Envoy Medical Provides Third Quarter 2023 Financial Results and Business Update
Interim Findings from Early Feasibility Trial Provide Important Learnings and Feedback Ahead of Pivotal Clinical Trial Planned for 2024
Virtual Fireside Chat to be held December 7
WHITE BEAR LAKE, Minn., Nov. 20, 2023 (GLOBE NEWSWIRE) -- Envoy Medical, Inc. ("Envoy Medical") (NASDAQ:COCH), a hearing health company, today is providing a business update and its financial results for the quarter ended September 30, 2023. The Company will host a virtual fireside chat event on December 7, which will cover a range of topics, including introductions to the technology, financial and clinical aspects of the business, as well as potential participation from cochlear implant key opinion leaders.
Envoy Medical is a medical technology company specializing in revolutionary "fully" or "totally" implanted hearing devices. Its propriety sensor technology leverages the unique benefits of the human ear to pick up and relay sound rather than relying on external microphones. Envoy Medical currently has its sights on disrupting what it believes to be a complacent cochlear implant industry with new, fully implanted solutions designed to address well-known shortcomings in existing devices.
The Company's first product, the Esteem®, remains the only FDA approved fully implanted active middle ear implant. In fact, it is the only fully implanted active hearing device to have received FDA approval for any set of clinical indications. The Esteem® is indicated for use in adults diagnosed with moderate to severe sensorineural hearing loss who no longer benefit from their hearing aids.
Envoy Medical is now leveraging its extensive understanding of fully implanted hearing devices for the development of a fully implanted Acclaim® cochlear implant, an investigational device that is currently in an early feasibility trial at Mayo Clinic in Rochester, Minnesota. The Acclaim® is expected to be the first fully implanted cochlear implant to use the natural ear to pick up sound. The Acclaim® was granted Breakthrough Device Designation from the U.S. Food and Drug Administration (FDA) and is currently considered Investigational (not yet commercially available). A pivotal clinical trial is expected to commence in 2024. Upon FDA approval of the Acclaim® cochlear implant, Envoy Medical intends to target the significantly under-penetrated adult cochlear implant market, which it believes may represent more than an $80 billion opportunity in the US alone.
"The third quarter was transformative for Envoy Medical – we completed a merger to become a publicly traded company on the Nasdaq Stock Exchange, enhanced our balance sheet with new capital, and reported key findings from our Acclaim® Early Feasibility Study conducted at the Mayo Clinic. We believe these accomplishments put Envoy Medical on track to advance our strategic plan over the next several years. Over the next few quarters, we anticipate finalizing our design, filing another Investigational Device Exemption (IDE) with the FDA, launching a pivotal clinical trial and beginning to educate professionals on why we believe fully implanted devices are the future of hearing implants. We are encouraged by the large and underserved adult cochlear implant market with existing strong reimbursement coverage," said Brent T. Lucas, CEO of Envoy Medical.
"Interim results in the early feasibility study confirmed that we are on the right track with the current design and provided important feedback for final design refinements ahead of our pivotal trial, which are now being implemented. The data provided additional confidence in many aspects of the Acclaim®'s functionality, and also revealed an early indication that the device may improve quality of life for patients. We hope to offer a new and highly differentiated solution that encourages more people who are eligible to receive a cochlear implant to pursue hearing improvement through this important technology."
Third Quarter and Recent Business Highlights
- Envoy Medical became a Nasdaq Listed company through a merger with Anzu Special Acquisition Corp I, which closed on September 29, 2023. Envoy Medical subsequently began trading its Class A common stock and warrants on the Nasdaq stock exchange under the new ticker symbols "COCH" and "COCHW", respectively.
- The Journal of Clinical Medicine highlighted early surgical experience with the investigational Acclaim® fully implantable cochlear implant. According to the publication, "All three surgeries proceeded without complication, and at activation, all three patients were hearing through their devices."
- 6-Month findings from the Early Feasibility Trial demonstrated improved Quality of Life metrics for two of the three participants at three and six months. The third participant's scores remained stable.
- A signal to noise issue was identified as part of the feasibility trial, which appears to be electrical noise and not body noise or inherent to the Acclaim® architecture. A design update is in progress that is expected to resolve this issue prior to the FDA pivotal trial planned to commence in 2024.
