enVVeno Medical Corporation — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022; filed August 3, 2022. The company is developing medical devices for chronic venous insufficiency (CVI); its lead product, the VenoValve, was being evaluated in the U.S. SAVVE pivotal trial. The company reported no revenue and expects no significant revenue before successful commercialization.
Financial performance
| Metric | Q2 2022 | Q2 2021 | First half 2022 | First half 2021 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| SG&A expense | $3.9 million | $1.3 million | $7.7 million | $2.5 million |
| Research and development expense | $3.1 million | $1.1 million | $4.6 million | $2.7 million |
| Operating loss | $7.0 million | $2.4 million | $12.3 million | $5.2 million |
| Net loss | $7.1 million | $2.4 million | $12.4 million | $5.2 million |
| Basic and diluted loss per share | $0.63 | $0.28 | $1.10 | $0.72 |
Gross margin and profitability margins are not meaningful because the company reported no revenue. SG&A growth primarily reflected share-based compensation; R&D growth primarily reflected SAVVE trial and related development costs.
Cash, liquidity and balance sheet
- At June 30, 2022, cash and cash equivalents were $9.1 million and investments were $38.1 million, totaling $47.2 million. Working capital was $35.6 million.
- Total assets were $49.9 million; total liabilities were $3.4 million, including operating lease liabilities. No debt was reported.
- For the first half, operating cash use was $7.3 million versus $6.5 million in 2021. Investing cash use was $38.4 million, principally Treasury purchases; financing cash flow was zero, compared with $38.4 million provided in the 2021 period.
- Cash declined from $54.7 million at year-end 2021 to $9.1 million at June 30, as the company shifted funds into investments. At August 1, 2022, cash was $5.5 million and investments were $40.7 million.
- Unrealized investment losses were $0.1 million in the first half, attributed to interest-rate-driven market value changes. The company said it did not consider the losses impairments.
Changes, outlook and risks
- First-half net loss increased $7.2 million year over year. Share-based compensation was $4.5 million, versus $0.3 million in the prior-year period; the filing attributes most of the SG&A increase to this change.
- Management estimated a cash burn of approximately $4 million per quarter and said available resources should fund operations through the end of 2024 and into 2025. It also stated resources were sufficient for obligations due within one year after the report date. These are management estimates, not guarantees.
- Management targeted full SAVVE enrollment by the end of 2022 or early 2023, but COVID-related hospital staffing constraints, paused elective procedures, screening restrictions and patient hesitancy had slowed enrollment. The trial targets 75 patients at up to 20 U.S. sites; the twentieth site became active in April 2022.
- The pivotal trial’s primary endpoints are safety at 30 days and improvement in reflux at six months after implantation. The VenoValve remained investigational and required FDA approval before commercialization.
- A former employee’s consolidated lawsuits, including employment, defamation and discrimination claims, were set for trial on October 24, 2022. The company denied the claims and asserted a counterclaim; potential loss was not reasonably estimable and no accrual was recorded.
- The filing refers investors to the company’s 2021 Form 10-K for risk factors. Management concluded disclosure controls were effective as of June 30, 2022.
Key facts for investors to verify
- Subsequent SAVVE enrollment, trial timing and clinical results, including any further effects from COVID-related disruptions.
- Cash burn, investment maturities and fair-value changes, and whether the stated runway remains achievable.
- FDA development and approval requirements and the uncertainties of bringing the VenoValve to market.
- Outcome and potential financial exposure from the Rankin litigation.
- The filing reports 9.470 million shares issued and outstanding at June 30, yet weighted-average shares of 11.229 million for both the quarter and first half; verify the share-count basis. It also reports 8.023 million potentially dilutive equivalents excluded from diluted loss per share.
- Unrecognized stock-option compensation of $10.6 million, expected to be recognized over a weighted-average remaining vesting period of 1.7 years, and the potential dilution from outstanding options and warrants.