Vivani Medical(VANI) - 2025 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the reported period Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes providing context and breakdowns of accounting policies, segment information, equity activities, and commitments Condensed Consolidated Balance Sheets This section provides a comparative overview of the company's financial position at the end of March 2025 and December 2024 | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (QoQ) | | :-------------------------- | :----------------------------- | :------------------------------ | :----------- | | Total Assets | $35,452 | $41,561 | -$6,109 | | Total Liabilities | $23,828 | $23,951 | -$123 | | Total Stockholders' Equity | $11,624 | $17,610 | -$5,986 | Condensed Consolidated Statements of Operations This section details the company's financial performance, including revenues, expenses, and net loss, for the three months ended March 31, 2025 and 2024 | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :---------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------- | | Research and development, net of grants | $4,217 | $3,726 | +$491 | | General and administrative, net of grants | $2,340 | $2,501 | -$161 | | Total operating expenses | $6,557 | $6,227 | +$330 | | Net loss | $(6,302) | $(6,039) | -$(263) | | Net loss per common share - basic and diluted | $(0.11) | $(0.12) | +$0.01 | Condensed Consolidated Statements of Comprehensive Loss This section presents the company's comprehensive loss, including net loss and other comprehensive income items, for the three months ended March 31, 2025 and 2024 | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :----------- | | Net loss | $(6,302) | $(6,039) | -$(263) | | Foreign currency translation adjustments | $(6) | $(52) | +$46 | | Comprehensive loss | $(6,308) | $(6,091) | -$(217) | Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in the company's stockholders' equity, reflecting net loss, stock-based compensation, and stock issuances, for the three months ended March 31, 2025 and 2024 | Metric | Balance, January 1, 2025 (in thousands) | Balance, March 31, 2025 (in thousands) | Change | | :-------------------------- | :------------------------------------- | :------------------------------------ | :------- | | Total Stockholders' Equity | $17,610 | $11,624 | -$5,986 | | Net loss (Q1 2025) | - | $(6,302) | | | Stock-based compensation expense (Q1 2025) | - | $350 | | | Issuance of common stock (net) (Q1 2025) | - | $(28) | | Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025 and 2024 | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :---------------------------------- | :------------------------------------------ | :------------------------------------------ | :----------- | | Net cash used in operating activities | $(5,163) | $(4,512) | -$(651) | | Net cash used in investing activities | $(5) | $(182) | +$177 | | Net cash used in financing activities | $(170) | $13,690 | -$(13,860) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(5,344) | $8,994 | -$(14,338) | | Cash, cash equivalents and restricted cash balance at end of period | $14,346 | $30,986 | -$(16,640) | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and breakdowns of the accounting policies, significant transactions, and financial statement line items Note 1. Organization and Business Operations This note describes the company's core business, its drug development programs, strategic initiatives, and current operational status - Vivani Medical, Inc. is a clinical-stage biopharmaceutical company developing miniaturized, subdermal drug implants using its NanoPortal™ technology for chronic disease treatment, focusing on medication non-adherence[24][25][108] - Lead programs include NPM-115 (six-month GLP-1 implant for chronic weight management), NPM-139 (semaglutide implant for chronic weight management), NPM-119 (exenatide implant for type 2 diabetes), and OKV-119 (GLP-1 implant for cardiometabolic disorders in animals, in collaboration with Okava)[26][110] - The company is pursuing a spin-off of its Neurostimulation Division (Cortigent) into an independent public company, shifting from an IPO strategy announced in March 2025[28][112] - The FDA lifted the clinical hold on NPM-119 on June 13, 2024, allowing the first-in-human study for type 2 diabetes to proceed. The LIBERATE-1™ study for NPM-115 (exenatide implant) in obese/overweight patients initiated screening and enrollment in Australia at the end of 2024, with the first implant administered and full enrollment achieved by March 13, 2025; top-line