SEC Form 10-Q filed by Vivani Medical Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
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VIVANI MEDICAL, INC.
AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
Item 1. Financial Statements
VIVANI MEDICAL, INC.
AND SUBSIDIARIES
(In thousands, except per share data)
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets | ||||||||
| Restricted cash | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Litigation accrual | ||||||||
| Accrued compensation expense | ||||||||
| Current operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term operating lease liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value $ |
||||||||
| Common stock, par value $ |
||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The
accompanying notes are an integral part of these condensed consolidated financial statements.
VIVANI MEDICAL, INC.
AND SUBSIDIARIES
(In thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development, net of grants | $ | $ | $ | $ | ||||||||||||
| General and administrative, net of grants | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other income, net | ||||||||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss per common share - basic and diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Weighted average common shares outstanding - basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
VIVANI MEDICAL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss (unaudited)
(In thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Other comprehensive (loss) income: | ||||||||||||||||
| Foreign currency translation adjustments | ( |
) | ( |
) | ||||||||||||
| Comprehensive loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
VIVANI MEDICAL, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity (unaudited)
(In thousands)
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
| Issuance of common stock and warrants in connection with securities purchase agreement, net of issuance costs $ |
||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||
| Foreign currency translation adjustments | - | ( |
) | ( |
) | |||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance, March 31, 2024 | ( |
) | ||||||||||||||||||||||
| Issuance of common stock in connection with At-the-Market offering, net of issuance costs $ |
||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||
| Foreign currency translation adjustments | - | ( |
) | ( |
) | |||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance, June 30, 2024 | ( |
) | ||||||||||||||||||||||
| Issuance of common stock in connection with At-the-Market offering, net of issuance costs $ |
||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||
| Foreign currency translation adjustments | - | |||||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
| Option exercises | ||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||
| Foreign currency translation adjustments | - | |||||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance, March 31, 2023 | ( |
) | ||||||||||||||||||||||
| Option exercises | ||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||
| Foreign currency translation adjustments | - | |||||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance, June 30, 2023 | ( |
) | ||||||||||||||||||||||
| Options exercised | ||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||
| Foreign currency translation adjustments | - | ( |
) | ( |
) | |||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
VIVANI MEDICAL, INC.
AND SUBSIDIARIES
(In thousands)
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Non-cash lease expense | ||||||||
| Fixed assets write-off | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ( |
) | ||||||
| Accounts payable | ||||||||
| Accrued compensation expenses | ( |
) | ||||||
| Accrued expenses | ( |
) | ( |
) | ||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( |
) | ( |
) | ||||
| Net cash used in investing activities | ( |
) | ( |
) | ||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from exercise of options | ||||||||
| Proceeds from issuance of common stock and warrants in connection with securities purchase agreement, net of issuance costs | ||||||||
| Proceeds from issuance of common stock in connection with the At-the-Market offering, net of issuance costs |
|
|
||||||
| Net proceeds from insurance premium loan | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( |
) | ||||||
| Cash, cash equivalents and restricted cash: | ||||||||
| Net decrease | ( |
) | ( |
) | ||||
| Balance at beginning of period | ||||||||
| Balance at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Establishment of operating right-of-use assets through operating lease obligations | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
VIVANI MEDICAL, INC.
AND SUBSIDIARIES
Note 1. Organization and Business Operations
Vivani Medical, Inc. (“Vivani,” the “Company,” “we,” “us,” “our” or similar terms) is a preclinical stage biopharmaceutical company which develops miniaturized, subdermal implants utilizing its proprietary NanoPortal™ technology, which is designed to enable long-term, near constant-rate delivery of a broad range of medicines to treat chronic diseases. Vivani uses this platform technology to develop and potentially commercialize drug implant candidates, alone or in collaboration with pharmaceutical company partners to address a leading cause of poor clinical outcomes in the treatment of chronic disease, medication non-adherence. According to the U.S. Centers for Disease Control and Prevention, adherence is defined as the extent to which an individual’s behavior, including taking medications, corresponds to recommendations from a health care provider. An alarmingly high proportion of patients, approximately
At Vivani, we are developing a portfolio of miniature, subdermal drug implant candidates that, unlike most oral and injectable medicines, are designed with the goal of guaranteeing medication adherence by delivering therapeutic drug levels for up to
Vivani resulted from the business combination of Second Sight Medical Products, Inc. (“Second Sight”) and Nano Precision Medical, Inc. (“NPM”). On August 30, 2022, Second Sight and NPM completed their merger pursuant to which NPM became a wholly owned subsidiary of Second Sight and the combined company of NPM and Second Sight was renamed Vivani Medical, Inc. Vivani’s main priority is the further development of its lead program NPM-115, a miniature, 6-month, GLP-1 implant candidate for chronic weight management in obese or overweight patients with one or more risk factors and further development of the balance of company’s miniature, long-acting drug implant portfolio. In parallel, Vivani’s management team remains committed to identifying and exploring strategic options that will enable further development of its pioneering neurostimulation systems from legacy company Second Sight aimed at helping patients recover critical body functions.
In December 2022, we contributed our neurostimulation assets and certain liabilities to Cortigent, Inc. (“Cortigent”), a wholly owned subsidiary of Vivani. Cortigent has
On July 6, 2023, Vivani changed its state of incorporation from the State of California to the State of Delaware by means of a plan of conversion, effective July 5, 2023. The reincorporation, including the principal terms of the plan of conversion, was submitted to a vote of, and approved by, Vivani’s stockholders at its 2023 Annual Meeting of Stockholders held on June 15, 2023. As part of this change of incorporation the Company established a par value of $
An Investigational New Drug Application (“IND”) for NPM-119 (GLP-1 implant) was filed with the U.S. Food and Drug Administration (“FDA”) on July 14, 2023, to support the initiation of a first-in-human study of an exenatide implant in patients with type 2 diabetes. On August 18, 2023, FDA provided written notification that the study was on full clinical hold, primarily due to insufficient Chemistry, Manufacturing, and Controls (“CMC”) information to assess the risk to human subjects. After providing additional information to sufficiently address the FDA's requests, the FDA lifted the clinical hold on NPM-119 on June 13, 2024 allowing for the proposed study to proceed. The primary objective of this first-in-human clinical study was to evaluate the safety, tolerability and pharmacokinetics of NPM-119 in type 2 diabetes patients. The initial study design also incorporated Bydureon BCise® (exenatide injection) for comparison purposes.
| 7 |
On August 25, 2023, the Company and Cortigent entered into an Amendment 1 (the “Amendment”) to the Transition Funding, Support and Services Agreement dated March 19, 2023 (the “TFSSA”). Pursuant to the TFSSA, Vivani has agreed to advance funds and provide or cause to be provided to Cortigent the services and funding intended to cover salaries and related costs, rent and other overhead in order to permit Cortigent to operate in substantially the same manner in which business operations of Cortigent were previously operated by Second Sight, prior to the formation of Cortigent, which obligations will continue, in the case of the funding obligations, until the earlier of December 31, 2024 or the closing of an initial public offering of Cortigent (the “Funding Support Term”). Under the Amendment, Cortigent has agreed to repay $
In the fourth quarter of 2023, Vivani Medical Australia Pty Ltd., a wholly owned subsidiary in Australia was established to support studies of our product candidates.
In February 2024, Vivani announced positive preclinical weight loss data with its exenatide implant that was comparable to semaglutide, the active ingredient in Ozempic®/Wegovy®, and a strategic shift to prioritize the Company's obesity portfolio. In a study of high-fat diet-induced obese mice, the exenatide implant generated weight loss of approximately
In February, the Company also disclosed that semaglutide is the active pharmaceutical ingredient in NPM-139, another miniature, long term subdermal GLP-1 implant in development for chronic weight management further demonstrating our prioritization on obesity. NPM-139 also has the added potential benefit of once-yearly administration.
On March 1, 2024, the Company entered into a securities purchase agreement (“Securities Purchase Agreement”) with an institutional investor to purchase
On April 22, 2024, the Company entered into an Open Market Sale AgreementSM (the “Sales Agreement”) with Jefferies LLC (“Jefferies”), under which the Company may offer and sell, from time to time at its sole discretion, shares of the common stock, having an aggregate offering price of up to $
On May 28, 2024, Vivani announced the publication of positive weight loss data supporting the potential veterinary use of OKV-119, the company's miniature, long-acting GLP-1 implant under development with partner Okava Pharmaceuticals, Inc. ("Okava") for the treatment of pre-diabetes, diabetes and obesity in companion felines. The device is intended to be conveniently inserted under the skin during routine veterinary visits and is being designed to deliver
As stated previously, on June 13, 2024, Vivani announced that the FDA cleared the IND and lifted the clinical hold for NPM-119, the Company's miniature, six-month GLP-1 implant under development for the treatment of patients with type 2 diabetes.
