likely increase.

The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions which help us determine the estimated fair value of stock-based awards, including the expected term and the price volatility of the underlying stock. These assumptions include:

In addition to the assumptions used in the Black Scholes option-pricing model, we must also estimate a forfeiture rate to calculate the stock-based compensation for our awards. We will continue to use judgment in evaluating the expected volatility, expected terms and forfeiture rates utilized for our stock-based compensation calculations on a prospective basis.

The estimated grant date fair values of the employee and non-employee stock options were based on the following weighted-average assumptions:

Prior to our IPO on June 23, 2021, and in accordance with the American Institute of Certified Public Accountants, or AICPA, Practice Aid, Valuation of Privately-held-Company Equity Securities issued as Compensation (the AICPA Practice Aid) our board of directors exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock.

Significant Factors, Assumptions and Methodologies Used in Determining the Estimated Fair Value of Our Common Stock

Prior to our IPO on June 23, 2021, the exercise price of our stock options and the estimated fair value of the common stock underlying the options was determined by our board of directors with input from management, after taking into account the relevant valuations from an independent third-party valuation specialist. The board of directors utilized the fair values of the common stock derived in the third-party valuations as a factor to set the exercise prices for options granted, however management and our board of directors assume full responsibility for the estimates. Our board of directors determined the estimated fair value of our common stock on the date of each grant based on a number of objective and subjective factors, including:

Table of Contents

Our board of directors intended all options granted to be exercisable at a price per share not less than fair market value of the shares of our stock underlying those options on their respective dates of grant.

There are significant judgments and estimates inherent in the determination of the estimated fair value of our common stock. These judgments and estimates include assumptions regarding our future operating performance, the time to a liquidity event, or other event and the determination of the appropriate valuation methods. If we had made different assumptions, our stock-based compensation expense, net loss and net loss per share could have been significantly different.

After completion of our IPO on June 23, 2021, the fair value of our common stock is based on the closing price as reported on the date of grant on the primary stock exchange on which our common stock is traded.

Restricted Stock Units

We recognize compensation costs related to restricted stock units granted to employees and directors based on the grant date fair value and they are expensed on a straight-line basis over the vesting period of the respective award.

We recognized stock-based compensation expense of $473,045 and $107,841 for restricted stock units during the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, total compensation cost related to unvested restricted stock units not yet recognized in the financial statements was $741,499, which will be recognized over the next four years. We expect to continue to grant restricted stock units in the future, and to the extent that we do, our stock-based compensation expense recognized in future periods will likely increase.

Research and Development Expenses

Our research and development expenses consist primarily of engineering, product development, consulting services, materials, depreciation and other costs associated with products and technologies in development. These expenses include employee and non-employee compensation, including stock-based compensation, supplies, materials, consulting, related travel expenses and facility costs. We charge expenditures for research and development activities to operations as they are incurred.

Equity Method Investment

We account for our equity investments in 20% to 50%-owned companies under the equity method as the Company can exercise significant influence, but not control, over such investments. The equity method requires that gains (losses) are recognized in other income (expense), net in the statements of operations. We recorded the equity method share of losses in Reprise for the year ended December 31, 2021 in the statements of operations. Even though our ownership dropped below 20% on November 15, 2020, the Company still had significant influence over the activities of Reprise due to common board members. We sold our remaining ownership of Reprise in March 2021 (see Note 5 to the Financial Statements contained in Item 8 of this Form 10-K).

License Revenue

We recognize revenue in accordance with Accounting Standards Codification, Topic 606, Revenue from Contracts with Customers (“ASC 606”).

In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our agreements, we perform the following steps: (i) identify the contract with the customer; (ii) identify the performance obligations in the

Table of Contents

contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when (or as) each performance obligation is satisfied.

