Filing summary
Company identity: The supplied filing is Second Sight Medical Products, Inc.’s Form 10-Q, not a filing for Vivani Medical, Inc. Verify the issuer before relying on this summary.
Business context and reporting period
The filing reports the quarter and six months ended June 30, 2020. Second Sight develops implantable visual prosthetics. It had stopped marketing its Argus II product and was concentrating its limited resources on Orion, an investigational visual cortical prosthesis. The six-subject Orion early feasibility study was underway at UCLA and Baylor, but scheduled visits and the FLORA-20 validation work were affected by COVID-19.
Financial results and liquidity
Amounts below are in millions of dollars unless noted.
- Revenue: $0 for both Q2 and the first half of 2020, versus $1.282 million and $2.410 million, respectively, in 2019. The company said it did not expect further Argus II sales.
- Profit and margins: Q2 net loss was $3.100 million versus $8.440 million a year earlier; first-half net loss was $11.986 million versus $18.140 million. With no 2020 sales, there was no gross profit or gross margin. Q2 basic and diluted loss per share was $0.15, compared with $0.56; first-half loss per share was $0.67, compared with $1.28.
- Expenses: Q2 operating expenses fell to $3.116 million from $8.790 million. First-half operating expenses fell to $12.020 million from $18.955 million. Reductions reflected workforce cuts, curtailed development activity, and the end of Argus II commercial activities; restructuring charges continued.
- Cash flow: First-half cash used in operations was $13.891 million, versus $13.785 million in 2019. Investing used $0.331 million; financing provided $6.398 million, principally from the May stock offering. Cash declined $7.822 million to $3.505 million.
- Liquidity and balance sheet: Working capital was $1.9 million at June 30, down from $6.2 million at year-end 2019. Total assets were $4.805 million and total liabilities $2.722 million; stockholders’ equity was $2.083 million. The balance sheet showed no borrowings or lease liabilities at June 30. Management said available funds were insufficient for the next 12 months from the financial statements’ issuance and disclosed substantial doubt about the company’s ability to continue as a going concern.
Changes, outlook, risks, and unusual items
- Compared with 2019, the company reported no product sales or implants in the first half of 2020. It cut most staff in March and April and reported approximately 10 employees retained at the time described in the filing; as of August 10, it reported 11 employees, including three rehired to focus on Orion.
- The May 2020 public offering of 7.5 million shares generated approximately $6.7 million in net proceeds. Management said this was expected to fund operations into Q4 2020, but also stated that funds were insufficient for the following 12 months and additional financing was required. No assurance was given that financing or strategic arrangements would be available.
- COVID-19 contributed to financing constraints, staffing reductions, clinical-visit delays, and suspension of FLORA-20 validation. The filing warns that funding shortfalls could further delay, curtail, or stop Orion development and operations.
- The company ceased its former facility leases, paid a $150,000 termination fee, and agreed to pay $210,730 to bring rent current. A replacement, smaller-space lease was disclosed after quarter-end at $16,000 per month, subject to monthly renewal after December 2020.
- Nasdaq notified the company in July that it did not meet the minimum market-value requirement and also cited deficiencies in equity or income listing standards. The stated compliance period for the market-value issue ran through January 19, 2021; delisting remained a risk. Other board and committee listing deficiencies had separate cure periods, and the compensation committee issue was reported resolved.
- An Orion study participant’s counsel demanded $3.0 million over alleged claims, including alleged clinical-protocol violations. The company said it believed the claims lacked merit; litigation remained possible. Patent oppositions involving Pixium Vision were also pending.
- Management described early Orion safety and efficacy findings as encouraging, but noted that the study was small, results were not peer-reviewed, and early findings might not predict pivotal-trial outcomes. The FDA had granted Orion Breakthrough Devices Program designation; this is not marketing approval.
Important facts for investors to verify
- Confirm the issuer: the filing is for Second Sight Medical Products, Inc., rather than Vivani Medical, Inc.
- Assess current cash runway, financing needs, and whether new funding, grants, partnerships, or other strategic alternatives were secured.
- Check subsequent developments in Nasdaq listing compliance and any risk of delisting.
- Verify the status of Orion patient visits, FLORA-20 validation, clinical-trial plans, and any regulatory milestones.
- Review developments in the $3.0 million participant claim and the patent proceedings.
- Consider the effects of the Argus II wind-down, warranty obligations, and further restructuring on remaining operations.