On July 11, 2024, the Company provided an update of the clinical development plans for NPM-115, the clinical program associated with the miniature, long-acting GLP-1 (high-dose exenatide) implant for chronic weight management in obese and overweight individuals. The Company has redesigned the First-in-Human study, LIBERATE-1, initially intended to explore the safety, tolerability and pharmacokinetics of its exenatide implant in patients with type 2 diabetes, to evaluate the implant in obese and overweight patients. The study will enroll patients who will be titrated on weekly semaglutide injections for
On September 4, 2024, Vivani announced positive preclinical liver fat results with its miniature, ultra long-acting GLP-1 implant currently under development chronic weight management in obese and overweight individuals and type 2 diabetes. The Company's GLP-1 (exenatide) implant produced sham-implant adjusted liver fat reduction of
On September 26, 2024, the Company reported receiving regulatory approval to initiate its first in human clinical trial with a miniature, ultra long-acting GLP-1 (exenatide) implant in obese and overweight individuals in Australia. This clinical trial, known as LIBERATE-1™, is part of the NPM-115 program and will investigate the safety, tolerability and full pharmacokinetic profile of an exenatide implant. The trial also represents the first clinical application of the Company’s proprietary NanoPortal™ drug implant technology. LIBERATE-1 is designed to enroll participants who will be titrated on weekly semaglutide injections for
Liquidity and Capital Resources
From inception, our operations have been funded primarily through the sales of our common stock and warrants.
Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We are subject to the risks and uncertainties associated with a business with
On March 1, 2024, the Company entered into the Securities Purchase Agreement relating to the issuance of
On April 22, 2024, the Company entered into the Sales Agreement with Jefferies, under which the Company may offer and sell, from time to time at its sole discretion, shares of the common stock, having an aggregate offering price of up to $
We estimate that currently available cash will provide sufficient funds to enable the Company to meet its planned obligations for at least the next twelve months. Our ability to continue as a going concern is dependent on our ability to develop profitable operations through implementation of our business initiatives and/or raise additional capital, however, there can be no assurances that we will be able to do so.
Note 2. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
These unaudited interim financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and following the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. In our opinion, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our financial position and our results of operations and cash flows for periods presented. These statements do not include all disclosures required by GAAP and should be read in conjunction with our financial statements and accompanying notes for the fiscal year ended December 31, 2023, included within our Annual Report on Form 10-K filed with the SEC on March 26, 2024. The results of the interim periods are not necessarily indicative of the results expected for the full fiscal year or any other interim period or any future year or period.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.
Use of estimates
The preparation of condensed consolidated financial statements in conformity with 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 condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. On an ongoing basis, management evaluates its estimates, including, but not limited to, those related to useful lives of long-lived assets, stock-based compensation and evaluation of going concern. Management bases its estimates on historical experience and on various assumptions that management believes to be reasonable under the circumstances. Actual results could differ materially from those estimates.
Operating Segments
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. Our chief operating decision-maker, our Chief Executive Officer, reviews financial information presented for each of our segments. We have
During the three months ended September 30, 2024, the Biopharm Division and Neurostimulation Division incurred operating expenses of $
During the nine months ended September 30, 2024, the Biopharm Division and Neurostimulation Division incurred operating expenses of $
As of September 30, 2024, total assets for the Biopharm Division and the Neurostimulation Division were $
The Company’s long-term assets are located in the United States.
Significant Accounting Policies
Our significant accounting policies are set forth in our financial statements for the year ended December 31, 2023, included within our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 26, 2024.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. This ASU will likely result in us including the additional required disclosures when adopted. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will result in the required additional disclosures being included in our consolidated financial statements, once adopted.
Note 3. Concentration of Risk
Credit Risk
Financial instruments that subject us to concentrations of credit risk consist primarily of cash, certificates of deposit and money market funds. We maintain cash, certificates of deposit and money market funds with financial institutions that we deem reputable.
Foreign Operations
The
accompanying condensed consolidated financial statements as of September 30, 2024 and 2023 include assets amounting to approximately
$
Note 4. Fair Value Measurements
The authoritative guidance with respect to fair value establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required.
Level 1. Observable inputs such as quoted prices in active markets for an identical asset or liability that we have the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active-exchange traded securities and exchange-based derivatives.
Level 2. Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange-based derivatives, mutual funds, and fair-value hedges.
Level 3. Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. Financial assets and liabilities utilizing Level 3 inputs include infrequently traded non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models.
We determine the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, we perform an analysis of the assets and liabilities at each reporting period end.
Cash equivalents, which include certificates of deposit and money market funds, are the only financial instruments measured and recorded at fair value on our condensed consolidated balance sheet, and are valued using Level 1 inputs. As of September 30, 2024 and 2023, we did not have any Level 1 and Level 2 financial liabilities or Level 3 financial assets or liabilities measured at fair value on a recurring basis. We did not have any transfers between Level 1 and Level 2 or transfers in or out of Level 3 during the three and nine months ended September 30, 2024 and 2023.
The following table summarizes assets measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
| As of September 30, 2024 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets | ||||||||||||||||
| Cash equivalents: | ||||||||||||||||
| Certificates of deposit | $ | $ | $ | $ | ||||||||||||
| Money market funds | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| As of December 31, 2023 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets | ||||||||||||||||
| Cash equivalents: | ||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| 11 |
Note 5. Insurance Premium Financing
In September 2024, we entered into a finance agreement with First Insurance Funding in order to fund a portion of our insurance premiums for our professional liability policies. The amount financed is approximately $
Note 6. Selected Balance Sheet Detail
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Property and equipment at cost: | ||||||||
| Equipment | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Computer software | ||||||||
| Construction in progress | ||||||||
| Total property and equipment | ||||||||
| Accumulated depreciation and amortization | ( |
) | ( |
) | ||||
| Property and equipment, net | $ | $ | ||||||
Note 7. Equity Securities
We are authorized to issue
Securities Purchase Agreement
On March 1, 2024, the Company entered into the Securities Purchase Agreement relating to the issuance of
On April 22, 2024, the Company entered into the Sales Agreement with Jefferies, under which the Company may offer and sell, from time to time at its sole discretion, shares of the common stock, having an aggregate offering price of up to $
The Company may sell the common stock under the Sales Agreement (A) in privately negotiated transactions; (B) as block transactions; or (C) by any other method permitted by law deemed to be an “at-the-market” offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, including sales made directly on the Nasdaq Capital Market or sales made into any other existing trading market for the shares of Common Stock. Jefferies will use commercially reasonable efforts to place the shares of common stock from time to time, based upon the Company's instructions (including any price, time or size limits or other customary parameters or conditions we may impose). The Company will pay Jefferies a commission of up to three percent (
The Company is not obligated to make any sales of common stock under the Sales Agreement. The offering of shares of common stock pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all common stock subject to the Sales Agreement or (ii) termination of the Sales Agreement in accordance with its terms.
During the nine months ended September 30, 2024, the Company issued
Note 8. Warrants
A summary of warrant activity for the nine months ended September 30, 2024 is presented below (in thousands, except per share and contractual life data).
