Envoy Medical Reports Fourth Quarter and Full Year 2023 Financial Results
Company Provides Corporate Update that Include Updates on its Investigational Fully Implanted Acclaim® Cochlear Implant Meeting its Early Feasibility Study Milestones
Recent bipartisan Congressional bill, the Hearing Device Coverage Clarification Act, seeks to open a pathway to insurance coverage for the Company's Esteem® Fully Implanted Active Middle Ear Implant
WHITE BEAR LAKE, Minn., April 02, 2024 (GLOBE NEWSWIRE) -- Envoy Medical®, Inc. ("Envoy Medical") (NASDAQ:COCH), a revolutionary hearing health company focused on fully implanted hearing devices, today announced its corporate and financial results for the fourth quarter and full year ended December 31, 2023.
Financial and Corporate Highlights from Q4 2023 to Date
- Completed Business Combination transaction at the end of September and began trading on Nasdaq under its own ticker, COCH, the first week of October 2023.
- Secured up to $10 million in non-convertible, unsecured debt financing at the beginning of 2024 from billionaire entrepreneur Glen Taylor – a multi-decade shareholder, largest investor, and current Director.
- Investigational Fully Implanted Acclaim® Cochlear Implant (Acclaim® CI):
- Early Feasibility Study (EFS) continues to meet milestones with all three implanted patients surpassing twelve-month post-activation visits remaining implanted.
- Announced four additional patents which brings the Company's total to 30 issued U.S. patents, 16 pending U.S. patent applications, 12 issued foreign patents and 28 pending foreign and international patent applications for both products.
- Esteem® Fully Implanted Active Middle Ear Implant (FI-AMEI):
- Continued efforts to address improper classification of fully implanted active middle ear implants (FI-AMEI) as hearing aids have resulted in the introduction of bipartisan Congressional bill – Hearing Device Coverage Clarification Act (H.R. 7254) – in the House of Representatives.
- The bipartisan bill aims to rectify the classification issue by removing FI-AMEIs from the broad hearing aid exclusion imposed by Centers for Medicare and Medicaid Services (CMS) and properly designating them as fully implanted active middle ear implants – thereby making them eligible for coverage as hearing prosthetics.
"The year 2023 will be one to remember in our ambitious journey to becoming the leading hearing implant company in the world: we saw our first podium presentation on the Acclaim® implant in June; completed a business combination in September; began trading as a public company under the ticker symbol "COCH" on the Nasdaq in October; and all three patients in the early feasibility study completed twelve months of post-activation follow-up in December," commented Brent Lucas, Envoy Medical's CEO. "We are moving forward with our plans and hope to start our pivotal clinical trial for the fully implanted Acclaim® cochlear implant in 2024. We are also excited about the Esteem® FI-AMEI implant's future and look forward to providing more updates with our progress in 2024. It is an exciting time to be in the hearing implant business and we hope savvy investors start to pay more attention to the space."
Financial Results from YE 2023
Revenue increased $79,000 for the twelve months ended December 31, 2023, compared to the same period in 2022, driven by growth in replacement component sales.
R&D expenses increased approximately $4.0 million for the year ended December 31, 2023, compared to the previous year. The increase was driven by an increase of $3.0 million in R&D product costs for the year ended December 31, 2023, as the Company continued to optimize its fully implanted cochlear implant product in preparation for the pivotal clinical study. Additionally, there was an increase of $0.9 million in personnel and salary costs as the Company increased headcount across the clinical and cochlear R&D department.
Sales and marketing expenses increased $0.8 million for the year ended December 31, 2023 compared to the same period in 2022. The increase was primarily due to market access efforts related to the Esteem FI-AMEI product, a gradual increase of activity around the investigational Acclaim CI product, and more activity around name recognition of Envoy Medical among both end users and professionals.
General and administrative expenses increased $4.7 million for the year ended December 31, 2023 compared to prior year. The increase is primarily due to a $2.8 million rise in professional and legal fees in 2023 related to the finalization of the Business Combination in the third quarter of 2023. Additionally, there was a $1.6 million increase in personnel-related costs for the year ended December 31, 2023 as the Company expanded its headcount in preparation for going public.
As of December 31, 2023 cash and cash equivalents were approximately $4.2 million.
About the Fully Implanted Acclaim® Cochlear Implant
The Company believes the fully implanted Acclaim Cochlear Implant ("Acclaim CI") will be a first-of-its-kind fully implanted 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 CI is designed to address severe to profound sensorineural hearing loss that is not adequately addressed by hearing aids. The Acclaim CI is expected to be indicated for adults who have been deemed adequate candidates by a qualified ear surgeon and audiologist.