- The Early Feasibility Study also provided an unanticipated discovery related to using a hearing aid in the Acclaim® cochlear implant ear. Envoy Medical intends to explore this further as this would be unique to Acclaim®, which uses the ear to pick up sound while other devices use external or subdermal microphones.
- Initiated efforts with the Minnesota Congressional Delegation to address the CMS's improper classification of the Envoy Esteem® as a heading aid. Successful reclassification of Esteem® as a fully implanted active middle ear implant could have a material change in reimbursement prospects.
- Announced additional patent award as part of a growing IP portfolio covering current and future implantable hearing device technologies.
- As part of the Nasdaq listing, Envoy Medical appointed a Board of Directors comprised of seven leaders strategically selected from the bio/pharmaceutical, accounting and financial fields. This along with the highly regarded audiologists and surgeons on the existing advisory panel provide world class guidance and counsel to the management team.
Third Quarter Financial Results
- As of September 30, 2023 the Company had $7.4 million in available cash; total cash including restricted funds was $16.8 million.
- Operating costs were $3.5 million for the 3 months ended September 30, 2023, this includes costs associated with the Company's business combination and Nasdaq listing of approximately $0.4 million.
- Research and Development expense totaled $1.9 million as the Company conducted early feasibility trials and advanced refinements intended to finalize the Acclaim® design ahead of the Company's pivotal trial, expected to begin in 2024.
"With our new public listing, Envoy Medical enhanced its balance sheet, providing an improved cash position on which to advance our strategic plans," said David R. Wells, Chief Financial Officer. "We intend to maintain our low-cost operating model, which maximizes our cash resources ahead of our pivotal trial, while also moving ahead on these important corporate matters."
Upcoming Milestones
Over the next few months, Envoy Medical will continue to advance its efforts on a number of key milestones relating to its clinical progress, including:
- Finalizing and integrating select design enhancements based on the initial feedback and learnings of the Early Feasibility Study.
- Filing for an investigational device exemption (IDE) in early 2024 to commence a pivotal clinical trial later that year.
- Updates pertaining to the continuing efforts underway to properly reclassify its Esteem® as a fully implanted active middle ear implant, and not as a hearing aid. Hearing aids are statutorily excluded from Medicare and Medicaid coverage, and if the Esteem® is properly reclassified as a fully implanted active middle ear implant it can pursue reimbursement coverage, which the Company believes would encourage additional adoption by potential patients.
Conference Call
As a newly listed Company on the Nasdaq Stock Exchange, Envoy Medical will host an introductory educational virtual event on December 7. This event will include a review of the third quarter results, as well as presentations from management on its two products, and their respective market opportunities. The Company will announce additional details and a link to join this exciting event in advance by press release.
About Envoy Medical
Envoy Medical, Inc. (NASDAQ:COCH), headquartered in White Bear Lake, Minnesota, is a hearing health company focused on providing innovative medical technologies.
Envoy Medical is dedicated to pushing hearing technology beyond the status quo to provide patients with improved access, usability, independence and quality of life.
About the Fully Implanted Acclaim® Cochlear Implant
We believe the fully implanted Acclaim® Cochlear Implant will be a first-of-its-kind cochlear implant. Envoy Medical's fully implanted technology includes a sensor designed to leverage the natural anatomy of the ear instead of a microphone to capture sound.
The Acclaim® is designed to address severe to profound sensorineural hearing loss that is not adequately addressed by hearing aids. The Acclaim® is expected to be indicated for adults who have been deemed adequate candidates by a qualified physician.
The Acclaim® Cochlear Implant received the Breakthrough Device Designation from the U.S. Food and Drug Administration (FDA) in 2019. We believe the Acclaim® was the first hearing-focused device to receive Breakthrough Device Designation and may still be the only hearing focused medical technology to receive the designation.
CAUTION The fully implanted Acclaim® Cochlear Implant is an investigational device. Limited by United States law to investigational use.
Important safety information for the Esteem® can be found at: https://www.envoymedical.com/safety-information.