| Number of Shares |
Weighted Average Exercise Price Per Share |
Weighted Average Remaining Contractual Life (in Years) |
||||||||||
| Warrants outstanding as of December 31, 2023 | $ | |||||||||||
| Issued | $ | |||||||||||
| Exercised | $ | |||||||||||
| Forfeited or expired | ( |
) | $ | |||||||||
| Warrants outstanding as of September 30, 2024 | $ | |||||||||||
| Warrants exercisable as of September 30, 2024 | $ | |||||||||||
NPM, prior to the merger with Second Sight, issued common stock and warrants (collectively, the “unit” or “units”) in 2019, 2020 and 2021 for $
Second Sight underwriter warrants of
In connection with the Securities Purchase Agreement entered on March 1, 2024, relating to the issuance of
The warrants outstanding as of September 30, 2024 had
Note 9. Stock-Based Compensation
Equity Incentive Plan
The Vivani Medical, Inc. 2022 Omnibus Incentive Plan (the “2022 Plan”) became effective on August 30, 2022. Under the 2022 Plan,
For stock option grants, the option price is determined by the Board of Directors but cannot be less than the fair value of the shares at the grant date. Generally, the options vest ratably over
Stock Options
| Weighted | ||||||||||||
| Weighted | Average | |||||||||||
| Average | Remaining | |||||||||||
| Exercise | Contractual | |||||||||||
| Number of | Price | Life | ||||||||||
| Shares | Per Share | (in Years) | ||||||||||
| Options outstanding as of December 31, 2023 | $ | |||||||||||
| Granted | $ | |||||||||||
| Exercised | $ | |||||||||||
| Forfeited or expired | ( |
) | $ | |||||||||
| Options outstanding, vested and expected to vest as of September 30, 2024 | $ | |||||||||||
| Options exercisable as of September 30, 2024 | $ | |||||||||||
The estimated aggregate intrinsic value of stock options exercisable as of September 30, 2024 was $
Restricted Stock Units (RSUs)
| Number of Shares |
Weighted Average Grant Date Fair Value Per Share |
|||||||
| Outstanding as of December 31, 2023 | $ | |||||||
| Granted | $ | |||||||
| Vested and released | $ | |||||||
| Forfeited and canceled | $ | |||||||
| Outstanding as of September 30, 2024 | $ | |||||||
During the nine months ended September 30, 2024, the Company granted
During the nine months ended September 30, 2023, the Company granted
Stock-Based Compensation Expense
| Three Months Ended September 30, | Nine Months Ended September 30, |
|||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | ||||||||||||
| 14 |
As of September 30, 2024, there was $
Stock Options
During the nine months ended September 30, 2024, we granted stock options to purchase
Stock Options (Service Vesting)
During the nine months ended September 30, 2024,
| Nine Months Ended September 30, | |||
| 2024 | 2023 | ||
| Risk-free interest rate | |||
| Expected dividend yield | |||
| Expected volatility | |||
| Expected term | |
||
Stock Options (Market Conditions Vesting)
During the nine months ended September 30, 2023,
| ● | Beginning Stock Price. We utilized the Company’s publicly traded share price as of the Valuation Date as the beginning stock value. At the Valuation Date, the publicly traded common share price was $ |
| ● | Drift Rate. In determining the value of the instrument in the risk-neutral framework, risk-free rates were estimated based on the applicable treasury rate for the projection period. For each simulation, the term of the risk-free rate was based on the term from the Valuation Date through the latest date on which the award could vest (i.e., |
| ● | Volatility. The total equity volatility (standard deviation) was based on a total equity volatility analysis. |
| ● | Period. The period was measured as the number of years from the Valuation Date through the PSO expiration date ( |
| ● | Dividends. The Company has not historically paid dividends. In addition, the Company does not expect to pay dividends going forward. As such, |
| 15 |
Restricted Stock Units (RSUs)
During the nine months ended September 30, 2024, the Company granted
| Nine Months Ended September 30, | Nine Months Ended September 30, | ||
| 2024 | 2023 | ||
| RSUs Granted | |||
| Valuation date stock price | $ |
$ | |
| Risk-free interest rate | |||
| Expected dividend yield | |||
| Expected volatility | |||
| Simulation term |
The steps involved in utilizing the Monte Carlo simulation in order to value the performance-based RSUs included the following:
1. Projection of the Company’s Common Stock Value. The performance-based RSUs were measured based on the Company’s underlying common stock value over the performance period (
Additionally, we considered the vesting period following achievement of the performance condition. Accordingly, our common stock value was simulated over a period to capture iterations through which the performance condition was satisfied on the Performance Period End Date. The analysis involved projecting our common stock value starting with our current common stock value. The forecasted stock price was based on the Geometric Brownian motion (“GBM”), and the Monte Carlo simulation generated random variables using the GBM to forecast our stock price on a daily basis over the specified period assuming
| ● | Beginning Stock Price. As of the Valuation Date, we were a publicly traded company with an observable share price. Therefore, we utilized our publicly traded share price as of the Valuation Date as the beginning stock value. |
| ● | Drift Rate. In determining the value of the instrument in the risk-neutral framework, risk free rates were estimated based on the applicable treasury rate for the projection period. For each simulation, the term of the risk-free rate was based on the term from the Valuation Date through the latest date on which the award could vest (i.e., |
| ● | Volatility. The total equity volatility (standard deviation) was based on a total equity volatility analysis. |
| ● | Period. The period was measured as the number of years from the Valuation Date through the latest date on which the award could vest. |
| ● | Dividends. We have not historically paid dividends nor do we expect to pay dividends going forward. As such, |
2. Consideration of the Performance-Vesting Schedule. As previously discussed, our publicly traded common share price must equal or exceed the Stock Price Hurdle amount of $
3. Performance-Based RSU Value Conclusion. The proceeds from the vesting of common shares were then discounted to the Valuation Date using the applicable risk-free rate, which is consistent with the assumption utilized to project stock prices in our Monte Carlo simulation. For the purpose of calculating the weighted service period associated with the Subject Interest, a separate simulation was performed using our cost of equity as the drift rate. The service period was then determined based on the median Hurdle Achievement Date.
Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by dividing the net loss by the sum of the weighted average number of shares of common stock outstanding during the period plus the dilutive effects of potentially dilutive securities outstanding during the period. Potentially dilutive securities include common stock options, RSUs and warrants issued and outstanding.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Denominator: | ||||||||||||||||
| Weighted average common shares outstanding - basic and diluted | ||||||||||||||||
| Net loss per common share, basic and diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods presented, as the inclusion of all potential common stock equivalents outstanding would have been antidilutive.
| September 30, | |||||||
| 2024 | 2023 | ||||||
| Stock options issued and outstanding | |||||||
| Unvested restricted stock units issued and outstanding | |||||||
| Warrants to purchase common stock | |||||||
| Total |
| ||||||
Note 11. Right-of-use Assets and Operating Lease Liabilities
We lease certain office, laboratory, research and development space for our use. Leases with an initial term of
On November 21, 2022, Vivani entered into a triple net lease agreement for a single building with
On February 1, 2023, we entered into a lease agreement, effective
| 17 |
The following table summarizes supplemental balance sheet information related to the Company’s operating leases (in thousands):
| September 30, | December 31, | |||||||||
| Balance Sheet Classification | 2024 | 2023 | ||||||||
| Assets | ||||||||||
| Non-current assets | Right-of-use assets | $ | $ | |||||||
| Liabilities | ||||||||||
| Current | Current operating lease liabilities | $ | $ | |||||||
| Long-term | Long-term operating lease liabilities | $ | $ | |||||||
Operating lease cost was $
Variable lease cost, comprising primarily of common area maintenance charges and taxes, for the operating lease was $
The following table summarizes a maturity analysis of our lease liabilities showing the aggregate lease payments as of September 30, 2024 (in thousands except weighted average data):
| Year Ending December 31, | Amount | ||||
| 2024 | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Thereafter | |||||
| Total lease payments | $ | ||||
| Less imputed interest | ( |
) | |||
| Total lease liabilities | $ | ||||
| Weighted average discount rate | % | ||||
| Weighted average remaining lease term | |||||
Other information related to leases are as follows (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Cash paid for operating lease liabilities | $ | $ | $ | $ | ||||||||||||
Note 12. Commitments and Contingencies
Indemnification Agreements
We maintain indemnification agreements with our directors and officers that may require us to indemnify them against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by applicable law.
Clinical Trial Agreements
Based
upon FDA approval of Argus II, which was obtained in February 2013, we were required to collect follow-up data from subjects enrolled
in our pre-approval trial for a period of up to ten years post-implant, which was extended through the year 2019. This requirement
to collect follow-up data was halted in 2020 with FDA approval. In addition, we conducted three post-market studies to comply
with U.S. FDA, French, and European post-market surveillance regulations and requirements and are conducting an early feasibility
clinical study of Orion. We have contracted with various universities, hospitals, and medical practices to provide these services.
Payments are based on procedures performed for each subject and are charged to clinical and regulatory expense as incurred. Total
amounts expensed during the three months ended September 30, 2024 and 2023 were $
Litigation, Claims and Assessments
One opposition filed by Pixium Vision SA (“Pixium”) is pending in the European Patent Office challenging the validity of a European patent owned by Cortigent. The outcome of the challenge is not certain, however, if successful, it may affect our ability to block competitors from utilizing Cortigent’s neurostimulation patented technology. We believe a successful challenge will not have a material effect on our ability to manufacture and sell our products, or otherwise have a material effect on Cortigent’s operations.