For our agreements that include sales-based royalties and where the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur after the minimum guarantee is satisfied, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). We assess the collectability of the consideration and only recognize revenue when the collectability of the consideration is deemed probable. We re-assess the collectability of the consideration on a periodic basis, typically quarterly, and recognize revenue deemed probable of being collected.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Recently Issued and Adopted Accounting Pronouncements

See Note 1 to the Financial Statements contained in Item 8 of this Form 10-K for a discussion of recent accounting pronouncements.

Emerging Growth Company and Smaller Reporting Company Status

We are an “emerging growth company” as defined in the JOBS Act. Under the JOBS Act, companies have extended transition periods available for complying with new or revised accounting standards. We have elected this exemption to delay adopting new or revised accounting standards.

We will remain an emerging growth company until the earlier of (1) December 31, 2026, the fiscal year-end following the fifth anniversary of our IPO, (2) the last day of the fiscal year in which we have total annual gross revenues of at least $1.235 billion, (3) the date on which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, or (4) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company,

We have elected to take advantage of certain of the reduced disclosure obligations in our filings with the SEC and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (1) the market value of our stock held by nonaffiliates is less than $250.0 million or (2) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may

Table of Contents

choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 8. Financial Statements and Supplementary Data.

The financial statements and supplemental financial information required by this Item 8 are included on the pages immediately following the Index to Financial Statements appearing on F-1 of this Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal year ended December 31, 2022, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2022 due to identified material weaknesses in our internal control over financial reporting, which are described below in “Management’s Annual Report on Internal Control Over Financial Reporting”.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles. Management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2022.

In making this assessment, management used the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control–Integrated Framework (2013). Based on this assessment, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2022 due to deficiencies that existed in the design or operation of our internal control over financial reporting that are considered to be material weaknesses.

Management has determined that our financial statement close process includes deficiencies in the design or operation of our financial statement close processes, mainly driven by the small size of our accounting and finance staff and, as a result, inadequate segregation of duties consistent with control objectives. We also do not have written policies and procedures for accounting and financial reporting, which contributed to the lack of a formalized process or controls for management’s timely review and approval of financial information.

Table of Contents

Management is committed to remediating its material weaknesses as promptly as possible and is in the process of implementing its remediation plan. We are in the process of designing, implementing, documenting and testing the effectiveness of our processes, procedures and internal controls over financial reporting. The material weakness cannot be considered completely remediated until the applicable internal controls over financial reporting have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We cannot reasonably assure we will be able to remediate the material weaknesses we have identified or avoid potential future material weaknesses.

This Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which exempts smaller reporting companies from the auditor attestation requirement.

Changes in Internal Control Over Financial Reporting.

We have not identified any change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

​

Table of Contents

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information in the definitive proxy statement for our annual meeting of stockholders (the “Proxy Statement”) under the captions “Proposal One — Election of Directors,” “Corporate Governance and Board Matters,” “Submission of Stockholder Proposals and Nominations” and, if any, “Delinquent Section 16(a) Reports,” is incorporated herein by reference.

Information about our Executive Officers

As of the date of this Form 10-K, the following individuals were executive officers of the Company:

Jeffrey Ross, Ph.D. Dr. Ross has been our Chief Executive Officer since 2017 and has served on our board of directors since October 2019. Prior to serving as our Chief Executive Officer, Dr. Ross was our Vice President of Product Development from 2010 to 2017. Dr. Ross started his industry career at Guidant leading a biologics group for new cardiovascular therapies. Following his work at Guidant, he worked at Athersys assisting with the commercialization and scale up of stem cell technologies. He then served as Director of Research and Commercial Development of Biologics at SurModics. Dr. Ross has over 30 published and issued patents along with leading publications in Nature and the Journal of Clinical Investigation. He holds a M.S. in Biomedical Engineering and a Ph.D. in Molecular, Cellular and Developmental Biology, from the University of Minnesota.

