UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
Commission file number:
GLAUKOS CORPORATION
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
(Address of registrant’s principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company’’ and “emerging growth company” in Rule 12b-2 of the Exchange Act:
☒ | ☐ Accelerated filer | ☐ Non-accelerated filer |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of October 30, 2023, there were
GLAUKOS CORPORATION
Form 10-Q
For the Quarterly Period Ended September 30, 2023
Table of Contents
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 | |||
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2
Note Regarding Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act) All statements other than statements of historical or current facts included in this report are forward-looking statements. In some cases, you can identify forward-looking statements by the following words: "may," "will," "could," "would," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "project," "potential," "continue," "ongoing" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Any statements in this Quarterly Report on Form 10-Q regarding future operations, expected operating results and financial performance, the Company’s strategy for growth, product development activities, regulatory approvals, including timing and likelihood of success, market position and expenditures are forward-looking statements. These forward-looking statements are based on management’s beliefs and assumptions based on the information currently available to management. Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we caution you that these forward-looking statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements.
You are urged to carefully review the disclosures we make concerning the risks we face and other factors that may affect the outcome of our forward-looking statements and our business and operating results, including the risks set forth in the "Risk Factors" section of this report, which includes a discussion of important factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate, and actual results may differ materially from those expressed or implied by the forward-looking statements. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. You are therefore cautioned not to place undue reliance on the forward-looking statements included in this report, which speak only as of the date of this document. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
We use Glaukos, our logo, iStent, iStent inject, iStent infinite, iPrism, iDose, iPRIME, MIGS, Avedro, Photrexa, iLink, KXL, Epioxa, iLution, Retina XR and other marks as trademarks. This report contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this report, including logos, artwork and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entity.
References throughout this document to “we,” “us,” “our,” the “Company,” or “Glaukos” refer to Glaukos Corporation and its consolidated subsidiaries.
3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLAUKOS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
September 30, | December 31, | ||||||
2023 | 2022 | ||||||
| (unaudited) |
|
| ||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | | $ | | |||
Short-term investments | | | |||||
Accounts receivable, net | | | |||||
Inventory | | | |||||
Prepaid expenses and other current assets | | | |||||
Total current assets | | | |||||
Restricted cash | | | |||||
Property and equipment, net | | | |||||
Operating lease right-of-use assets | | | |||||
Finance lease right-of-use asset | | | |||||
Intangible assets, net | | | |||||
Goodwill | | | |||||
Deposits and other assets | | | |||||
Total assets | $ | | $ | | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | | $ | | |||
Accrued liabilities | | | |||||
Total current liabilities | | | |||||
Convertible senior notes | | | |||||
Operating lease liability | | | |||||
Finance lease liability | | | |||||
Deferred tax liability, net | | | |||||
Other liabilities | | | |||||
Total liabilities | | | |||||
Commitments and contingencies (Note 12) | |||||||
Stockholders' equity: | |||||||
Preferred stock, $ | |||||||
Common stock, $ | | | |||||
Additional paid-in capital | | | |||||
Accumulated other comprehensive income (loss) | | ( | |||||
Accumulated deficit | ( | ( | |||||
Less treasury stock ( | ( | ( | |||||
Total stockholders' equity | | | |||||
Total liabilities and stockholders' equity | $ | | $ | |
See accompanying notes to condensed consolidated financial statements.
4
GLAUKOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 |
| |||||
Net sales | $ | | $ | | $ | | $ | | |||||
Cost of sales | | | | | |||||||||
Gross profit | | | | | |||||||||
Operating expenses: | |||||||||||||
Selling, general and administrative | | | | | |||||||||
Research and development | | | | | |||||||||
Acquired in-process research and development | - | - | | | |||||||||
Litigation-related settlement | - | - | - | ( | |||||||||
Total operating expenses | | | | | |||||||||
Loss from operations | ( | ( | ( | ( | |||||||||
Non-operating expense: | |||||||||||||
Interest income | | | | | |||||||||
Interest expense | ( | ( | ( | ( | |||||||||
Other expense, net | ( | ( | ( | ( | |||||||||
Total non-operating expense | ( | ( | ( | ( | |||||||||
Loss before taxes | ( | ( | ( | ( | |||||||||
Income tax provision | | | | | |||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Basic and diluted net loss per share | ( | ( | ( | ( | |||||||||
Weighted average shares used to compute basic and diluted net loss per share | | | | |
See accompanying notes to condensed consolidated financial statements.
5
GLAUKOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
(in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 |
| |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Other comprehensive income (loss): | |||||||||||||
Foreign currency translation gain | | | | | |||||||||
Unrealized income (loss) on short-term investments | | ( | | ( | |||||||||
Other comprehensive income (loss): | | ( | | ( | |||||||||
Total comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
See accompanying notes to condensed consolidated financial statements.
