Business context and reporting period
enVVeno Medical Corporation (formerly Hancock Jaffe Laboratories, Inc.; Nasdaq: NVNO) filed this unaudited Form 10-Q for the quarter and nine months ended September 30, 2021. The development-stage med-tech company is focused on venous disease and is evaluating its VenoValve in the U.S. SAVVE pivotal trial. It also began early development of enVVe and deferred further CoreoGraft development. The company reports no material product revenue.
Financial results and liquidity
| Metric | Three months ended Sept. 30, 2021 | Nine months ended Sept. 30, 2021 | Comparable 2020 period |
|---|---|---|---|
| Revenue | No material revenue reported | No material revenue reported | No material revenue reported |
| Operating expenses | $2.71 million | $7.90 million | $1.92 million and $4.98 million, respectively |
| Net loss | $2.39 million | $7.54 million | $1.97 million and $4.76 million, respectively |
| Loss per share, basic and diluted | $0.26 | $0.96 | $1.38 and $4.70, respectively |
At September 30, 2021, cash and cash equivalents were $57.90 million, working capital was $57.09 million, total assets were $59.17 million, and total liabilities were $1.12 million. The PPP note was forgiven, leaving no note payable; remaining liabilities were primarily accounts payable, accruals, and lease obligations. No gross margin is meaningful because the filing reports no material revenue.
For the first nine months, operating cash use was $8.75 million, investing cash use was $0.30 million, and financing provided $57.61 million. Cash increased $48.56 million to $57.90 million. Financing included $38.13 million net from a February public offering, $18.27 million from a September registered direct offering, and $0.97 million from ATM sales. Management said available cash was sufficient to fund operations for at least one year after the report date; it expects continued losses and may need further capital to commercialize products.
Material changes and developments
- For the quarter, net loss increased 21% year over year, while operating expenses rose by approximately $0.8 million. For the nine months, net loss increased 58% and operating expenses rose by approximately $2.9 million.
- R&D expense roughly doubled for the nine-month period to $3.95 million, primarily from SAVVE trial preparation, added personnel, consulting, testing, and lab costs. SG&A rose to $3.95 million, mainly from compensation, administration, insurance, and investor outreach.
- The company raised substantial equity capital and reported 9.47 million common shares outstanding on its cover as of November 9. Warrants and options representing approximately 5.04 million potential shares were excluded from diluted loss per share as anti-dilutive.
- The $312,700 PPP loan and accrued interest were forgiven in September, producing a one-time $312,700 gain.
- The filing’s equity statement lists 9,466,240 shares at September 30, while the balance sheet lists 9,468,324; investors should verify the share-count difference.
Outlook, risks, contingencies, and unusual items
- The SAVVE trial is planned as a single-arm, multicenter study of 75 patients at up to 20 U.S. sites. The first patient was implanted in October 2021; five sites were actively enrolling at that time. FDA approval is required before commercialization.
- The company reported favorable one-year results from an 11-patient first-in-human study and two-year follow-up observations for eight patients. These small-study results are not a substitute for pivotal-trial evidence. VenoValve has FDA Breakthrough Device Designation.
- Management expects losses to continue and cautions that additional capital may be needed; access to financing on acceptable terms is not assured. COVID-19-related disruption is also identified as a risk.
- Two lawsuits brought by a former employee allege employment, defamation, discrimination, and other claims. The company intends to defend them; potential loss could not be reasonably estimated and no accrual was recorded.
- Disclosure controls were deemed ineffective due to a material weakness in accounting controls for warrants issued in a 2020 financing. Management said the weakness had not caused revision of prior statements and was developing a remediation plan.
- Cash balances included $57.65 million uninsured at U.S. banks. The filing provides no specific financial guidance.
Most important facts for investors to verify
- SAVVE enrollment pace, trial safety and effectiveness outcomes, and the timing and requirements for FDA review.
- Cash burn and whether available funds remain sufficient for the trial and other development plans; the need and terms of future financing.
- The reported common-share count discrepancy and the potential dilution from warrants, options, and the ATM program.
- Progress in remediating the material weakness and any subsequent changes in disclosure controls.
- Developments in the former employee litigation and any change in the company’s assessment of potential loss.