Vivani Medical, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparative period is Q1 2022. Vivani is a preclinical-stage biopharmaceutical company developing long-acting subdermal drug implants using its NanoPortal technology. It reported no revenue.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Research and development expense | $4.0 million | $2.7 million |
| General and administrative expense | $2.6 million | $1.2 million |
| Total operating expenses | $6.6 million | $3.9 million |
| Operating loss | $6.6 million | $3.9 million |
| Other income (expense), net | $0.3 million income | $0.02 million expense |
| Net loss | $6.3 million | $3.9 million |
| Basic and diluted loss per share | $0.12 | $0.11 |
| Cash used in operating activities | $7.0 million | $3.2 million |
Revenue and gross margin are not applicable to the reported results; the filing reports no product revenue. Operating expenses increased about 69% year over year. R&D rose 48%, including approximately $0.6 million of Second Sight-related costs and higher drug-implant development spending. G&A rose 115%, primarily reflecting approximately $1.1 million of Second Sight-related costs; about $0.1 million related to the proposed Cortigent IPO. Higher interest income contributed to the change in other income.
At March 31, 2023, cash and cash equivalents were $38.1 million, restricted cash was $1.4 million, and total cash, cash equivalents and restricted cash were $39.4 million, down $7.0 million from year-end 2022. Working capital was $34.9 million, down $5.8 million. Total liabilities were $6.2 million, including $1.3 million of operating lease liabilities; the filing reports no borrowings. The company estimates available cash will fund planned obligations into the second half of 2024.
Material developments, outlook and risks
- Management said the planned FDA IND filing for lead candidate NPM-119, a GLP-1 implant for type 2 diabetes, and initiation of the LIBERATE-1 study remained on track for mid-2023. The planned study is described as a randomized, Phase 2, 12-week investigation.
- Vivani filed an S-1 for a proposed Cortigent IPO in March 2023 and expected to retain majority ownership after the offering. The strategic plan to focus exclusively on drug implants is subject to completion of that IPO.
- The company expects ongoing losses and negative operating cash flow, with expenses likely to increase as it prepares clinical trials. It will need additional capital; financing may be unavailable or dilutive, and failure to obtain funding could force delays or cuts to development and operations.
- A NIH grant’s final-year funding of $1.0 million was approved in March 2023. The filing also describes a $6.4 million five-year grant supporting a visual cortical prosthesis feasibility study.
- Lease commitments include a 10-year, 4-month Alameda building lease beginning June 1, 2023, with stated payments totaling approximately $31 million before other charges; $1.4 million was deposited to secure a letter of credit. The company also entered into shorter Valencia office and storage subleases in 2023.
- Pixium litigation remains a contingency. A Paris court judgment ordered payment of approximately €1.55 million net of a credit for the prior $1.0 million payment; Vivani recorded a $1.675 million charge in 2022 and said it planned legal challenges. Three European patent oppositions are also pending.
- Management reported effective disclosure controls at the reasonable-assurance level and no material changes in internal control over financial reporting during the quarter. The filing said there were no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Whether the NPM-119 IND filing and LIBERATE-1 trial began on the stated mid-2023 schedule, and what regulatory or clinical updates followed.
- Actual cash burn and financing needs relative to management’s stated runway into the second half of 2024.
- Whether the Cortigent IPO was completed, its proceeds and ownership effects, and the resulting allocation of resources between businesses.
- The status and potential financial impact of the Pixium judgment and patent challenges.
- The full cost and commencement of the long-term Alameda lease and the other new lease commitments.