6
GLAUKOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited)
(in thousands)
Accumulated | ||||||||||||||||||||||
Additional | other | |||||||||||||||||||||
Common stock | paid-in | comprehensive | Accumulated | Treasury stock | Total | |||||||||||||||||
| Shares |
| Amount |
| capital |
| (loss) income |
| deficit |
| Shares |
| Amount |
| equity | |||||||
Balance at December 31, 2022 | | $ | | $ | | $ | ( | $ | ( |
| ( | $ | ( | $ | | |||||||
Common stock issued under stock plans, net | | — | | — | — | — | — | | ||||||||||||||
Stock-based compensation | — | — | | — | — | — | — | | ||||||||||||||
Other comprehensive income | — | — | — | | — | — | — | | ||||||||||||||
Net loss | — | — | — | — | ( | — | — | ( | ||||||||||||||
Balance at March 31, 2023 | | $ | | $ | | $ | ( | $ | ( |
| ( | $ | ( | $ | | |||||||
Common stock issued under stock plans, net | |
| — |
| ( |
| — |
| — |
| — |
| — |
| ( | |||||||
Acquired in-process R&D acquired through the issuance of common stock | | — |
| — |
| — |
| — | | |||||||||||||
Stock-based compensation | — |
| — |
| |
| — |
| — |
| — |
| — |
| | |||||||
Other comprehensive income | — |
| — |
| — |
| |
| — |
| — |
| — |
| | |||||||
Net loss | — |
| — |
| — |
| — |
| ( |
| — |
| — |
| ( | |||||||
Balance at June 30, 2023 | | $ | | $ | | $ | ( | $ | ( | ( | $ | ( | $ | | ||||||||
Common stock issued under stock plans, net | | | | — | — | — | — | | ||||||||||||||
Stock-based compensation | — | | — | — | — | — | | |||||||||||||||
Other comprehensive income | — | — | | — | — | — | | |||||||||||||||
Net loss | — | — | — | ( | — | — | ( | |||||||||||||||
Balance at September 30, 2023 | | $ | | $ | | $ | | $ | ( | ( | $ | ( | $ | |
Accumulated | ||||||||||||||||||||||
Additional | other | |||||||||||||||||||||
Common stock | paid-in | comprehensive | Accumulated | Treasury stock | Total | |||||||||||||||||
| Shares |
| Amount |
| capital |
| (loss) income |
| deficit |
| Shares |
| Amount |
| equity | |||||||
Balance at December 31, 2021 | | $ | | $ | | $ | | $ | ( |
| ( | $ | ( | $ | | |||||||
Common stock issued under stock plans, net | | — | | — | — | — | — | | ||||||||||||||
Stock-based compensation | — | — | | — | — | — | — | | ||||||||||||||
Other comprehensive loss | — | — | — | ( | — | — | — | ( | ||||||||||||||
Net income | — | — | — | — | | — | — | | ||||||||||||||
Balance at March 31, 2022 | | $ | | $ | | $ | ( | $ | ( |
| ( | $ | ( | $ | | |||||||
Common stock issued under stock plans, net | |
| |
| |
| — |
| — |
| — |
| — |
| | |||||||
Stock-based compensation | — |
| — |
| |
| — |
| — |
| — |
| — |
| | |||||||
Other comprehensive loss | — |
| — |
| — |
| ( |
| — |
| — |
| — |
| ( | |||||||
Net loss | — |
| — |
| — |
| — |
| ( |
| — |
| — |
| ( | |||||||
Balance at June 30, 2022 | | $ | | $ | | $ | ( | $ | ( | ( | $ | ( | $ | | ||||||||
Common stock issued under stock plans, net | |
| — |
| |
| — |
| — |
| — |
| — |
| | |||||||
Stock-based compensation | — |
| — |
| |
| — |
| — |
| — |
| — |
| | |||||||
Other comprehensive income | — |
| — |
| — |
| ( |
| — |
| — |
| — |
| ( | |||||||
Net loss | — |
| — |
| — |
| — |
| ( |
| — |
| — |
| ( | |||||||
Balance at September 30, 2022 | | $ | | $ | | $ | ( | $ | ( | ( | $ | ( | $ | |
See accompanying notes to condensed consolidated financial statements.
