Envoy Medical Reports Third Quarter 2024 Results and Other Exciting Events
WHITE BEAR LAKE, Minn., Nov. 14, 2024 (GLOBE NEWSWIRE) -- Envoy Medical®, Inc. ("Envoy Medical") (NASDAQ:COCH), a revolutionary hearing health company focused on fully implanted hearing devices, today announces its corporate and financial results for the third quarter ended September 30, 2024, as well as other subsequent events.
"The progress and accomplishments of late have been extremely important to Envoy Medical as they have set the stage for us to demonstrate the value of fully implanted hearing devices. First, we have received FDA's approval to start our pivotal trial of the Acclaim® fully implanted cochlear implant ("Acclaim CI"). Second, we continue to make tremendous progress on obtaining meaningful reimbursement for our already FDA-approved Esteem® FIAMEI. We continue to receive considerable support for the bipartisan bills that were introduced in both the House and the Senate this year to change the way fully implanted active middle ear hearing devices classified by CMS. In addition, the American Medical Association's CPT Editorial Panel has approved Category III CPT codes for totally implantable active middle ear hearing devices for the first time. A significant step forward for our Esteem® device. Ultimately, we continue to believe that our products are important innovations for patients suffering from hearing loss and foresee a bright future for Envoy Medical," commented Brent Lucas, Envoy Medical's Chief Executive Officer. "We look forward to updating shareholders on our progress as we initiate the trial for the Acclaim® device and as we progress with our reimbursement strategy for the Esteem® device."
Corporate Highlights from Q3 2024 and To Date
- Received FDA Approval to initiate pivotal clinical study for Acclaim fully implantable cochlear implant to support eventual PMA submission
- AMA approved new CPT codes for totally implantable middle ear hearing implants, which provides significant opportunity for Esteem® FIAMEI
- Considerable support voiced for the bi-partisan House and Senate bills to change classification for fully implanted middle ear hearing devices to become coverable benefits for Medicare beneficiaries
- U.S. Patent issued for Recharge System with Implantable Battery
- European Patent Agency issued Patent for Modular Cochlear Implant System
- Company included in Russell Microcap Index
Financial Results for the Quarter Ended September 30, 2024
Net revenues were $56 thousand for the quarter ended September 30, 2024, a decrease of $24 thousand from $80 thousand for the same period in 2023. Net revenues were $183 thousand for the nine months ended September 30, 2024, a decrease of $38 thousand compared to the previous period. Both decreases were due mainly to a reduction in the number of battery replacement requests for Esteem implants received during the noted periods, and also as a result of supply chain issues.
R&D expenses increased $907 thousand from $1.9 million to $2.8 million for the three months ended September 30, 2024, and the nine-month results showed an increase of $1.8 million from $5.9 million to $7.7 million for September 30, 2024. Both increases were due to costs associated with additional headcount and contractors across our clinical and engineering departments in preparation for the pivotal clinical study for the Acclaim CI.
Sales and marketing expenses decreased by $5 thousand for the three months ended September 30, 2024 as compared to the same period for 2023, although for the nine months ended September 30, 2024 increased by $63 thousand compared to the same period in 2023. For the year-to-date results, increases in legal and professional fees to secure insurance reimbursement for the Esteem FI-AMEI product were offset by reductions in headcount.
General and administrative expenses increased by $665 thousand to $1.7 million for the three months ended September 30, 2024, and the year-to-date results showed a $1.2 million increase over the prior year. The increases are due primarily to increased legal and professional fees normally associated with being a publicly traded company and other administrative expenses.
As of September 30, 2024, cash and cash equivalents were approximately $4.4 million.
About the Fully Implanted Acclaim® Cochlear Implant
We believe the fully implanted Acclaim Cochlear Implant ("Acclaim CI") is a first-of-its-kind hearing device. 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 physician.
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 Federal (or 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 allowing for 24/7 hearing capability using the ear's natural anatomy. The Esteem FI-AMEI hearing implant is invisible and 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. You can't lose it. You don't clean it. The Esteem FI-AMEI hearing implant offers true 24/7 hearing.