The Acclaim Cochlear Implant received the Breakthrough Device Designation from the U.S. Food and Drug Administration (FDA) in 2019.
CAUTION The fully implanted Acclaim Cochlear Implant is an investigational device. Limited by United States law to investigational use.
About the Esteem® Fully Implanted Active Middle Ear Implant (FI-AMEI)
The Esteem fully implanted active middle ear implant (FI-AMEI) is the only FDA-approved, fully implanted hearing device for adults diagnosed with moderate to severe sensorineural hearing loss capable of delivering 24/7 hearing capability using the ear's natural anatomy. The Esteem FI-AMEI requires no externally worn components and nothing is placed in the ear canal for it to function.* Unlike hearing aids, you never put it on or take it off.
*Once activated, the external Esteem FI-AMEI Personal Programmer is not required for daily use.
Important safety information for the Esteem FI-AMEI 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, the availability and benefits of future funding, the Acclaim CI being the first to market fully implanted cochlear implant, the impact of proposed legislation on the hearing health market, reimbursement for the Esteem FI-AMEI device, and the Envoy Medical business, and future market conditions or economic performance, as well as any information concerning possible or assumed future operations of Envoy Medical. 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 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:
CoreIR
516-222-2560
[email protected]
| ENVOY MEDICAL, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 4,218 | $ | 183 | ||||
| Accounts receivable, net | 70 | 41 | ||||||
| Other receivable | 176 | - | ||||||
| Inventories | 1,404 | 1,295 | ||||||
| Prepaid expenses and other current assets | 957 | 129 | ||||||
| Total current assets | 6,825 | 1,648 | ||||||
| Property and equipment, net | 351 | 331 | ||||||
| Operating lease right-of-use assets (related party) | 464 | 577 | ||||||
| Total assets | $ | 7,640 | $ | 2,556 | ||||
| Liabilities and stockholders' deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,554 | $ | 1,003 | ||||
| Accrued expenses | 4,613 | 608 | ||||||
| Convertible notes payable, current portion (related party) | - | 448 | ||||||
| Operating lease liability, current portion (related party) | 158 | 125 | ||||||
| Product warranty liability, current portion | 311 | 335 | ||||||
| Total current liabilities | 6,636 | 2,519 | ||||||
| Convertible notes payable, net of current portion (related party) | - | 33,397 | ||||||
| Product warranty liability, net of current portion | 1,923 | 2,143 | ||||||
| Operating lease liabilities, net of current portion (related party) | 404 | 565 | ||||||
| Warrant liability | 332 | - | ||||||
| Forward purchase agreement put option liability | 103 | - | ||||||
| Forward purchase agreement warrant liability | 4 | - | ||||||
| Warrant liability (related party) | - | 127 | ||||||
| Total liabilities | 9,402 | 38,751 | ||||||
| Commitments and contingencies (see Note 15) | ||||||||
| Stockholders' deficit: | ||||||||
| Series A Preferred stock, $0.0001 par value; 10,000,000 and zero shares authorized as of December 31, 2023 and 2022, respectively; 4,500,000 and zero shares issued and outstanding as of December 31, 2023 and 2022, respectively | - | - | ||||||
| Class A Common stock, $0.0001 par value; 400,000,000 and 232,000,000 shares authorized as of December 31, 2023 and 2022, respectively; 19,599,982 and 10,122,581 shares issued and outstanding as of December 31, 2023 and 2022, respectively | 2 | 1 | ||||||
| Additional paid-in capital | 255,596 | 189,904 | ||||||
| Accumulated deficit | (257,242 | ) | (225,985 | ) | ||||
| Accumulated other comprehensive loss | (118 | ) | (115 | ) | ||||
| Total stockholders' deficit | (1,762 | ) | (36,195 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 7,640 | $ | 2,556 | ||||
| ENVOY MEDICAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except share and per share amounts) | ||||||||
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net revenues | $ | 316 | $ | 237 | ||||
| Costs and operating expenses: | ||||||||
| Cost of goods sold | 789 | 498 | ||||||
| Research and development | 8,956 | 4,975 | ||||||
| Sales and marketing | 1,666 | 885 | ||||||