As
described in the Company’s 10-K for the year ended December 31, 2020, the Company had entered into a Memorandum of
Understanding (“MOU”) for a proposed business combination with Pixium. In response to a press release by Pixium
dated March 24, 2021, and subsequent communications between us and Pixium, our Board of Directors determined that the
business combination with Pixium was not in the best interest of our shareholders. On April 1, 2021, we gave notice to Pixium
that we were terminating the MOU between the parties and seeking an amicable resolution of termination amounts that may be
due, however no assurance can be given that an amicable resolution will be reached. We accrued $
The Company recorded a charge of $
We are party to litigation arising in the ordinary course of business. It is our opinion that the outcome of such matters will not have a material effect on our results of operations, however, the results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
On November 8, 2024, the Company entered into a private sale transaction with one of its independent directors whereby the Company sold an aggregate of
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our products, plans and strategy for our business and related financing, contains forward-looking statements that involve risks and uncertainties, including statements regarding our expected financial results in future periods. The words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “projects,” “will,” “would,” “strategy” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, among others, statements we make regarding expectations for revenues, liquidity, cash flows and financial performance, the anticipated results of our development efforts and the timing for receipt of required regulatory approvals, including those required to commence clinical development of our product candidates, insurance reimbursements and product launches, our financing plans and future capital requirements, and statements regarding the anticipated or projected impact of our merger on our business, results of operations, financial condition or prospects, the materially adverse impact of the COVID-19 coronavirus pandemic and related public health measures on our business. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. We assume no obligations to update these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect actual outcomes.
Business Overview
Vivani Medical, Inc. (“Vivani,” the “Company,” “we,” “us,” “our” or similar terms) is a preclinical stage biopharmaceutical company which develops miniaturized, subdermal implants utilizing its proprietary NanoPortal™ technology to enable ultra long-term, near constant-rate delivery of a broad range of medicines to treat chronic diseases. Vivani uses this platform technology to develop and potentially commercialize drug implant candidates, alone or in collaboration with pharmaceutical company partners to address a leading cause of poor clinical outcomes in the treatment of chronic disease, medication non-adherence. According to the U.S. Centers for Disease Control and Prevention, adherence is defined as the extent to which an individual’s behavior, including taking medications, corresponds to recommendations from a health care provider. An alarmingly high proportion of patients, approximately 50%, do not take their medicine as prescribed by their physician in the real world, a statistic which holds for both weekly injectable and daily oral medications. In addition, a recent study has shown that 64% of patients taking Wegovy® (semaglutide for weight management) discontinue therapy within the first year, a number which increases to 76% by year two. The Company is developing a portfolio of miniature, subdermal drug implant candidates that, unlike most oral and injectable medicines, are designed with the goal of guaranteeing medication adherence by delivering therapeutic drug levels for up to six months or longer. In addition, our aim is to minimize fluctuations in patients’ drug levels through the use of our proprietary NanoPortal™ implant technology, which may improve the tolerability profiles for medicines, including GLP-1 receptor agonists, that produce side effects associated with fluctuating drug levels in the blood.
Vivani resulted from the business combination of Second Sight Medical Products, Inc. (“Second Sight”) and Nano Precision Medical, Inc. (“NPM”). On August 30, 2022, Second Sight and NPM closed their merger pursuant to which NPM became a wholly owned subsidiary of Second Sight and the combined company of NPM and Second Sight was renamed Vivani Medical, Inc. Vivani’s main priority is the further development of the company’s lead program NPM-115, a miniature, six-month, GLP-1 implant candidate for chronic weight management in obese or overweight patients with one or more risk factors and further development of the balance of company’s miniature, long-term drug implant portfolio. In parallel, Vivani’s management team remained committed to identifying and exploring strategic options that will enable further development of its pioneering neurostimulation systems from legacy company Second Sight aimed at helping patients recover critical body functions.
Moving forward, Vivani’s focus will be on the further development of NPM-115 and its emerging pipeline of innovative miniature, long-term drug implants to treat patients with chronic diseases and high unmet medical need. The origins of this business started while its current Vivani CEO and NPM co-founder Adam Mendelsohn and two of his graduate school colleagues, Kathleen Fischer and Lily Peng, at the University of California, San Francisco (“UCSF”) and the University of California, Berkeley (“UCB”), entered business school competitions leveraging their growing knowledge of chemistry, drug delivery, and nanoscale technology to propose the development of new miniature, biocompatible, drug implant prototypes capable of releasing therapeutic drug levels over an extended period of time. Based on their success and encouragement from professors and others, including medical device/pharmaceutical icon Alfred E. Mann, Dr. Mendelsohn and colleagues started NPM in 2009 and operations began in 2011 in an incubator on the UCB campus. Today, the Company has grown to 36 full-time employees and its current headquarters and operations are located at 1350 South Loop Road, Alameda, California.
Vivani’s implant technology, which we refer to as NanoPortal™, utilizes a space-efficient design that allows a miniaturized implant to provide many months of therapeutic delivery of potent molecules. The technology has no moving parts, which is intended to minimize fluctuating drug delivery over the duration of the implant and is also tunable. Vivani has primarily been developing implant candidates around peptide therapeutics, but the technology has potential application across a wide range of molecular types. The key innovative component of the technology is a biocompatible titanium-oxide nano-porous membrane which consists of millions of precisely sized nanotubes whose inner diameters represent the only path for drug molecules to exit the reservoir once the implant is fully assembled.
In December 2022, we contributed our neurostimulation assets and certain liabilities to Cortigent, Inc. (“Cortigent”), a wholly owned subsidiary of Vivani. Cortigent has 5,000,000 shares of common stock outstanding, all owned by Vivani. Cortigent is advancing the Company’s pioneering neurostimulation technology. In March 2023, Vivani announced the filing of a Registration Statement on Form S-1 with the U.S. Securities and Exchange Commission (“SEC”) for the proposed initial public offering of Cortigent. The Registration Statement on Form S-1 was recently amended and filed with the SEC on September 4, 2024 to refresh the financial information and provide minor updates to the business.
On July 6, 2023, Vivani changed its state of incorporation from the State of California to the State of Delaware by means of a plan of conversion, effective July 5, 2023. The reincorporation, including the principal terms of the plan of conversion, was submitted to a vote of, and approved by, Vivani’s stockholders at its 2023 Annual Meeting of Stockholders held on June 15, 2023. As part of this change of incorporation the Company established a par value of $0.0001 per share and all periods have been retroactively adjusted to reflect this change.
An Investigational New Drug Application (“IND”) for NPM-119 (GLP-1 implant for the treatment of type 2 diabetes) was filed with the U.S. Food and Drug Administration (“FDA”) on July 14, 2023, to support the initiation of the first-in-human study of NPM-119 in patients with type 2 diabetes. On August 18, 2023, FDA provided written notification that the proposed NPM-119 study was on full clinical hold, primarily due to insufficient Chemistry, Manufacturing, and Controls (“CMC”) information to assess the risk to human subjects. Vivani provided the FDA with the requested CMC information and the FDA subsequently cleared the IND and lifted the full clinical hold on June 13, 2024.
On August 25, 2023, Vivani and Cortigent entered into an Amendment No. 1 (the “Amendment”) to the Transition Funding, Support and Services Agreement dated March 19, 2023 (the “TFSSA”). Pursuant to the TFSSA, Vivani has agreed to advance funds and provide or cause to be provided to Cortigent the services and funding intended to cover salaries and related costs, rent and other overhead in order to permit Cortigent to operate in substantially the same manner in which business operations of Cortigent were previously operated by Second Sight, prior to the formation of Cortigent, which obligations will continue, in the case of the funding obligations, until the earlier of December 31, 2024 or the closing of an initial public offering of Cortigent (the “Funding Support Term”). Under the Amendment, Cortigent has agreed to repay $1,500,000 to Vivani at the conclusion of the Funding Support Term. In addition, at the conclusion of the Funding Support Term, Cortigent will enter into a five-year promissory note at 5% interest for $2,000,000 in favor of Vivani. Consequently, Vivani will forgive any remaining amounts due by Cortigent to the Company under the TFSSA. In October 2023, Vivani implemented a reduction-in-force to conserve cash that decreased Cortigent’s employees while continuing the ongoing Orion® clinical study and basic operations.
In the fourth quarter of 2023, Vivani Medical Australia Pty Ltd., a wholly-owned subsidiary in Australia was established to support studies of our product candidates.
In February 2024, Vivani announced positive preclinical weight loss data with a GLP-1 (exenatide) implant comparable to semaglutide, the active ingredient in Ozempic®/Wegovy®, and a strategic shift to prioritize our obesity portfolio including our NPM-115 program. In a study of high-fat diet-induced obese mice, NPM-115 generated weight loss of approximately 20% compared to a sham implant control after a 28-day treatment duration, comparable to weight loss observed in mice treated with semaglutide injections (Ozempic®/Wegovy®) in the same study. The Company also disclosed that semaglutide is the active pharmaceutical ingredient in NPM-139, a miniature, subdermal GLP-1 implant in development for chronic weight management, with the added potential benefit of once-yearly administration.