* 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 Acclaim CI being the first to market fully implanted cochlear implant, the result of the clinical trial, the timing and results of clinical trials of the Acclaim CI, and the participation of any institution in such trials; the safety, performance, and market acceptance of the Acclaim CI; and 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 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; changes in or removal of Envoy Medical's shares inclusion in any index; 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 Annual Report on Form 10-K filed by Envoy Medical on April 1, 2024, 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:
David R. Wells
Chief Financial Officer
(651) 361-8013
[email protected]
CORE IR
(516) 222-2560
[email protected]
| ENVOY MEDICAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share and per share amounts) | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 4,424 | $ | 4,218 | ||||
| Accounts receivable, net | 197 | 70 | ||||||
| Other receivable | 32 | 176 | ||||||
| Inventories | 1,641 | 1,404 | ||||||
| Prepaid expenses and other current assets | 842 | 957 | ||||||
| Total current assets | 7,136 | 6,825 | ||||||
| Property and equipment, net | 1,197 | 351 | ||||||
| Operating lease right-of-use asset (related party) | 1,064 | 464 | ||||||
| Total assets | $ | 9,397 | $ | 7,640 | ||||
| Liabilities and stockholders' deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,757 | $ | 1,554 | ||||
| Accrued expenses | 6,854 | 4,613 | ||||||
| Product warranty liability, current portion | 238 | 311 | ||||||
| Operating lease liability, current portion (related party) | 225 | 158 | ||||||
| Total current liabilities | 9,074 | 6,636 | ||||||
| Term loan payable and accrued interest (related party) | 14,356 | — | ||||||
| Product warranty liability, net of current portion | 1,923 | 1,923 | ||||||
| Operating lease liability, net of current portion (related party) | 1,028 | 404 | ||||||
| Publicly traded warrant liability | 1,134 | 332 | ||||||
| Forward purchase agreement put option liability | — | 103 | ||||||
| Forward purchase agreement warrant liability | 411 | 4 | ||||||
| Total liabilities | 27,926 | 9,402 | ||||||
| Commitments and contingencies (see Note 14) | ||||||||
| Stockholders' deficit: | ||||||||
| Series A Preferred Stock, $0.0001 par value; 100,000,000 shares authorized and 10,000,000 shares designated as of September 30, 2024 and December 31, 2023; 4,500,000 shares issued and outstanding as of September 30, 2024 and December 31, 2023 | — | — | ||||||
| Class A Common Stock, $0.0001 par value; 400,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 19,730,982 and 19,599,982 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | 2 | 2 | ||||||
| Additional paid-in capital | 259,119 | 255,596 | ||||||
| Accumulated deficit | (277,529 | ) | (257,242 | ) | ||||
| Accumulated other comprehensive loss | (121 | ) | (118 | ) | ||||
| Total stockholders' deficit | (18,529 | ) | (1,762 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 9,397 | $ | 7,640 | ||||
| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||
| ENVOY MEDICAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED) (In thousands, except share and per share amounts) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net revenues | $ | 56 | $ | 80 | $ | 183 | $ | 221 | ||||||||
| Costs and operating expenses: | ||||||||||||||||
| Cost of goods sold | 187 | 189 | 585 | 555 | ||||||||||||
| Research and development | 2,757 | 1,850 | 7,708 | 5,901 | ||||||||||||
| Sales and marketing | 394 | 399 | 1,216 | 1,153 | ||||||||||||
| General and administrative | 1,692 | 1,027 | 5,406 | 4,248 | ||||||||||||
| Total costs and operating expenses | 5,030 | 3,465 | 14,915 | 11,857 | ||||||||||||
| Operating loss | (4,974 | ) | (3,385 | ) | (14,732 | ) | (11,636 | ) | ||||||||
| Other (expense) income: | ||||||||||||||||
| Gain (loss) from changes in fair value of convertible notes payable (related party) | — | 4,902 | — | (13,332 | ) | |||||||||||
| Change in fair value of forward purchase agreement put option liability | — | — | 103 | — | ||||||||||||
| Change in fair value of forward purchase agreement warrant liability | (311 | ) | — | (329 | ) | — | ||||||||||
| Change in fair value of publicly traded warrant liability | (426 | ) | — | (802 | ) | — | ||||||||||
| Interest expense, related party | (264 | ) | — | (432 | ) | — | ||||||||||
| Other income (expense) | 15 | 46 | 15 | (59 | ) | |||||||||||
| Total other (expense) income, net | (986 | ) | 4,948 | (1,445 | ) | (13,391 | ) | |||||||||
| Net (loss) income | $ | (5,960 | ) | $ | 1,563 | $ | (16,177 | ) | $ | (25,027 | ) | |||||