7
GLAUKOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Nine Months Ended September 30, | |||||||
| 2023 |
| 2022 |
| |||
Operating Activities | |||||||
Net loss | $ | ( | $ | ( | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation | | | |||||
Amortization of intangible assets | | | |||||
Noncash lease expense | | | |||||
Amortization of debt issuance costs | | | |||||
Deferred income tax benefit | ( | ( | |||||
Gain on disposal of fixed assets | | | |||||
Stock-based compensation | | | |||||
Unrealized foreign currency losses | | | |||||
Amortization of premium on short-term investments | ( | | |||||
Other liabilities | | - | |||||
Acquired in-process R&D acquired through the issuance of common stock | | - | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | ( | ( | |||||
Inventory | ( | ( | |||||
Prepaid expenses and other current assets | ( | ( | |||||
Accounts payable and accrued liabilities | ( | ( | |||||
Other assets | ( | ( | |||||
Net cash used in operating activities | ( | ( | |||||
Investing activities | |||||||
Purchases of short-term investments | ( | ( | |||||
Proceeds from sales and maturities of short-term investments | | | |||||
Purchases of property and equipment | ( | ( | |||||
Proceeds from disposal of property and equipment | - | | |||||
Investment in company-owned life insurance | ( | ( | |||||
Net cash provided by investing activities | | | |||||
Financing activities | |||||||
Proceeds from exercise of stock options | | | |||||
Proceeds from share purchases under Employee Stock Purchase Plan | | | |||||
Payment of employee taxes related to vested restricted stock units | ( | ( | |||||
Principal paid on finance lease | ( | ( | |||||
Net cash provided by financing activities | | | |||||
Effect of exchange rate changes on cash and cash equivalents | | ( | |||||
Net (decrease) increase in cash, cash equivalents and restricted cash | ( | | |||||
Cash, cash equivalents and restricted cash at beginning of period | | | |||||
Cash, cash equivalents and restricted cash at end of period | $ | | $ | | |||
Supplemental disclosures of cash flow information | |||||||
Taxes paid, net of refunds | $ | | $ | | |||
Interest paid on convertible senior notes | $ | | $ | | |||
Other interest paid | $ | | $ | | |||
Supplemental schedule of noncash investing and financing activities | |||||||
Purchases of property and equipment included in accounts payable and accrued liabilities | $ | | $ | | |||
See accompanying notes to condensed consolidated financial statements.
8
GLAUKOS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Organization and Basis of Presentation
Organization and business
Glaukos Corporation (Glaukos or the Company), incorporated in Delaware on July 14, 1998, is an ophthalmic medical technology and pharmaceutical company focused on developing novel therapies for the treatment of glaucoma, corneal disorders, and retinal diseases. The Company developed Micro-Invasive Glaucoma Surgery (MIGS) to serve as an alternative to the traditional glaucoma treatment paradigm and launched its first MIGS device commercially in 2012. The Company also offers commercially a proprietary bio-activated pharmaceutical therapy for the treatment of a rare corneal disorder, keratoconus, that was approved by the United States (U.S.) Food and Drug Administration (FDA) in 2016. The Company is developing a portfolio of platforms to support ongoing pharmaceutical and medical device innovations. Products or product candidates for each of these platforms are designed to advance the standard of care through better treatment options across the areas of glaucoma; corneal disorders such as keratoconus, dry eye and refractive vision correction; and retinal diseases such as neovascular age-related macular degeneration, diabetic macular edema and retinal vein occlusion.
The accompanying condensed consolidated financial statements include the accounts of Glaukos and its wholly-owned subsidiaries. The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. All significant intercompany balances and transactions among the consolidated entities have been eliminated in consolidation.
Basis of presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted (GAAP) in the U.S. for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X.
As permitted by Form 10-Q and Article 10 of Regulation S-X, under those rules, certain footnotes and other financial information that are normally required by GAAP have been condensed or omitted. The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements. In the opinion of management, the unaudited interim financial statements reflect all adjustments necessary for the fair presentation of the Company’s financial information contained herein. All such adjustments are of a normal and recurring nature. The condensed consolidated balance sheet as of December 31, 2022 has been derived from audited financial statements at that date, but excludes disclosures required by GAAP for complete financial statements. These interim financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s financial statements and accompanying notes for the fiscal year ended December 31, 2022, which are contained in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (SEC) on February 24, 2023. The Company’s results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other interim period.
Recent developments
On May 16, 2023, the Company issued $
9
On July 17, 2023, the Company entered into a collaboration and marketing agreement (Collaboration and Marketing Agreement) with Radius XR, Inc. (Radius), in which the Company became the exclusive sales agent to market, promote and solicit orders for the Radius XR™ wearable patient engagement and diagnostic system within the United States. Pursuant to the Collaboration and Marketing Agreement, the Company earns commission payments based on sales of Radius products resulting from the Company’s marketing and promotion efforts. These sales commissions were immaterial for the three months ended September 30, 2023. In connection with the Collaboration and Marketing Agreement, the Company entered into a convertible promissory note (Convertible Promissory Note) pursuant to which the Company agreed to fund Radius up to $
Note 2. Summary of Significant Accounting Policies
The Company accounts for a variable interest entity (VIE) when: (a) the equity investment at risk in the entity is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by other parties, including the equity holders; (b) the entity’s equity holders as a group (i) lack the direct or indirect ability to make decisions about the entity, (ii) are not obligated to absorb expected losses of the entity or (iii) do not have the right to receive expected residual returns of the entity; or (c) the entity’s equity holders have voting rights that are not proportionate to their economic interests, and the activities of the entity involve, or are conducted on behalf of, the equity holder with disproportionately few voting rights. If an entity is deemed to be a VIE, the enterprise that has both (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb the expected losses of the entity or right to receive benefits from the entity that could be potentially significant to the VIE is considered the primary beneficiary and must consolidate the VIE.