On March 1, 2024, the Company entered into a securities purchase agreement with an institutional investor to purchase 3,947,368 shares of common stock and warrants to purchase up to an aggregate of 3,947,368 shares of common stock at a purchase price of $3.80 per share and accompanying warrant in a registered direct offering. The warrants have an exercise price of $3.80 per share, are exercisable immediately upon issuance, and will expire three years following the date of issuance. For additional information, refer to Note 7. Equity Securities of the Notes to Condensed Consolidated Financial Statements in this quarterly report on Form 10-Q.
On March 6, 2024, the Company announced the appointment of Daniel Bradbury to its Board of Directors. Under Bradbury’s leadership as CEO, Amylin Pharmaceuticals, with partner Alkermes, secured the 2012 approval of Bydureon® (exenatide injection), the world’s first weekly GLP-1 receptor agonist, a class of drugs that now includes blockbusters Ozempic®, Trulicity® and Wegovy®.
On April 22, 2024, the Company entered into a sales agreement with an underwriter, under which the Company may offer and sell, from time to time at its sole discretion, shares of common stock, having an aggregate offering price of up to $75.0 million through such underwriter as its sales agent. Also on April 22, 2024, the Company filed a Registration Statement on Form S-3, which was declared effective on May 3, 2024, including a sales agreement prospectus relating to the offering of up to $75.0 million shares of common stock in accordance with the sales agreement. For additional information, refer to Note 7. Equity Securities of the Notes to Condensed Consolidated Financial Statements.
On May 28, 2024, Vivani announced the publication of positive weigh loss data supporting the potential veterinary use of OKV-119, the Company's miniature, long-term GLP-1 implant under development with partner Okava for the treatment of pre-diabetes, diabetes, and obesity in companion felines. The device is intended to be conveniently inserted under the skin during routine veterinary visits and is being designed to deliver six months of GLP-1 therapy with a single implant.
On June 13, 2024, the Company announced that the FDA cleared the IND for NPM-119, a miniature, long-term subdermal GLP-1 implant under investigation to address medication non-adherence and potentially improve tolerability in patients with type 2 diabetes. The proposed first-in-human clinical study was designed to evaluate the safety, tolerability and pharmacokinetic profile of the exenatide implant versus the marketed exenatide injectable, Bydureon BCise®.
On July 11, 2024, the Company provided an update of the clinical development plans for NPM-115, the miniature, long-acting GLP-1 (high-dose exenatide) implant for the treatment of chronic weight management in obese and overweight individuals. The Company has redesigned the first-in-human study, LIBERATE-1, to explore the safety, tolerability and pharmacokinetics of an exenatide implant (initially using the same test article proposed for NPM-119) in obese and overweight patients. The study will enroll patients who will be titrated on weekly semaglutide injections for eight weeks before being randomized to receive a single exenatide implant, weekly exenatide injections (Bydureon BCise®) or weekly semaglutide injections (Wegovy®) for a nine-week treatment duration. The LIBERATE-1 study will be conducted in Australia and is anticipated to be initiated in the fourth quarter of 2024, pending regulatory clearance, with data from the study expected in 2025.
On September 4, 2024, Vivani announced positive preclinical liver fat results with its miniature, ultra long-acting GLP-1 implant currently under development chronic weight management in obese and overweight individuals and type 2 diabetes. The Company's GLP-1 (exenatide) implant produced sham-implant adjusted liver fat reduction of 82% in an obese mouse model from a single administration with expected twice-yearly dosing. These liver fat data are consistent with published results from similar investigations with semaglutide, the active pharmaceutical ingredient in Ozempic® and Wegovy®.
On September 26, 2024, the Company reported receiving regulatory approval to initiate its first in human clinical trial with a miniature, ultra long-acting GLP-1 (exenatide) implant in obese and overweight individuals in Australia. This clinical trial, known as LIBERATE-1™, is part of the NPM-115 program and will investigate the safety, tolerability and full pharmacokinetic profile of an exenatide implant. The trial also represents the first clinical application of the Company’s proprietary NanoPortal™ drug implant technology. LIBERATE-1 is designed to enroll participants who will be titrated on weekly semaglutide injections for 8 weeks (0.25 mg/week for 4 weeks followed by 0.5 mg/week for 4 weeks) before being randomized to receive a single administration of Vivani’s exenatide implant (n=8), weekly exenatide injections (n=8), or weekly 1 mg semaglutide injections (n=8) for a 9-week treatment duration. Changes in weight will be measured. The trial is expected to be initiated later this year with data projected to be available in 2025.
Funding and Liquidity
Capital Funding
From inception, our operations have been funded primarily through the sales of our common stock and warrants. On March 1, 2024, the Company entered into the Securities Purchase Agreement relating to the issuance of 3,947,368 shares of the Company’s common stock, par value of $0.0001 per share (the “common stock”) and warrants to purchase up to an aggregate of 3,947,368 shares of common stock (the “Warrants”), to such investor at a purchase price of $3.80 per share and accompanying warrants in a registered direct offering (the “Offering”). The Warrants have an exercise price of $3.80 per share, are exercisable immediately upon issuance and will expire three years following the date of issuance. Simultaneously, the Company also entered into a placement agency agreement with Maxim Group LLC (“Maxim” and such agreement, the “Placement Agency Agreement,” and together with the Securities Purchase Agreement, the “Agreements”), who acted as the sole placement agent for the Offering. The gross proceeds of $15.0 million from the Offering, before paying the placement agent fees and other offering costs, were received on March 5, 2024. In connection with the Securities Purchase Agreement, the Company paid issuance costs of $1.3 million, resulting in net proceeds of $13.7 million. For additional information, refer to Note 7. Equity Securities of the Notes to Condensed Consolidated Financial Statements in this quarterly report on Form 10-Q.
On April 22, 2024, the Company entered into an Open Market Sale AgreementSM (the “Sales Agreement”) with Jefferies LLC (“Jefferies”), under which the Company may offer and sell, from time to time at its sole discretion, shares of the common stock, having an aggregate offering price of up to $75.0 million through Jefferies as its sales agent. Also on April 22, 2024, the Company filed a Registration Statement on Form S-3, which was declared effective on May 3, 2024, including a sales agreement prospectus relating to the offering of up to $75.0 million shares of its common stock in accordance with the Sales Agreement. For additional information, refer to Note 7. Equity Securities of the Notes to Condensed Consolidated Financial Statements.
During the three months and nine months ended September 30, 2024, the Company received net proceeds of $48,000 and 160,000 from issuing common stocks under the Sales Agreement with Jefferies, respectively.
Non-Capital Funding
From time to time, we receive grants that help fund specific development programs. Any amounts received pursuant to grants are offset against the related operating expenses as the costs are incurred. Commencing in January 2018, we were awarded a grant from the National Institutes of Health (the “NIH”) to fund the “Early Feasibility Clinical Trial of a Visual Cortical Prosthesis”. The final year of the grant ended in March 2024, however the NIH issued us a no-cost extension allowing us to utilize the unfunded amount through March 2025. During the nine months ended September 30, 2024 and 2023 total grants offsetting against operating expenses were $0.2 million and $0.4 million, respectively. As of September 30, 2024, we expect $70,000 will be available to offset future operating expenses.
Liquidity
We have experienced recurring operating losses and negative operating cash flows since inception and have financed our working capital requirements through the recurring sale of our equity securities. Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
To finance our operations, we will need to raise additional capital, which cannot be assured. Our operating plan may change as a result of many factors currently unknown to us, and we will need to seek additional funds through public or private equity offerings or debt financings, grants, collaborations, strategic partnerships or other sources. However, we may be unable to raise additional capital or enter into such other arrangements when needed on favorable terms or at all. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs, or we may be unable to expand or maintain our operations, maintain our current organization and employee base or otherwise capitalize on our business opportunities, as desired, which could materially and adversely affect our business, financial condition and results of operations.
We estimate that currently available cash will provide sufficient funds to enable the Company to meet its planned obligations for at least the next twelve months. Our ability to continue as a going concern is dependent on our ability to raise additional capital and/or develop profitable operations through implementation of our business initiatives, however, there can be no assurances that we will be able to do so.
Critical Accounting Policies and Estimates
The preparation of our condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) and the requirements of the United States Securities and Exchange Commission require management to make estimates, assumptions and judgments that affect the amounts, liabilities, revenue and expenses reported in the financial statements and the notes to the financial statements. On an ongoing basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies during the nine months ended September 30, 2024 compared to those disclosed in our Form 10-K for the year ended December 31, 2023.