| Cumulative preferred dividends and undistributed earnings allocated to participating securities, basic | $ | (1,380 | ) | (203 | ) | (4,110 | ) | — | ||||||||
| Net (loss) income attributable to common stockholders, basic | $ | (7,340 | ) | $ | 1,360 | $ | (20,287 | ) | $ | (25,027 | ) | |||||
| Net (loss) income attributable to common stockholders, diluted | $ | (7,340 | ) | $ | 1,404 | $ | (20,287 | ) | $ | (25,027 | ) | |||||
| Net (loss) income per share attributable to common stockholders, basic | $ | (0.37 | ) | $ | 0.13 | $ | (1.03 | ) | $ | (2.46 | ) | |||||
| Net (loss) income per share attributable to common stockholders, diluted | $ | (0.37 | ) | $ | 0.13 | $ | (1.03 | ) | $ | (2.46 | ) | |||||
| Weighted-average common stock outstanding, basic | 19,616,362 | 10,214,183 | 19,605,482 | 10,153,564 | ||||||||||||
| Weighted-average common stock outstanding, diluted | 19,616,362 | 11,215,068 | 19,605,482 | 10,153,564 | ||||||||||||
| Other comprehensive (loss) income: | ||||||||||||||||
| Foreign currency translation adjustment | (1 | ) | (1 | ) | (3 | ) | (1 | ) | ||||||||
| Other comprehensive loss | (1 | ) | (1 | ) | (3 | ) | (1 | ) | ||||||||
| Comprehensive (loss) income | $ | (5,961 | ) | $ | 1,562 | $ | (16,180 | ) | $ | (25,028 | ) | |||||
| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||||||||||
| ENVOY MEDICAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (16,177 | ) | $ | (25,027 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 125 | 85 | ||||||
| Accrued interest and amortization of debt discount on term loan payable (related party) | 432 | — | ||||||
| Stock-based compensation | 409 | — | ||||||
| Change in fair value of convertible notes payable (related party) | — | 13,332 | ||||||
| Change in fair value of warrant liability (related party) | — | 104 | ||||||
| Change in fair value of publicly traded warrant liability | 802 | — | ||||||
| Change in fair value of forward purchase agreement warrant liability | 329 | — | ||||||
| Change in fair value of forward purchase agreement put option liability | (103 | ) | — | |||||
| Gain on exercise and cancellation warrant liability (related party) | — | (231 | ) | |||||
| Change in operating lease right-of-use asset (related party) | 250 | 83 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (127 | ) | (68 | ) | ||||
| Other receivable | 144 | — | ||||||
| Inventories | (237 | ) | (102 | ) | ||||
| Prepaid expenses and other current assets | 657 | (868 | ) | |||||
| Accounts payable | 203 | 2,378 | ||||||
| Operating lease liability (related party) | (159 | ) | (101 | ) | ||||
| Accrued expenses | (36 | ) | 694 | |||||
| Product warranty liability | (73 | ) | (225 | ) | ||||
| Payable to related party | — | 4,000 | ||||||
| Net cash used in operating activities | $ | (13,561 | ) | $ | (5,946 | ) | ||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (1,514 | ) | (132 | ) | ||||
| Net cash used in investing activities | $ | (1,514 | ) | $ | (132 | ) | ||
| Cash flows from financing activities | ||||||||
| Proceeds from the issuance of convertible notes payable (related party) | — | 10,000 | ||||||
| Proceeds from the PIPE Transaction, the Forward Purchase Agreement, and the Business Combination, net of transaction costs | — | 11,736 | ||||||
| Proceeds from the additional Series A Preferred Shares subscription | — | 1,000 | ||||||
| Proceeds from the issuance of term loan (related party) | 15,000 | — | ||||||
| Dividends paid to Series A Preferred Shareholders | (1,833 | ) | — | |||||
| Proceeds from exercise of warrants | 434 | — | ||||||
| Proceeds from the sale of common stock associated with forward purchase agreement, net of transaction costs | 1,683 | — | ||||||
| Net cash provided by financing activities | $ | 15,284 | $ | 22,736 | ||||
| Effect of exchange rate changes on cash | (3 | ) | (1 | ) | ||||
| Net increase in cash | 206 | 16,657 | ||||||
| Cash, beginning of period | 4,218 | 183 | ||||||
| Cash, end of period | $ | 4,424 | $ | 16,840 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | — | $ | — | ||||
| Cash paid for income taxes | $ | — | $ | — | ||||
| Non-cash investing and financing activities: | ||||||||
| Deemed capital contribution from related party | $ | — | $ | 18,702 | ||||
| SPAC excise tax liability recognized upon the Business Combination | $ | — | $ | 2,248 | ||||
| Accrued and unpaid dividends on Series A Preferred Shares | $ | 2,277 | $ | 30 | ||||
| Warrants issued with 2024 Term Loans | $ | 1,075 | $ | — | ||||
| Extinguishment of excess warrant liability upon exercise of warrants associated with the forward purchase agreement | $ | 16 | $ | — | ||||
| Modification of forward purchase agreement warrant liability | $ | 94 | $ | — | ||||
| Lease liabilities arising from obtaining right-of-use assets | $ | 850 | $ | — | ||||
| The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||
