Second Sight Medical Products, Inc. — FY2020 Form 10-K
Filing identity: The supplied filing is for Second Sight Medical Products, Inc. (NASDAQ: EYES), not Vivani Medical, Inc. It is an annual report for the fiscal year ended December 31, 2020, rather than a standalone quarterly filing.
Business context
Second Sight had discontinued marketing Argus II and was focusing resources on developing Orion, an investigational cortical visual prosthesis. The six-subject Orion early feasibility study reported encouraging preliminary measures of visual function and daily-living benefit, but the results were limited and not peer-reviewed. The company had no commercial product revenue in 2020.
Financial performance and liquidity
| Metric | FY2020 | FY2019 |
|---|---|---|
| Net sales | $0 | $3.379 million |
| Gross profit | $0.500 million | $1.227 million |
| Operating expenses | $15.396 million | $35.181 million |
| Operating loss | $14.896 million | $33.954 million |
| Net loss | $14.880 million | $33.592 million |
| Net loss per share | $0.72 | $2.28 |
| Cash used in operations | $16.822 million | $27.629 million |
The reported FY2020 gross profit despite zero sales reflects a $0.5 million reduction in Argus II warranty expense after production ended; it does not represent revenue-generating operations. The lower net loss primarily reflected reduced operating costs after Argus II commercial activities ceased.
At year-end, cash and cash equivalents were $3.177 million, versus $11.327 million a year earlier; working capital was negative $0.863 million, versus positive $6.151 million. Total assets were $4.460 million and total liabilities $5.132 million, leaving a $0.672 million stockholders’ deficit. The company reported $2.2 million of unsecured debt borrowed in December 2020 at 12% annual interest, due with accrued interest on December 31, 2021.
Financing activities provided $8.598 million in 2020, including approximately $6.7 million net proceeds from a May share offering and $2.2 million in debt. Management said existing resources were insufficient for twelve months of operations from the report date; the auditor also cited substantial doubt about the company’s ability to continue as a going concern. The filing does not provide a clear committed financing plan sufficient to resolve that uncertainty.
Material changes, outlook, and risks
- COVID-19 and financing constraints led to major staff reductions, lower spending, and pauses or delays in clinical activity. Orion study visits resumed at UCLA in September 2020 and Baylor in December 2020; validation of the planned FLORA-20 efficacy measure had been interrupted.
- Management expected to complete FLORA validation in the second half of 2021 and anticipated an Orion pivotal-trial IDE filing in the first half of 2022. Trial design remained under discussion with FDA; the company estimated at least 45 pre-market subjects and 12 months of follow-up, subject to regulatory agreement and available funding.
- On January 5, 2021, the company agreed a framework for a proposed combination with Pixium Vision, including a planned private placement raising at least $25 million, Pixium asset contributions in exchange for shares, and transfer of Orion assets to a subsidiary with a partial spin-off to shareholders. Completion was conditional and not assured; failure or delay could impair operations and trigger a termination fee of up to $1 million in specified circumstances.
- FDA approval of redesigned Argus 2s external hardware was reported after year-end. Whether to produce it was pending the Pixium transaction and a decision by the prospective new management team.
- Other significant risks include Nasdaq listing noncompliance (extension to regain compliance through May 30, 2021), potential dilution and reliance on related-party financing, uncertain clinical and regulatory outcomes, reimbursement uncertainty, and possible device reliability or adverse-event issues. One Orion feasibility-study subject had a prior seizure; electrode impedance/perception changes had also been reported in two subjects, with causes not conclusively established.
Most important facts for investors to verify
- Current cash, burn rate, and whether financing beyond the reported runway was secured.
- Status and closing terms of the Pixium transaction, including the $25 million fundraising condition, shareholder approvals, and resulting dilution and asset structure.
- Nasdaq compliance status and any subsequent extension or delisting action.
- Progress on FLORA-20 validation, FDA alignment, IDE timing, and funding for the proposed pivotal trial.
- Further Orion safety, efficacy, and device-reliability data, plus management’s decision on Argus 2s production and ongoing support obligations.