Results of Operations
Operating Expenses. We recognize our operating expenses as incurred in two general operational categories: research and development and general and administrative. Our operating expenses also include a non-cash component related to the amortization of stock-based compensation for research and development and general and administrative personnel. From time-to-time we have received grants from institutions or agencies, such as the National Institutes of Health, to help fund some of the cost of our development efforts. We have recorded these grants as reductions to operating expenses.
| ● |
Research and development expense consist primarily of employee compensation and consulting costs related to the design, development, and enhancements of our current and potential future products, as well as internal and external costs associated with conducting clinical trials and maintaining relationships with regulatory agencies, as well as facilities costs, which include expenses for rent, maintenance of facilities and depreciation of equipment, offset by grant revenue received in support of specific research projects. We expense our research and development costs as they are incurred. We expect research and development expenses to increase in the future as we pursue further enhancements of our existing product and develop technology for our potential future products. We also expect to receive additional grants in the future that will primarily offset research and development costs. | |
| ● | General and administrative expense consist primarily of salaries and related expenses for executive, legal, finance, human resources, information technology and administrative personnel, as well as recruiting and professional fees, patent filing and annuity costs, insurance costs and other general corporate expenses, including rent and other facility related costs. We expect general and administrative expenses to increase as we add personnel and incur additional costs related to the growth of our business and operate as a public company. |
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Comparison of the Three Months Ended September 30, 2024 and 2023
Research and development expense. Research and development expense during the three months ended September 30, 2024 was $4.2 million, compared to $4.4 million during the three months ended September 30, 2023. The decrease of $0.2 million, or 5%, was primarily attributable to staffing reduction and reduced use of outside services from our neurostimulation division, partially offset by the increase in Alameda site facility expense from our Biopharma division.
General and administrative expense. General and administrative expense during the three months ended September 30, 2024 was $2.1 million, compared to $2.7 million during the three months ended September 30, 2023. The decrease of $0.6 million, or 22%, was primarily attributable to staffing reductions along with reduced outside legal services from our neurostimulation division, in addition to reduced professional services from our Biopharma division.
Other income, net. Other income, net during the three months ended September 30, 2024 was $0.3 million, compared to $0.4 million during the three months ended September 30, 2023. The change was not significant.
Comparison of the Nine Months Ended September 30, 2024 and 2023
Research and development expense. Research and development expense decreased by $0.8 million, or 7%, to $11.4 million in the first nine months of 2024 from $12.3 million in the same period of 2023. The costs decreased was primarily attributable to staffing reduction and reduced use of outside services from our neurostimulation division, partially offset by the increase in Alameda site facility expense from our Biopharma division.
General and administrative expense. General and administrative expense decreased $1.7 million, or 20%, to $6.8 million in the first nine months of 2024 from $8.5 million in the same period of 2023. This decrease was primarily attributable to staffing reductions along with reduced outside legal services from our neurostimulation division.
Other income, net. Other income, net during the nine months ended September 30, 2024 was $0.8 million, compared to $1.1 million during the nine months ended September 30, 2023. The decrease was due to lower interest associated with lower cash balances.
Liquidity and Capital Resources
We have experienced recurring operating losses and negative operating cash flows since inception and have financed our working capital requirements through the recurring sale of our equity securities. Our financial statements have been presented on the basis that our business is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
On March 1, 2024, the Company entered into the Securities Purchase Agreement relating to the issuance of 3,947,368 shares of the Company’s common stock, par value of $0.0001 per share and warrants to purchase up to an aggregate of 3,947,368 shares of common stock at a purchase price of $3.80 per share and accompanying warrants in a registered direct offering. The Warrants have an exercise price of $3.80 per share, are exercisable immediately upon issuance and will expire three years following the date of issuance. In connection with the Placement Agency Agreement, the Company agreed to pay Maxim an aggregate cash fee of 7.0% of the aggregate proceeds raised from the sale and issuance of the shares of common stock and accompanying warrants. Pursuant to the Placement Agency Agreement, the Company also agreed to reimburse Maxim up to $65,000 for its legal expenses. The gross proceeds of $15.0 million from the Offering, before paying the placement agent fees and other estimated offering costs, were received on March 5, 2024. In connection with the Securities Purchase Agreement, the Company paid issuance costs of $1.3 million, resulting in net proceeds of $13.7 million, during the nine months ended September 30, 2024. For additional information, refer to Note 7. Equity Securities of the Notes to Condensed Consolidated Financial Statements in this quarterly report on Form 10-Q.
On April 22, 2024, the Company entered into the Sales Agreement with Jefferies, under which the Company may offer and sell, from time to time at its sole discretion, shares of the common stock, having an aggregate offering price of up to $75.0 million through Jefferies as its sales agent. Also on April 22, 2024, the Company filed a Registration Statement on Form S-3, which was declared effective on May 3, 2024, including a sales agreement prospectus relating to the offering of up to $75.0 million shares of its common stock in accordance with the Sales Agreement. For additional information, refer to Note 7. Equity Securities of the Notes to Condensed Consolidated Financial Statements.
We estimate that currently available cash will provide sufficient funds to enable the Company to meet its planned obligations for at least the next twelve months. Our ability to continue as a going concern is dependent on our ability to develop profitable operations through implementation of our business initiatives and/or raise additional capital, however, there can be no assurances that we will be able to do so.
We are subject to the risks and uncertainties associated with a business with no revenue that is developing a novel pharmaceutical product candidates and medical device candidates, including limitations on our operating capital resources and uncertain demand for our products. We have incurred recurring operating losses and negative operating cash flows since inception, and we expect to continue to incur operating losses and negative operating cash flows for the foreseeable future. We expect our operating expenses to increase significantly as we continue our business operations, particularly as we prepare to and initiate our planned clinical trial and conduct our other research and development activities. Conducting clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete and we may never generate the necessary data or results required to obtain marketing approval. We do not expect revenues until we are successful in completing the development and obtaining marketing approval for our products. We expect expenses to increase in connection with our ongoing activities, particularly as we initiate clinical trials, initiate new research and development projects and seek marketing approval for any product candidates that we successfully develop. If we are required to conduct additional nonclinical or clinical activities preclinical or IND-enabling activities such as additional pre-clinical, our overall expenditures would increase. In addition, if we obtain marketing approval, we expect to incur significant additional expenses related to sales, marketing, distribution and other commercial infrastructure to commercialize such product. In addition, our product candidates, if approved, may not achieve commercial success. We incur significant costs associated with operating as a public company in a regulated industry.
Until such time, if ever, we can generate product revenues, we anticipate that we will seek to fund our operations through public or private equity or debt financings, grants, collaborations, strategic partnerships or other sources. However, we may be unable to raise additional capital or enter into such other arrangements when needed on favorable terms or at all. To the extent that we raise additional capital through the sale of equity, convertible debt or other equity-linked securities, the ownership interests of some or all of our common stockholders will be diluted, the holders of new equity securities may have priority rights over our existing stockholders and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. Debt 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. If adequate funds are not available, we may be required to curtail operations significantly or to obtain funds by entering into agreements on unattractive terms. If, for example, we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or to grant licenses on terms that may not be favorable to us. Our inability to raise capital could have a material adverse effect on our business, financial condition and results of operations.
Cash, cash equivalents and restricted cash decreased by $1.0 million from $22.0 million as of December 31, 2023 to $21.0 million as of September 30, 2024. Working capital was $15.1 million as of September 30, 2024, as compared to $17.3 million as of December 31, 2023, a decrease of $2.2 million. We use our cash and cash equivalents and working capital to fund our operating activities.
Cash Flows from Operating Activities
During the nine months ended September 30, 2024, we used $15.0 million of cash in operating activities, consisting primarily of a net loss of $17.4 million, partially offset by $0.7 million provided by a net change in operating assets and liabilities and non-cash items totaling $1.8 million for depreciation and amortization of property and equipment, stock-based compensation and lease expense.
During the nine months ended September 30, 2023, we used $20.2 million of cash in operating activities, consisting primarily of a net loss of $19.6 million and a net increase in net operating assets of $3.0 million, partially offset by non-cash charges of $2.4 million for depreciation and amortization of property and equipment, stock-based compensation and lease expense.
Cash Flows from Investing Activities
Cash used for investing activities during the nine months ended September 30, 2024 and 2023 was $0.3 million and $0.1 million, respectively, primarily attributable to the purchase of property and equipment.
