Vivani Medical, Inc. — Q1 2024 Form 10-Q
Business context and period. This unaudited report covers the three months ended March 31, 2024, compared with Q1 2023. Vivani is a preclinical biopharmaceutical company developing long-acting subdermal drug implants using its NanoPortal technology. It also operates a neurostimulation business through Cortigent. Neither division generates revenue.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $3.7 million | $4.0 million; down 6% |
| General and administrative expense | $2.5 million | $2.6 million; down 5% |
| Total operating expenses / operating loss | $6.2 million | $6.6 million |
| Other income, net | $0.2 million | $0.3 million |
| Net loss | $6.0 million | $6.3 million |
| Net loss per share, basic and diluted | $0.12 | $0.12 |
| Operating cash used | $4.5 million | $7.0 million |
| Investing cash used | $0.2 million | $0.04 million |
| Financing cash provided | $13.7 million | None |
Margins are not meaningful because the company had no revenue. Cash and cash equivalents were $29.6 million at quarter-end; including $1.3 million of restricted cash, cash, cash equivalents and restricted cash totaled $31.0 million. Working capital was $25.4 million, up from $17.3 million at December 31, 2023. Total liabilities were $25.1 million, including $20.4 million of operating lease liabilities; the filing reports no conventional debt balance. The company estimates available cash will fund planned obligations into the second half of 2025, but states that continued operations depend on raising capital and/or developing profitable operations.
Material changes and developments
- On March 5, Vivani received $15.0 million gross proceeds from a registered offering of 3.95 million shares and warrants to buy 3.95 million shares at $3.80 per share. After $1.3 million of issuance costs, net proceeds were $13.7 million. Shares outstanding rose from 51.0 million at year-end to 55.0 million at March 31.
- Research and development expense declined primarily due to lower neurostimulation and drug-implant development costs, partly offset by increased personnel and Alameda facility costs. General and administrative expense declined primarily due to lower neurostimulation costs, partly offset by personnel, rent and professional fees.
- Operating cash use improved year over year, while quarterly net loss remained substantial. The company continues to expect operating losses and negative operating cash flows for the foreseeable future.
- Management emphasized the obesity portfolio. A February 2024 mouse study reported approximately 20% weight loss with NPM-115 versus sham after 28 days, comparable in that study to injected semaglutide. Vivani also disclosed NPM-139, a semaglutide implant candidate being developed for chronic weight management, with potential once-yearly administration.
Outlook, risks and contingencies
- The NPM-119 type 2 diabetes study remains on full FDA clinical hold, primarily because of insufficient chemistry, manufacturing and controls information. The company said it remained on track to provide requested information in the first half of 2024; the filing does not establish that the hold was lifted.
- Vivani expects research and development spending to increase as it advances programs and clinical work. Clinical development is lengthy, costly and uncertain, and the company does not expect product revenue before development and marketing approval.
- On April 22, 2024, after quarter-end, Vivani entered an at-the-market sales agreement permitting up to $75.0 million of common stock sales at its discretion. Jefferies may receive a commission of up to 3% of gross proceeds. No sales were required by the agreement.
- Additional equity or equity-linked financing could dilute existing shareholders. If funding is unavailable on acceptable terms, Vivani may have to delay, curtail or discontinue programs or reduce operations.
- The Pixium dispute remains in appeal in France. A prior court judgment ordered payment of approximately €1.55 million net of a credit for the earlier $1.0 million payment; Vivani has appealed, and Pixium’s liquidator is participating. The company has a $1.675 million litigation accrual. A hearing on Pixium’s request to strike Vivani’s appeal was scheduled for June 2024.
- A separate European patent opposition could affect Cortigent’s ability to block competitors, though the company believes a successful challenge would not materially affect its operations. The company disclosed no material changes to previously reported risk factors.
- Management concluded disclosure controls and procedures were effective at the reasonable-assurance level as of March 31, 2024.
Important facts for investors to verify
- Whether FDA’s NPM-119 clinical hold has been addressed and what regulatory and clinical milestones follow.
- Whether NPM-115 and NPM-139 preclinical results translate into durable, clinically meaningful outcomes; the reported NPM-115 result is from a mouse study, not a human trial.
- Actual cash burn, spending plans and the assumptions underlying management’s runway estimate into the second half of 2025.
- Any future ATM sales, additional financing, warrant exercises and resulting dilution; the March offering included 3.95 million immediately exercisable warrants, and total warrants outstanding were 10.96 million at quarter-end.
- Developments in the Pixium litigation and the potential payment or appeal outcome, as well as the Cortigent patent opposition.