Vivani Medical, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Financial amounts below are in U.S. dollars; millions unless noted. Vivani is a preclinical-stage company developing long-acting subdermal drug implants using its NanoPortal technology. It reported no revenue and expects continued operating losses while developing its products.
Key financial metrics
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | No revenue reported | No revenue reported | No revenue reported | No revenue reported |
| Research and development expense | $3.9 | $3.2 | $7.8 | $5.9 |
| General and administrative expense | $3.1 | $0.9 | $5.8 | $2.1 |
| Total operating expenses / operating loss | $7.0 / $(7.0) | $4.1 / $(4.1) | $13.6 / $(13.6) | $8.0 / $(8.0) |
| Other income (expense), net | $0.5 | $(0.0) | $0.8 | $(0.0) |
| Net loss | $(6.5) | $(4.1) | $(12.8) | $(8.0) |
| Basic loss per share | $(0.13) | $(0.11) | $(0.25) | $(0.22) |
Margins are not meaningful because the company reported no revenue. At June 30, cash and cash equivalents were $32.5 million, with an additional $1.4 million of restricted cash. Cash, cash equivalents and restricted cash totaled $33.9 million, down $12.6 million from year-end 2022. Working capital was $29.1 million, versus $40.7 million at December 31, 2022.
Six-month operating cash use was $12.5 million, compared with $6.6 million in the prior-year period. Investing cash use was $0.1 million; financing provided less than $0.1 million. The company disclosed no conventional debt balance, but reported $21.0 million of operating lease liabilities, including $20.1 million long term. Total liabilities were $27.2 million, versus $6.8 million at year-end, largely reflecting lease recognition.
Changes versus the prior comparable period
- Q2 net loss widened to $6.5 million from $4.1 million; six-month net loss widened to $12.8 million from $8.0 million.
- R&D and G&A expenses increased in both periods. Management attributed the increases to the inclusion of Second Sight costs following the August 2022 merger, higher drug-implant development spending, public-company costs and payroll. Q2 G&A also included approximately $0.2 million for the planned Cortigent IPO.
- Other income increased, primarily because cash acquired in the merger generated interest income.
- Cash burn increased year over year. The prior-year six-month financing cash inflow included $8.0 million from a SAFE advance; no such proceeds were received in 2023.
- Vivani recognized substantial new lease assets and liabilities, including a ten-year Alameda facility lease with approximately $31.0 million of contractual payments.
Outlook, risks and unusual items
- Management estimates available cash will fund planned obligations through September 2024. It expects continuing losses and negative operating cash flows, with expenses likely to rise as development and clinical work proceeds. Additional financing may be required; availability and terms are uncertain and could result in dilution, restrictions or reduced development activity.
- After quarter-end, the company completed clinical-supply manufacturing for NPM-119, submitted an IND for the proposed LIBERATE-1 first-in-human study on July 14, 2023, and was verbally notified by the FDA on August 11 that the IND was on clinical hold. The FDA had not yet provided its formal letter as of the filing. Enrollment was expected in the second half of 2023 only if regulatory clearance is obtained; interim data were anticipated in the first half of 2024 and top-line results in the second half of 2024, subject to the study proceeding as planned.
- A Paris court judgment in the Pixium dispute ordered a net payment of approximately €1.55 million after credit for a prior payment. Vivani appealed on May 24, 2023; the company had recorded a $1.675 million charge in 2022. Three Pixium challenges to Vivani-owned European patents also remain pending.
- Vivani contributed its neuromodulation assets to wholly owned Cortigent and had filed for a proposed Cortigent IPO. Vivani said it intended to focus exclusively on drug implants subject to completion of that IPO.
- The company reported effective disclosure controls at June 30, 2023 and no material change in internal control over financial reporting during the six-month period. It also reincorporated in Delaware effective July 5, 2023.
Investor verification priorities
- Obtain the FDA’s formal clinical-hold letter, identify any required additional work, and confirm the resulting NPM-119 development timeline and costs.
- Track cash burn, financing needs and the stated September 2024 cash runway, especially as clinical spending changes.
- Review the Alameda lease commitments and related operating costs alongside the company’s liquidity.
- Monitor the Pixium appeal, potential payment exposure and pending patent oppositions.
- Confirm Cortigent IPO status and strategy, and assess potential dilution from outstanding warrants, options and equity awards.