Cash Flows from Financing Activities
Cash provided by financing activities was $14.2 million during the nine months ended September 30, 2024, primarily attributable to a securities purchase agreement with an institutional investor. For additional information, refer to Note 7. Equity Securities of the Notes to Condensed Consolidated Financial Statements in this quarterly report on Form 10-Q.
Cash provided by financing activities was $110,000 during the nine months ended September 30, 2023 from exercise of options.
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Off-Balance Sheet Arrangements
As of September 30, 2024, we did not have any transactions, obligations or relationships that constitute off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Sensitivity
The primary objective of our investment activities is to maintain the safety of principal and preserve liquidity without incurring significant risk. We invest cash in excess of our current needs in certificates of deposit and money market funds. In general, money market funds are not considered to be subject to interest rate risk because the interest paid on such funds fluctuates with the prevailing interest rate. As of September 30, 2024, our cash equivalents consisted of certificates of deposit, money market funds and restricted cash as collateral for our lease.
Exchange Rate Sensitivity
The majority of our operating expenses were denominated in U.S. dollars. We have not entered into foreign currency forward contracts to hedge our operating expense exposure to foreign currencies, but we may do so in the future.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. As of September 30, 2024, based on the evaluation of these disclosure controls and procedures, our CEO and CFO have concluded that our disclosure controls and procedures were effective at a reasonable assurance level.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended September 30, 2024, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are updating our internal control environment to address changes in our risks in financial reporting to accommodate our operating activities, staffing levels, and segregation of duties. Such changes may result in new or reduced controls.
Inherent Limitations on Effectiveness of Controls
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Item 1. Legal Proceedings
One opposition filed by Pixium Vision SA (“Pixium”) is pending in the European Patent Office challenging the validity of a European patent owned by Cortigent. The outcome of the challenge is not certain, however, if successful, it may affect our ability to block competitors from utilizing Cortigent’s neurostimulation patented technology. We believe a successful challenge will not have a material effect on our ability to manufacture and sell our products, or otherwise have a material effect on Cortigent’s operations.
As described in the Company’s 10-K for the year ended December 31, 2020, the Company had entered into a Memorandum of Understanding (“MOU”) for a proposed business combination with Pixium. In response to a press release by Pixium dated March 24, 2021, and subsequent communications between us and Pixium, our Board of Directors determined that the business combination with Pixium was not in the best interest of our shareholders. On April 1, 2021, we gave notice to Pixium that we were terminating the MOU between the parties and seeking an amicable resolution of termination amounts that may be due, however no assurance can be given that an amicable resolution will be reached. We accrued $1,000,000 of liquidated damages as contemplated by the MOU in accounts payable as of March 31, 2021 and remitted that amount to Pixium in April 2021. Pixium indicated that it considered this termination wrongful, rejected the Company’s offers, but retained the $1,000,000 payment. On May 19, 2021, Pixium filed suit in the Paris Commercial Court, and currently claim damages of approximately €5.1 million or about $5.6 million. We believe we have fulfilled our obligations to Pixium with the liquidated damages payment of $1,000,000. On December 8, 2022, the Company received notice that the Paris Commercial Court has rendered its judgment, including finding that the Company’s termination of the MOU was not valid. In the judgment, the Company was ordered to pay to Pixium the amount of €2,500,000 minus a €947,780 credit for the $1,000,000 already paid for, a net amount payable of approximately €1,552,220. On May 24, 2023, the Company filed an appeal against the judgment from the Paris Commercial Court except in so far as such prior judgment dismissed (i) Pixium’s claim for the Company to pay it a sum of €480,693 relating to the alleged time spent by its teams, (ii) Pixium’s application to order the Company to pay it a sum of €1,500,000 in respect to alleged loss of opportunity and (iii) deducted the sum of $1,000,000 that we already paid Pixium and which Pixium retained converted into euros at the date of the judgment. Thereafter Pixium filed its brief with Paris Court of Appeal and filed a cross-appeal on January 18, 2024. Meanwhile, the Company received notice that the Paris Commercial Court had opened safeguard proceedings against Pixium by judgment dated October 9, 2023, then in its judgment dated November 13, 2023, converted safeguard proceedings into receivership, and in its judgment dated January 31, 2024, converted Pixium’s receivership proceedings to liquidation proceedings, the transfer plan being rejected. As a result, Pixium’s liquidator intervened on behalf of Pixium in the pending proceedings before the Paris Court of Appeal and filed its brief on March 21, 2024. The Company filed its brief in reply with the Paris Court of Appeal on April 17, 2024. Proceedings before the Paris Court of Appeal are pending. In parallel, since the Company has failed to enforce the judgment, Pixium has requested the pre-trial judge to strike out the Company's appeal for failure to enforce the judgment. The hearing took place on June 4, 2024, and on October 23, 2024, the pre-trial judge issued his order, striking out Vivani's appeal for failure to enforce the decision. Within two years, Vivani will have to request that the case be reinstated on the court's docket, providing evidence that the judgment has been fully enforced or, at the very least, that an agreement has been reached. Failing this, the appeal proceedings will lapse.
The Company recorded a charge of $1,675,000 for the year ended December 31, 2022, related to this matter but plans to continue its appeal against the preliminary judgment.
We are party to litigation arising in the ordinary course of business. It is our opinion that the outcome of such matters will not have a material effect on our financial statements, however, the results of litigation and claims are inherently unpredictable. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Our business is subject to numerous material and other risks. You should carefully consider the risks and uncertainties described below together with all of the other information contained in this Form 10-Q, including our consolidated financial statements and the related notes, and in our other filings with the SEC. If any of the stated risks actually occur, our business, prospects, operating results, and financial condition could suffer materially. In such event, the trading price of our common stock could decline and you might lose all or part of your investment. The material risks associated with our business were most recently discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 that we filed on March 26, 2024. There have been no material changes from the risk factors previously disclosed in such filing, expect as noted below:
Risks Related to Our Financial Position and Need for Additional Capital
We will require substantial additional financing to pursue our business objectives, which may not be available on acceptable terms, or at all. A failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development, commercialization efforts or other operations.
Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive, and uncertain process that takes years to complete. Our operations have consumed substantial amounts of cash, and we expect our expenses to increase in connection with our ongoing activities, particularly as we conduct clinical trials of our product candidates. Even if one or more of our product candidates is approved for commercial sale, we will incur significant costs associated with sales, marketing, manufacturing, and distribution activities. Our expenses could increase beyond expectations if required by the FDA, the EMA or other regulatory agencies to perform clinical trials or preclinical studies in addition to those that we currently anticipate. For example, on June 13, 2024, the FDA lifted the full clinical hold that they had previously implemented on the LIBERATE-1 study on August 18, 2023 and have cleared us to initiate the LIBERATE-1TM Phase 1 clinical trial to assess the safety, tolerability and pharmacokinetics of NPM-119 (exenatide), our miniature, six-month GLP-1 implant in development for treatment of type 2 diabetes and on September 26, 2024, we received regulatory approval to initiate a first in human clinical trial, known as the LIBERATE-1™, with the Company’s GLP-1 (exenatide) implant in obese and overweight individuals in Australia. Other unanticipated costs may also arise. Because the design and outcome of our planned and anticipated clinical trials are highly uncertain, we cannot reasonably estimate the actual amount of resources and funding that will be necessary to successfully complete the development and commercialization of any product candidate. We are not permitted to market or promote any product candidate before it receives marketing approval from the regulatory authorities. Accordingly, we will need to obtain substantial additional funding in order to continue our operations and pursue our business objectives.
Risks Related to Product Development, Clinical Testing and Commercialization
Clinical development involves a lengthy and expensive process with uncertain outcomes. We may incur additional costs and experience delays in developing our product candidates, and our clinical development efforts may not yield favorable results.