| General and administrative | 7,276 | 2,585 | ||||||
| Total costs and operating expenses | 18,687 | 8,943 | ||||||
| Operating loss | (18,371 | ) | (8,706 | ) | ||||
| Other income (expense): | ||||||||
| Loss from changes in fair value of convertible notes payable (related party) | (13,332 | ) | (7,090 | ) | ||||
| Change in fair value of Forward purchase agreement put option liability | (69 | ) | - | |||||
| Change in fair value of Forward purchase agreement warrant liability | 842 | - | ||||||
| Change in fair value of warrant liability | 942 | - | ||||||
| Other income (expense) | 80 | (127 | ) | |||||
| Total other income (expense), net | (11,537 | ) | (7,217 | ) | ||||
| Net loss | $ | (29,908 | ) | $ | (15,923 | ) | ||
| Net loss attributable to common stockholders, basic | $ | (29,908 | ) | $ | (15,923 | ) | ||
| Net loss attributable to common stockholders, diluted | $ | (29,908 | ) | $ | (15,923 | ) | ||
| Net loss per share attributable to common stockholders, basic | $ | (2.38 | ) | $ | (1.57 | ) | ||
| Net loss per share attributable to common stockholders, diluted | $ | (2.38 | ) | $ | (1.57 | ) | ||
| Weighted-average common stock outstanding, basic | 12,552,925 | 10,123,169 | ||||||
| Weighted-average common stock outstanding, diluted | 12,552,925 | 10,123,169 | ||||||
| Other comprehensive loss: | ||||||||
| Foreign currency translation adjustment | (3 | ) | (7 | ) | ||||
| Other comprehensive loss | (3 | ) | (7 | ) | ||||
| Comprehensive loss | $ | (29,911 | ) | $ | (15,930 | ) | ||
| ENVOY MEDICAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | ||||||||
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (29,908 | ) | $ | (15,923 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 133 | 75 | ||||||
| Stock-based compensation | 1,575 | - | ||||||
| Change in fair value of convertible notes payable (related party) | 13,332 | 7,090 | ||||||
| Other expense related to warrant liability (related party) | (127 | ) | 35 | |||||
| Change in fair value of warrant liability | (942 | ) | - | |||||
| Change in fair value of Forward purchase agreement warrant liability | (842 | ) | - | |||||
| Change in fair value of Forward purchase agreement put option liability | 69 | - | ||||||
| Change in operating lease right-of-use assets (related party) | 113 | 119 | ||||||
| Increase in inventory reserve | (99 | ) | (41 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (29 | ) | 47 | |||||
| Other receivable | (176 | ) | - | |||||
| Inventories | (10 | ) | (194 | ) | ||||
| Prepaid expenses and other current assets | (828 | ) | 38 | |||||
| Accounts payable | 551 | 342 | ||||||
| Operating lease liabilities (related party) | (128 | ) | (6 | ) | ||||
| Accrued expenses | (94 | ) | 133 | |||||
| Product warranty liability | (244 | ) | (520 | ) | ||||
| Net cash used in operating activities | (17,654 | ) | (8,805 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (153 | ) | (218 | ) | ||||
| Net cash used in investing activities | (153 | ) | (218 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from the issuance of convertible notes payable (related party) | 10,000 | 8,000 | ||||||
| Proceeds from the issuance of stock | 109 | - | ||||||
| Proceeds from the PIPE Transaction, the Forward Purchase Agreement, and the Business Combination, net of transaction costs | 11,736 | - | ||||||
| Issuance of warrants (related party) | - | 92 | ||||||
| Net cash provided by financing activities | 21,845 | 8,092 | ||||||
| Effect of exchange rate on cash and cash equivalents | (3 | ) | (7 | ) | ||||
| Net increase (decrease) in cash | 4,035 | (938 | ) | |||||
| Cash at beginning of year | 183 | 1,121 | ||||||
| Cash at end of year | $ | 4,218 | $ | 183 | ||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Non-cash investing and financing activity | ||||||||
| Deemed capital contribution from related party | $ | 18,702 | $ | 4,722 | ||||
| Dividends on Series A Preferred Shares | $ | 1,349 | $ | - | ||||
| SPAC excise tax liability recognized | $ | 2,248 | $ | - | ||||
| Convertible debt exchanged for equity | $ | 27,493 | $ | - | ||||
| Bridge note exchanged for equity | $ | 10,982 | $ | - | ||||
| Series A Preferred Shares issued to PIPE investor in connection with the Merger | $ | 10,000 | $ | - | ||||
| Prepaid forward purchase agreement | $ | 1,384 | $ | - | ||||
