Filing identity and reporting period
The supplied filing is Second Sight Medical Products, Inc. and subsidiary’s unaudited Form 10-Q for the quarter ended September 30, 2020, filed November 12, 2020. This does not match the request metadata naming Vivani Medical, Inc.; verify the issuer before relying on this summary. Financial amounts below are in millions of dollars unless stated otherwise.
Business context
Second Sight develops implantable visual prosthetics. It had stopped marketing Argus II and focused its reduced operations on developing Orion, an investigational visual cortical prosthesis with FDA Breakthrough Devices designation. Orion’s six-subject early feasibility study was underway at UCLA and Baylor; scheduled visits had been disrupted by COVID-19. The company reported no sales in the quarter or first nine months of 2020.
Financial results and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | $0 | $0.472 | $0 | $2.882 |
| Operating expenses | $1.602 | $7.727 | $13.622 | $26.682 |
| Operating loss | $(1.602) | $(7.619) | $(13.622) | $(25.828) |
| Net loss | $(1.603) | $(7.584) | $(13.589) | $(25.724) |
| Loss per share, basic and diluted | $(0.07) | $(0.49) | $(0.69) | $(1.79) |
Gross margin is not meaningful for 2020 because the company reported no revenue or cost of sales. Nine-month operating cash use was $15.369 million, compared with $20.243 million in 2019. Investing activities provided $0.067 million; financing activities provided $6.398 million, primarily from the May equity offering.
Cash and cash equivalents fell to $2.437 million at September 30, 2020 from $11.327 million at December 31, 2019. Current assets were $3.309 million and current liabilities $2.980 million, leaving working capital of approximately $0.329 million. Total liabilities were $2.980 million; no lease liabilities remained after termination of the former facility leases. Stockholders’ equity was $0.542 million. The filing reports no funded debt balance.
Changes and notable items
- Revenue fell to zero following the cessation of Argus II marketing; management said it did not expect future Argus II revenue.
- Operating expenses declined substantially year over year, reflecting workforce reductions, curtailed research and clinical activity, and elimination of Argus II commercial activities. Nine-month restructuring charges were $2.229 million in 2020 versus $3.297 million in 2019; 2020 charges included inventory and fixed-asset impairments and severance and wind-down costs.
- The May 2020 offering of 7.5 million common shares generated approximately $6.7 million net proceeds. Shares outstanding increased from 15.643 million at year-end 2019 to 23.118 million at September 30, 2020. The offering also included underwriter warrants.
- The company terminated its larger facility lease and moved to a smaller space at $16,000 monthly rent, compared with prior base rent of $38,000 plus maintenance charges.
- Management reported encouraging preliminary Orion results: five of six subjects performed better with the system on in square localization, all six in direction-of-motion testing, and five of six showed benefit in the FLORA assessment. The filing cautions that these early results are not necessarily predictive of larger trials; no peer-reviewed Orion data were available.
Outlook, risks and contingencies
Management stated that available funds were insufficient to support operations for the next 12 months from issuance of the statements and that substantial doubt existed about the company’s ability to continue as a going concern. It had previously said the May financing could sustain operations into the first quarter of 2021. Additional funding, partnerships, grants, or other strategic arrangements were needed, but not assured; failure to secure them could force further reductions or suspension of development. The independent auditor had also raised substantial doubt in its report on the 2019 financial statements.
COVID-19 delayed clinical visits and paused validation work for the FLORA assessment; it also posed risks to suppliers, staffing, and development. Nasdaq had notified the company of deficiencies involving market value of listed securities, stockholders’ equity or net income, and minimum bid price. The filing described cure periods and possible delisting if requirements were not met. A participant in the Orion study demanded $3.0 million over alleged claims, including contract and clinical-protocol allegations; the company said it believed the claims were without merit. Patent oppositions involving Pixium Vision were pending in Europe.
Investor facts to verify
- Confirm that this Second Sight filing, rather than a Vivani Medical filing, is the intended document.
- Assess cash burn and the timing, amount, and terms of any subsequent financing; the filing’s runway statements indicate significant funding risk.
- Check subsequent Nasdaq compliance notices and the status of the company’s listing.
- Verify Orion study progress, FLORA validation, and whether pivotal-trial plans and funding were secured.
- Monitor the $3.0 million study-participant demand and the pending patent proceedings.