To receive regulatory approval for our product candidates, adequate and well-controlled clinical trials must be conducted to demonstrate safety and efficacy in humans to the satisfaction of the FDA, the EMA, and comparable foreign authorities. We have not yet conducted clinical trials for our current product candidates and clinical testing of such product candidates may not yield results to support continued development or seeking regulatory approval. The development process is expensive, can take many years and has an uncertain outcome. Failure can occur at any stage of the process. We may experience numerous unforeseen events during, or as a result of, the development process that could delay or prevent development and approval of our product candidates, including the following:
| • | we may be unable to initiate or conduct planned clinical trials on our anticipated timelines, including as a result of failing to obtain any clearances necessary to conduct clinical trials or being subject to clinical holds that prevent continuation of such trials; | |
| • |
clinical trials may produce negative or inconclusive results; | |
| • | preclinical studies conducted with product candidates during clinical development to, among other things, evaluate their safety, tolerability and pharmacokinetics and optimize their formulation may produce unfavorable results; | |
| • |
patient recruitment and enrollment in clinical trials may be slower than anticipated; | |
| • | costs of development may be greater than anticipated; | |
| • | our product candidates may cause undesirable side effects that delay or preclude regulatory approval or limit their commercial use or market acceptance, if approved; | |
| • | if one or more product candidates are developed in collaboration with third parties, such parties may not devote sufficient resources to these clinical trials or other preclinical studies of these candidates or conduct them in a timely manner; | |
| • | we may face delays or other challenges associated with the availability and sourcing key raw materials and/or key components; and | |
| • |
we may encounter difficulties in developing product candidates related to our proprietary NanoPortal implant technology or difficulties associated with the long-term purity, potency, safety, or stability of our product candidates. |
For example, on June 13, 2024, the FDA lifted the full clinical hold that they had previously implemented on the LIBERATE-1 study on August 18, 2023 and have cleared us to initiate the LIBERATE-1TM, a Phase 1 clinical trial to assess the safety, tolerability and pharmacokinetics of our miniature, 6-month, exenatide implant in patients with type 2 diabetes. In February 2024, Vivani announced a strategic shift to prioritize the Company's obesity portfolio and the LIBERATE-1 trial was revised to assess the safety, tolerability and pharmacokinetics of the exenatide implant in obese and overweight individuals. In addition, the Company announced that LIBERATE-1 would now be conducted in Australia and on September 26, 2024, the Company reported receiving regulatory approval to conduct the trial. Vivani anticipated initiation of LIBERATE-1 in 2024 and results from the study to be available in 2025.
We could experience delays in the commencement or completion of clinical trials, which could result in increased costs or otherwise impair our research and development efforts.
Delays in the commencement or completion of clinical trials could significantly impact our drug development costs and otherwise impair our research and development efforts. We do not know whether planned clinical trials will begin on time or be completed on schedule, if at all. The commencement of clinical trials can be delayed for a variety of reasons, including, but not limited to, delays related to:
| • | obtaining regulatory approval to commence one or more clinical trials; | |
| • |
reaching agreement on acceptable terms with prospective third-party contract research organizations and clinical trial sites; | |
| • |
obtaining institutional review board approval to conduct one or more clinical trials at a prospective site; | |
| • | recruiting and enrolling patients to participate in one or more clinical trials; and | |
| • | the failure of our collaborators to adequately resource our product candidates. |
For example, on June 13, 2024, the FDA lifted the full clinical hold that they had previously implemented on the LIBERATE-1 study on August 18, 2023 and have cleared us to initiate the LIBERATE-1TM Phase 1 clinical trial to assess the safety, tolerability and pharmacokinetics of NPM-119 (exenatide), our miniature, six-month GLP-1 implant in development for treatment of type 2 diabetes. In February 2024, Vivani announced a strategic shift to prioritize the Company's obesity portfolio and the LIBERATE-1 trial was revised to assess the safety, tolerability and pharmacokinetics of the exenatide implant in obese and overweight individuals. In addition, the Company announced that LIBERATE-1 would now be conducted in Australia and on September 26, 2024, the Company reported receiving regulatory approval to conduct the trial. Vivani anticipated initiation of LIBERATE-1 in 2024 and results from the study to be available in 2025.
Our product candidates are subject to extensive regulation under the FDA, the EMA and comparable foreign authorities, and must undergo extensive clinical testing that can be costly and time consuming, with no assurance that regulatory approval will be obtained for any of our product candidates.
The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, export, marketing, and distribution of our product candidates are subject to extensive regulation by the FDA and other U.S. regulatory agencies, the EMA, or comparable authorities in foreign markets. In the U.S., neither we nor any collaborators are permitted to conduct clinical testing in humans with our product candidates unless and until clearance is received to conduct clinical investigations under an IND from the FDA or receive similar authorizations abroad. For example, on June 13, 2024, the FDA lifted the full clinical hold that they had previously implemented on the LIBERATE-1 study on August 18, 2023 and have cleared us to initiate the LIBERATE-1TM Phase 1 clinical trial to assess the safety, tolerability and pharmacokinetics of NPM-119 (exenatide), our miniature, six-month GLP-1 implant in development for treatment of type 2 diabetes. The LIBERATE-1 study will be conducted in Australia and is anticipated to be initiated in the fourth quarter of 2024 after the HREC approval. In addition, marketing of such product candidates may not occur unless and until approval of a new drug application (“NDA”) from the FDA or similar approvals by comparable foreign regulatory authorities are secured.
With respect to one or more of our product candidates, we may seek regulatory approval in the U.S. by filing an NDA under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, which is referred to as the 505(b)(2) pathway. The 505(b)(2) pathway allows at least some of the information required for NDA approval, such as safety and efficacy information on the active ingredient, to come from studies not conducted by or for the applicant. For our exenatide implants for example, we may intend to rely on certain information from Bydureon® and/or Bydureon BCise®, AstraZeneca’s exenatide extended-release injectable products. If we are unable to reference data generated for Bydureon® and/or Bydureon BCise®, additional clinical studies, including a cardiovascular outcomes (“CVOT”) study, may be required and would add significant additional costs and a significant delay in our efforts to seek and secure marketing approval. Further, if a CVOT study were conducted, there can be no assurance that the study would generate favorable results and support regulatory approval.
Risks Related to Ownership of Our Common Stock
Because we became a reporting company under the Exchange Act by means other than a traditional underwritten initial public offering, we may not be able to attract the attention of research analysts at major brokerage firms.
Vivani resulted from the August 2022 business combination of Second Sight and NPM. Vivani’s main priority is the further development of the Company’s lead program NPM-115, which is a miniature, six-month, GLP-1 implant candidate for the treatment of chronic weight management and the balance of the Company’s emerging portfolio of miniature, long-acting, GLP-1 implant candidates. In parallel, Vivani’s management team remained committed to identifying and exploring strategic options for the Neuromodulation Division (formerly Second Sight) that will enable further development of its pioneering neurostimulation systems to help patients recover critical body functions.
Because the NPM business did not become a reporting company by conducting an underwritten initial public offering of our common stock, security analysts of brokerage firms may not provide coverage of our company. In addition, investment banks may be less likely to agree to underwrite secondary offerings on our behalf than they might if we became a public reporting company by means of an underwritten initial public offering, because they may be less familiar with our company as a result of more limited coverage by analysts and the media, and because we became public at an early stage in our development. The failure to receive research coverage or support in the market for our shares will have an adverse effect on our ability to develop a liquid market for our common stock.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On November 8, 2024, the Company entered into a private sale transaction with one of its independent directors whereby the Company sold an aggregate of 3,968,253 shares of the Company’s common stock to the director at a price of $1.26 per share, which was the lower of the closing price of the Company’s common stock on the Nasdaq or the 5-day average closing price of the Company’s common stock on the Nasdaq, each immediately prior to the closing date, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the date of the private sale transaction. The gross proceeds from this private sale transaction were $5,000,000.00.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
(a) Private Sale Transaction
The information set forth below is included for the purpose of providing disclosure under “Item 1.01 - Entry into a Material Definitive Agreement,” and “Item 3.02 – Unregistered Sales of Equity Securities” of Form 8-K.
On November 8, 2024, the Company entered into a private sale transaction with one of its independent directors whereby the Company sold an aggregate of
(c) Rule 10b5-1 Trading Plan Disclosure
or were adopted, modified, or by officers or directors of the Company, nor were there any material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors, during the quarter ended September 30, 2024.
Item 6. Exhibits
EXHIBIT INDEX
| Exhibit No. | Exhibit Description |
| 3.2 | Bylaws of Vivani Medical, Inc. effective July 6, 2023 (incorporated by reference to Exhibit 3.2 in the Registrant’s Current Report on Form 8-K filed with the SEC on July 10, 2023). |
| 31.1* | Certification of Principal Executive Officer of Vivani Medical, Inc. pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |
| 31.2* | Certification of Principal Financial and Accounting Officer of Vivani Medical, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 101.INS* | Inline XBRL Instant Document. |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * | Filed herewith. |
| ** | This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing. |
Pursuant to the requirements 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.
| Name | Title | Date | ||
| /s/ Adam Mendelsohn | Chief Executive Officer | November 13, 2024 | ||
| Adam Mendelsohn | (Principal Executive Officer) | |||
| /s/ Brigid A. Makes | Chief Financial Officer | November 13, 2024 | ||
| Brigid A. Makes | (Principal Financial and Accounting Officer) |
| 32 |