James Douglas Mr. Douglas has been our Chief Financial Officer since March 2022, with over 25 years of experience in investment banking, industry, and public accounting. Prior to joining the Company, Mr. Douglas was a Managing Director at Piper Sandler in the healthcare investment banking group, advising biotechnology and medical technology companies on mergers and acquisitions and financing transactions, as well as providing a broad range of strategic guidance. Prior to his work at Piper Sandler, Mr. Douglas worked at Abbott Laboratories in the corporate financial planning division and global pharmaceutical operations division (now AbbVie). Before his work at Abbott Laboratories, Mr. Douglas worked at PricewaterhouseCoopers providing audit and transaction services. Mr. Douglas holds a Bachelor’s degree in Accounting from the University of Wisconsin – Milwaukee and a M.B.A. specializing in analytical finance and marketing from the J.L. Kellogg School of Management at Northwestern University. He is also a certified public accountant (inactive).

John Barry, Ph.D., FRSC. Dr. Barry has been our Vice President of Research and Development since August 2021. Prior to joining the Company, Dr. Barry was a Vice President of Research and Development at Emergent BioSolutions, where he built an international research and development team and pipeline around combination products for emergency use. Prior to his work at Emergent BioSolutions, Dr. Barry worked for Baxter International, where he led research and development for the Biosurgery Business Unit. Dr. Barry has co-authored and co-invented multiple publications and patents related to hemostats, sealants and tissue repair/regeneration. Dr. Barry is co-inventor on multiple patents related to hemostats, sealants and tissue repair/regeneration. Dr. Barry has served as a principal investigator on grants, awards and contracts from leading government agencies and non-for-profit organizations, including the National Institutes of Health, Biomedical Advanced Research and Development Authority and the U.S. Department of Defense. Dr. Barry received his Ph.D. in Chemistry from the University of Nottingham (UK). Dr. Barry is a Fellow of the Royal Society of Chemistry (UK).

Table of Contents

Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics that applies to all of our directors, officers and employees. The code of business conduct and ethics covers fundamental ethics and compliance-related principles and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, the protection and use of our property and information and compliance with legal and regulatory requirements. Our code of business conduct and ethics is available on the investor relations section of our website at www.miromatrix.com. We intend to disclose any amendments to our code of business conduct and ethics, or waivers of its requirements, on our website to the extent required by applicable rules and exchange requirements.

Item 11. Executive Compensation.

The information in the Proxy Statement appearing under the captions “Executive Compensation” and “Corporate Governance and Board Matters — Compensation of Non-Employee Directors” is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information in the Proxy Statement appearing under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information appearing in the Proxy Statement under the captions “Certain Relationships and Related-Party Transactions” and “Corporate Governance and Board Matters” is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services.

The information regarding principal accountant fees and services appearing under the caption “Proposal Three — Ratification of Appointment of Independent Registered Public Accounting Firm” in the Proxy Statement is incorporated herein by reference.

​

Table of Contents

PART IV

Item 15. Exhibits and Financial Statements Schedules.

(a) Financial Statements, Financial Statement Schedules, and Exhibits.

(1) Financial Statements

The following financial statements are filed as part of this Form 10-K:

(2) Financial Statement Schedules

Schedules not listed above have been omitted because they are not applicable or not required or the information required to be set forth therein is included in the Financial Statements and notes thereto identified above.

(3) Exhibits

Table of Contents

Table of Contents

Table of Contents

Item 16. Form 10-K Summary

None.

​

​

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 on March 31, 2023.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 31, 2023.

​

​

​

​

Table of Contents

INDEX TO THE FINANCIAL STATEMENTS

​

​

​

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the board of directors of Miromatrix Medical Inc.:

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Miromatrix Medical Inc. (the "Company") as of December 31, 2022 and 2021, the related statements of operations, shareholders’ equity (deficit) and cash flows, for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

​

​

​

/s/ BAKER TILLY US, LLP

​

We have served as the Company's auditor since 2015.

​

Minneapolis, Minnesota

​

March 31, 2023

​

​

Table of Contents

MIROMATRIX MEDICAL INC.

BALANCE SHEETS