Additional Information and Where to Find It
Copies of the documents filed by Envoy Medical with the SEC may be obtained free of charge at the SEC's website at www.sec.gov.
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-Looking statements may be identified by the use of words such as "estimate," "plan," "project," "forecast," "intend," "will," "expect," "anticipate," "believe," "seek," "target" or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward-looking. Such statements may include, but are not limited to, statements regarding the expectations of Envoy Medical concerning the outlook for its business, productivity, plans and goals for future operational improvements and capital investments, clinical testing timeline and results, the implementation of design enhancements to the Acclaim® device, changes to reimbursement for the Esteem® device, the benefits of the Acclaim® device compared to existing cochlear implants, the size of Envoy Medical's addressable market, operational performance, future market conditions or economic performance and developments in the capital and credit markets, as well as any information concerning possible or assumed future operations of Envoy Medical. Forward-looking statements also include statements regarding the expected benefits of the Nasdaq listing. The forward-looking statements contained in this press release reflect Envoy Medical's current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause its actual results to differ significantly from those expressed in any forward-looking statement. Envoy Medical does not guarantee that the transactions and events described will happen as described (or that they will happen at all). These forward-looking statements are subject to a number of risks and uncertainties, including, but not limited to Envoy Medical's performance following the Business Combination; changes in the market price of shares of Envoy Medical's Class A Common Stock; Envoy Medical's success in retaining or recruiting, or changes required in, its officers, key employees or directors; unpredictability in the medical device industry, the regulatory process to approve medical devices, and the clinical development process of Envoy Medical products; competition in the medical device industry, and the failure to introduce new products and services in a timely manner or at competitive prices to compete successfully against competitors; disruptions in relationships with Envoy Medical's suppliers, or disruptions in Envoy Medical's own production capabilities for some of the key components and materials of its products; changes in the need for capital and the availability of financing and capital to fund these needs; changes in interest rates or rates of inflation; legal, regulatory and other proceedings could be costly and time-consuming to defend; changes in applicable laws or regulations, or the application thereof on Envoy Medical; a loss of any of Envoy Medical's key intellectual property rights or failure to adequately protect intellectual property rights; the effects of catastrophic events, including war, terrorism and other international conflicts; and other risks and uncertainties set forth in the section entitled "Risk Factors" and "Cautionary Note Regarding Forward Looking Statements" in the Registration Statement on Form S-4 (File No. 333-271920) filed by Envoy Medical (then known as Anzu Special Acquisition Corp I), and in other reports Envoy Medical files with, the SEC. If any of these risks materialize or Envoy Medical's assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. While forward-looking statements reflect Envoy Medical's good faith beliefs, they are not guarantees of future performance. Envoy Medical disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based only on information currently available to Envoy Medical.
Investor Contact:
Matt Kreps
Darrow Associates Investor Relations
(214) 597-8200
[email protected]
| CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share and per share amounts) | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 7,440 | $ | 183 | ||||
| Restricted cash - dividends | 5,400 | - | ||||||
| Restricted cash - other | 4,000 | - | ||||||
| Accounts receivable, net | 109 | 41 | ||||||
| Other receivable | 1,000 | - | ||||||
| Inventories | 1,397 | 1,295 | ||||||
| Prepaid expenses and other current assets | 997 | 129 | ||||||
