Vivani Medical, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed March 31, 2023. This is an annual report, not a standalone fourth-quarter report. Vivani is a preclinical biopharmaceutical company developing long-acting subdermal drug implants. It was formed through the August 2022 merger of Nano Precision Medical and Second Sight Medical Products; the filing presents consolidated results and includes Second Sight results only from the merger date.
Financial performance and position
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | No revenue reported | No revenue reported |
| Research and development expense, net of grants | $14.2 million | $11.0 million |
| General and administrative expense, net of grants | $7.1 million | $2.3 million |
| Total operating expenses | $21.2 million | $13.3 million |
| Net loss | $13.9 million | $12.8 million |
| Net loss per share, basic and diluted | $0.36 | $0.39 |
| Cash used in operating activities | $18.8 million | $11.0 million |
| Cash used in investing activities | $0.3 million | $0.6 million |
| Cash provided by financing activities | $63.4 million | $11.6 million |
Liquidity: At year-end, cash and cash equivalents were $45.1 million, restricted cash was $1.4 million, and working capital was $40.7 million. Total assets were $51.1 million and total liabilities were $6.8 million, including $1.7 million in litigation accruals and $1.0 million in current operating lease liabilities. No material debt balance is reported. The $8.0 million SAFE advance was eliminated in the merger. Management estimated available cash would fund planned obligations into the second half of 2024, while noting continued operations depend on profitable operations and/or additional capital.
Margins: Not meaningful because the company reported no revenue. The filing reports no commercial product sales. The 2022 results include a $6.9 million bargain-purchase gain; excluding this non-operating gain, the operating loss was $21.2 million.
Changes and notable items
- Operating expenses increased $7.9 million year over year. R&D rose 29%, primarily from contractors, product development and manufacturing work, higher headcount, and inclusion of neuromodulation costs. G&A rose 205%, reflecting a $1.7 million Pixium litigation charge, merger-related professional and other costs, and neuromodulation expenses.
- Net loss increased $1.1 million despite the bargain-purchase gain and higher interest income. The 2021 and 2022 reported results are not fully comparable: Vivani included Second Sight operations only from August 30, 2022. The filing gives pro forma consolidated net losses of $28.3 million for 2022 and $21.7 million for 2021 as if Second Sight had been included for each full year.
- Cash and working capital increased substantially following the merger, which brought in $55.4 million of cash; financing cash flows also included the $8.0 million SAFE proceeds. The SAFE was cancelled upon merger completion.
- Shares outstanding were 50.7 million at December 31, 2022, versus 36.8 million a year earlier. The merger issued approximately 13.1 million shares. The filing reported 10.3 million warrants and 5.3 million options outstanding at year-end.
Business outlook, risks, and contingencies
- Lead program: NPM-119 is a preclinical six-month exenatide implant candidate for type 2 diabetes. The company planned to submit an IND in 2023 and initiate LIBERATE-1, a 12-week randomized Phase 2 study, in mid-2023, subject to IND clearance. It targeted top-line results in the first half of 2024. These are plans, not assured outcomes.
- Regulatory strategy: Vivani intends to pursue the FDA 505(b)(2) pathway and believes one pivotal trial might support registration, based on preliminary FDA discussions. The FDA may require additional studies, including a cardiovascular outcomes study, or may not accept the proposed pathway. NPM-119 has not entered clinical testing.
- Pipeline and strategic plans: OKV-119, a partnered feline program, produced 12-week exposure data in 2022; Okava is responsible for its development and regulatory funding. NPM-139 for obesity and NPM-159 for NASH remained in feasibility testing under agreements with pharmaceutical companies. In March 2023, Vivani reported filing an S-1 for a proposed Cortigent IPO; Cortigent was expected to remain majority-owned by Vivani.
- Manufacturing and investment: The company planned to move into a new Alameda facility with R&D, laboratory, and GMP manufacturing space. Its 10-year-and-4-month triple-net lease begins June 2023 and has stated aggregate payments of approximately $31 million, before insurance, property taxes, and common-area charges. Vivani relies on external suppliers and contract manufacturers for drug substance and selected processes and had no long-term commercial manufacturing agreements.
- Funding and going concern: Vivani has recurring operating losses and negative operating cash flows, expects increasing development costs, and anticipates no product revenue for the foreseeable future. Additional financing may be needed and may cause dilution or impose restrictive terms. Management’s cash runway estimate is not a guarantee.
- Litigation: A Paris Commercial Court judgment found Vivani’s termination of a proposed Pixium transaction invalid and ordered approximately €1.6 million net additional payment after credit for the $1.0 million previously paid. Vivani accrued $1.7 million and stated it intended to challenge the preliminary judgment. Three Pixium oppositions to European patents were also pending.
- Other risks: Development, clinical, regulatory, safety, manufacturing, intellectual-property, reimbursement, competition, and market-acceptance risks are significant. The filing highlights the FDA’s prior rejection of Intarcia’s competing exenatide implant application, including safety, manufacturing, and dose-delivery concerns. The company also disclosed financial-system, inflation, and cybersecurity risks.
Key investor verification points
- Confirm subsequent progress and actual timing of the NPM-119 IND, LIBERATE-1 study, and any reported clinical results.
- Track cash burn, financing needs, cash runway, and any equity issuance or dilution; verify the status of Cortigent’s proposed IPO and funding arrangements.
- Assess the Alameda facility’s opening, manufacturing readiness, lease costs, and ability to meet clinical supply and quality requirements.
- Monitor the Pixium judgment, any appeal or settlement, and the European patent oppositions.
- Review the audited financial statements and notes for the merger accounting, bargain-purchase gain, leases, litigation accrual, and pro forma comparability. The auditor issued an unqualified opinion on the financial statements and reported no critical audit matters; management assessed internal control over financial reporting as effective, with no auditor attestation required.