Through the Collaboration and Marketing Agreement, Radius was determined to be a VIE that the Company does not consolidate as the Company lacks the power to direct the activities that significantly impact the economic success of the VIE. As of September 30, 2023, the Company’s carrying value of the investment in the VIE totaled $
Other than the aforementioned VIE accounting policy, there have been no significant changes in the Company’s significant accounting policies during the three and nine months ended September 30, 2023, as compared with those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 24, 2023.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates and assumptions used in the preparation of the accompanying condensed consolidated financial statements.
The Company’s condensed consolidated financial statements as of and for the three and nine months ended September 30, 2023 reflect the Company’s estimates of the impact of the macroeconomic and geopolitical environment, including the impact of inflation, higher interest rates and foreign exchange rate fluctuations. The duration and scope of these conditions cannot be predicted; therefore, the extent to which these conditions will directly or indirectly impact the Company’s business, results of operations and financial condition is uncertain.
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that equate to the amount reported in the condensed consolidated statements of cash flows as of the beginning and end of the three months ended September 30, 2023 (in thousands):
10
September 30, | December 31, | ||||||
2023 | 2022 | ||||||
Cash and cash equivalents | $ | | $ | | |||
Restricted cash | | | |||||
Cash, cash equivalents and restricted cash | $ | | $ | |
The Company’s cash and cash equivalents include cash in readily available checking and money market accounts, as well as certificates of deposit. The Company maintains balances of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits.
Recently Adopted Accounting Pronouncements
The Company has not adopted any recent accounting pronouncements that had a material impact on its condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
The Company reviewed recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the condensed consolidated financial statements.
Note 3. Balance Sheet Details
Short-term Investments
Short-term investments consisted of the following (in thousands):
At September 30, 2023 |
| ||||||||||||||
Maturity | Amortized cost | Unrealized | Unrealized | Estimated |
| ||||||||||
| (in years) |
| or cost |
| gains |
| losses |
| fair value |
| |||||
U.S. government agency bonds | less than | $ | | $ | - | ( | $ | | |||||||
U.S. treasury securities | less than | | - | ( | | ||||||||||
Bank certificates of deposit | less than | | | ( | | ||||||||||
Corporate notes | less than |
| |
| |
| ( |
| | ||||||
Asset-backed securities | less than |
| |
| - |
| ( |
| | ||||||
Municipal bonds | less than | | - | ( | | ||||||||||
Total | $ | | $ | | $ | ( | $ | | |||||||
At December 31, 2022 |
| ||||||||||||||
Maturity | Amortized cost | Unrealized | Unrealized | Estimated |
| ||||||||||
| (in years) |
| or cost |
| gains |
| losses |
| fair value |
| |||||
U.S. government agency bonds | less than | $ | | $ | - | $ | ( | $ | | ||||||
U.S. treasury securities | less than | | - | ( | | ||||||||||
Bank certificates of deposit | less than | | | ( | | ||||||||||
Corporate notes | less than |
| |
| - |
| ( |
| | ||||||
Asset-backed securities | less than |
| |
| - |
| ( |
| | ||||||
Municipal bonds | less than | | - | ( | | ||||||||||
Total | $ | | $ | | $ | ( | $ | |
At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are the result of credit losses. Impairment is assessed at the individual security level. Factors considered in determining whether a loss resulted from a credit loss or other factors include the Company’s intent and ability to hold the investment until the recovery of its amortized cost basis, the extent to which the fair value is less than the amortized cost basis, the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency, any adverse legal or regulatory events affecting the issuer or issuer’s industry, and any significant deterioration in economic conditions.
11
The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest expense in the condensed consolidated statements of operations through an allowance for credit losses. Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive loss. Unrealized losses on available-for-sale debt securities as of September 30, 2023 and December 31, 2022 were not significant and were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. Further, the Company does not intend to sell these investments prior to maturity and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost basis. Accordingly, the Company did not record an allowance for credit losses with respect to these investments as of September 30, 2023 and December 31, 2022.