| Forward purchase agreement assets | 2,386 | - | ||||||
| Total current assets | 22,729 | 1,648 | ||||||
| Property and equipment, net | 378 | 331 | ||||||
| Operating lease right-of-use assets (related party) | 494 | 577 | ||||||
| Total assets | $ | 23,601 | $ | 2,556 | ||||
| Liabilities and stockholders' equity (deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,381 | $ | 1,003 | ||||
| Accrued expenses | 4,052 | 608 | ||||||
| Payable to related party | 4,000 | - | ||||||
| Convertible notes payable, current portion (related party) | - | 448 | ||||||
| Operating lease liability, current portion (related party) | 149 | 125 | ||||||
| Product warranty liability, current portion | 228 | 335 | ||||||
| Forward purchase agreement warrant liability | 1,793 | - | ||||||
| Total current liabilities | 13,603 | 2,519 | ||||||
| Convertible notes payable, net of current portion (related party) | - | 33,397 | ||||||
| Product warranty liability, net of current portion | 2,025 | 2,143 | ||||||
| Operating lease liabilities, net of current portion (related party) | 440 | 565 | ||||||
| Warrant liability | 1,274 | - | ||||||
| Warrant liability (related party) | - | 127 | ||||||
| Total liabilities | 17,342 | 38,751 | ||||||
| Commitments and contingencies (see Note 14) | ||||||||
| Stockholders' equity (deficit): | ||||||||
| Series A Preferred stock, $0.0001 par value; 10,000,000 and zero shares authorized as of September 30, 2023, and December 31, 2022, respectively; 4,500,000 and zero shares issued and outstanding as of September 30, 2023, and December 31, 2022, respectively | - | - | ||||||
| Class A Common stock, $0.0001 par value; 400,000,000 shares and 232,000,000 shares authorized as of September 30, 2023, and December 31, 2022, respectively; 19,549,982 and 10,122,581 shares issued and outstanding as of September 30, 2023, and December 31, 2022, respectively | 2 | 1 | ||||||
| Additional paid-in capital | 257,385 | 189,904 | ||||||
| Accumulated deficit | (251,012 | ) | (225,985 | ) | ||||
| Accumulated other comprehensive loss | (116 | ) | (115 | ) | ||||
| Total stockholders' equity (deficit) | 6,259 | (36,195 | ) | |||||
| Total liabilities and stockholders' equity (deficit) | $ | 23,601 | $ | 2,556 | ||||
| ENVOY MEDICAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (In thousands, except share and per share amounts) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net revenues | $ | 80 | $ | 57 | $ | 221 | $ | 217 | ||||||||
| Costs and operating expenses: | ||||||||||||||||
| Cost of goods sold | 189 | 106 | 555 | 347 | ||||||||||||
| Research and development | 1,850 | 935 | 5,901 | 3,532 | ||||||||||||
| General and administrative | 1,426 | 812 | 5,401 | 2,138 | ||||||||||||
| Total costs and operating expenses | 3,465 | 1,853 | 11,857 | 6,017 | ||||||||||||
| Operating loss | (3,385 | ) | (1,796 | ) | (11,636 | ) | (5,800 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Gain (loss) from changes in fair value of convertible notes payable (related party) | 4,902 | 574 | (13,332 | ) | 1,473 | |||||||||||
| Other income (expense) | 46 | (117 | ) | (59 | ) | (119 | ) | |||||||||
| Total other income (expense), net | 4,948 | 457 | (13,391 | ) | 1,354 | |||||||||||
| Net income (loss) | $ | 1,563 | $ | (1,339 | ) | $ | (25,027 | ) | $ | (4,446 | ) | |||||
| Net income (loss) attributable to common stockholders, basic | $ | 1,360 | $ | (1,339 | ) | $ | (25,027 | ) | $ | (4,446 | ) | |||||
| Net income (loss) attributable to common stockholders, diluted | $ | 1,404 | $ | (1,339 | ) | $ | (25,027 | ) | $ | (4,446 | ) | |||||
| Net income (loss) per share attributable to common stockholders, basic | $ | 0.13 | $ | (0.13 | ) | $ | (2.46 | ) | $ | (0.44 | ) | |||||
| Net income (loss) per share attributable to common stockholders, diluted | $ | 0.13 | $ | (0.13 | ) | $ | (2.46 | ) | $ | (0.44 | ) | |||||
| Weighted-average common stock outstanding, basic | 10,214,183 | 10,123,187 | 10,153,564 | 10,123,187 | ||||||||||||
| Weighted-average common stock outstanding, diluted | 11,215,068 | 10,123,187 | 10,153,564 | 10,123,187 | ||||||||||||
| Other comprehensive loss: | ||||||||||||||||
| Foreign currency translation adjustment | (1 | ) | (3 | ) | (1 | ) | (3 | ) | ||||||||
| Other comprehensive loss | (1 | ) | (3 | ) | (1 | ) | (3 | ) | ||||||||
| Comprehensive income (loss) | $ | 1,562 | $ | (1,342 | ) | $ | (25,028 | ) | $ | (4,449 | ) | |||||