results are anticipated in mid-2025[30][36][41] - Management estimates that currently available cash will provide sufficient funds for at least the next twelve months, but continued operation as a going concern depends on developing profitable operations or raising additional capital[45][142] Note 2. Basis of Presentation and Significant Accounting Policies This note outlines the accounting principles applied in preparing the financial statements and discusses recently issued accounting pronouncements - The company operates with two reporting segments: Biopharm Division (primary focus, includes NPM and Vivani Medical Australia Pty Ltd.) and Neurostimulation Division (includes Cortigent and Swiss subsidiary, planned for spin-off). Neither division is currently revenue-producing[50][102] - Recently issued accounting pronouncements include ASU 2024-03 (Disaggregation of Income Statement Expenses, effective Jan 1, 2027) and ASU 2023-09 (Improvements to Income Tax Disclosures, effective after Dec 15, 2024). The company does not expect a material effect from ASU 2024-03[53][54] Note 3. Concentration of Risk This note identifies key financial and operational risks, including credit risk from financial instruments and risks associated with foreign operations - The company's financial instruments (cash, certificates of deposit, and money market funds) are subject to credit risk, managed by maintaining funds with reputable financial institutions[55] - Foreign operations include assets in Switzerland (approx. $26,000 as of March 31, 2025 and 2024) and Australia (approx. $557,000 as of March 31, 2025, up from $21,000 in 2024), with potential for disruption from unanticipated events[56] Note 4. Fair Value Measurements This note details the fair value hierarchy and measurements for the company's financial assets, primarily cash equivalents | Asset Category | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------- | :----------------------------- | :------------------------------ | | Certificates of deposit | $7,267 | $9,996 | | Money market funds | $4,805 | $7,441 | | Total Cash equivalents | $12,072 | $17,437 | Note 5. Insurance Premium Financing This note describes the company's financing arrangement for insurance premiums, including the principal amount and interest rate - In September 2024, the company entered a finance agreement for insurance premiums totaling approximately $426,000 at 7.2% interest. The outstanding balance as of March 31, 2025, was approximately $95,000[64] Note 6. Selected Balance Sheet Detail This note provides specific details for selected balance sheet accounts, such as property and equipment | Asset Category | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------ | | Property and equipment, net | $1,609 | $1,693 | Note 7. Equity Securities This note details the company's equity structure, including common stock outstanding, recent offerings, and private sales - As of March 31, 2025, Vivani had 59,243,903 shares of common stock outstanding, with 300,000,000 authorized. No preferred stock was issued[66] - In March 2024, the company completed a registered direct offering, selling 3,947,368 common shares and warrants for $3.80 per unit, generating $13.7 million in net proceeds after $1.3 million in issuance costs[67][119][132] - An Open Market Sale Agreement (ATM) with Jefferies LLC, effective April 22, 2024, allows the company to sell up to $75.0 million in common stock. During Q1 2025, 9,215 shares were issued for $10,000 gross proceeds, resulting in negative net proceeds of $28,000 after $37,000 in expenses[68][71][120] - The company completed a private sale transaction on November 8, 2024, selling 3,968,253 shares to a director for $5.0 million. Another private sale on March 26, 2025, will sell 7,366,071 shares to an affiliated entity for approximately $8.25 million[72][73][126] Note 8. Warrants This note provides information on outstanding warrants, including their quantity, weighted average exercise price, and remaining contractual life | Metric | December 31, 2024 | March 31, 2025 | Change | | :-------------------------------- | :---------------- | :--------------- | :----- | | Warrants outstanding (in thousands) | 9,340 | 8,569 | -771 | | Weighted Average Exercise Price | $3.42 | $3.45 | +$0.03 | | Weighted Average Remaining Contractual Life (in Years) | 1.6 | 1.5 | -0.1 | Note 9. Stock-Based Compensation This note details the company's stock option and RSU activity, along with the associated stock-based compensation expense recognized | Metric | December 31, 2024 | March 31, 2025 | Change | | :------------------------------------------------ | :---------------- | :--------------- | :----- | | Stock Options outstanding (in thousands) | 6,809 | 7,051 | +242 | | Weighted Average Exercise Price (Stock Options) | $2.52 | $2.47 | -$0.05 | | RSUs outstanding (in thousands) | 695 | 695 | 0 | | Expense Category | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :----------- | | Research and development | $196 | $235 | -$39 | | General and administrative | $154 | $118 | +$36 | | Total stock-based compensation expense | $350 | $353 | -$3 | Note 10. Net Loss Per Share This note presents the calculation of basic and diluted net loss per common share and lists anti-dilutive securities | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | :----------- | | Net loss per common share - basic and diluted | $(0.11) | $(0.12) | +$0.01 | | Weighted average common shares outstanding - basic and diluted (in thousands) | 59,236 | 52,202 | +7,034 | | Anti-dilutive Securities (in thousands) | March 31, 2025 | March 31, 2024 | | :-------------------------------------- | :--------------- | :--------------- | | Stock options | 7,051 | 5,880 | | Unvested restricted stock units | 695 | 403 | | Warrants to purchase common stock | 8,569 | 10,961 | | Total | 16,315 | 17,244 | Note 11. Right-of-use Assets and Operating Lease Liabilities This note details the company's operating lease assets and liabilities, including lease terms and discount rates | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Operating lease right-of-use assets, net | $17,523 | $17,957 | | Lease liability, current portion | $1,311 | $1,348 | | Lease liability, noncurrent portion | $17,629 | $17,965 | | Total lease liabilities | $18,940 | $19,313 | | Lease Cost | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------- | :------------------------------------------ | :------------------------------------------ | | Operating lease cost | $800 | $800 | | Variable lease cost | $200 | $100 | - Weighted average remaining lease term is 8.50 years with a weighted average discount rate of 8.38% as of March 31, 2025[95] Note 12. Commitments and Contingencies This note discloses the company's legal proceedings, patent challenges, and other contractual obligations - The company abandoned a European patent challenged by Pixium Vision SA in February 2025, which is not expected to materially affect operations[98][172] - Ongoing litigation with Pixium Vision SA regarding a terminated MOU. The Paris Commercial Court ordered Vivani to pay €2.5 million (net €1.55 million after credit), which Vivani appealed. Vivani's appeal was struck out on October 23, 2024, for failure to enforce the judgment, but can be reinstated within two years upon evidence of enforcement or agreement[99][100][173] - Clinical trial expenses were $35,000 for the three months ended March 31, 2025, compared to $6,000 for the same period in 2024[97] Note 13. Segment Information This note provides financial data disaggregated by the company's operating segments: Biopharm and Neurostimulation Divisions | Segment | Operating Expenses (Q1 2025, in thousands) | Net Loss (Q1 2025, in thousands) | Total Assets (March 31, 2025, in thousands) | | :-------------------- | :---------------------------------------- | :------------------------------- | :------------------------------------------ | | Biopharm Division | $6,000 | $5,600 | $34,700 | | Neurostimulation Division | $600 | $700 | $700 | Note 14. Subsequent Event This note describes significant events that occurred after the balance sheet date but before the financial statements were issued - On May 12, 2025, the company entered a private sale agreement to sell 2,912,621 shares of common stock to an affiliated entity for approximately $3.0 million[106][130][137] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, including a business overview, details on funding and liquidity, critical accounting policies, and a comparative analysis of operating expenses and other income for the reported periods Business Overview This section provides an overview of the company's biopharmaceutical focus, NanoPortal™ technology, and key drug development programs - Vivani is a clinical-stage biopharmaceutical company focused on developing miniaturized, subdermal drug implants using its NanoPortal™ technology to address medication non-adherence in chronic diseases[108][109] - Key programs include NPM-115 (GLP-1 implant for weight management), NPM-139 (semaglutide implant for weight management), NPM-119 (exenatide implant for type 2 diabetes), and OKV-119 (GLP-1 implant for animal cardiometabolic disorders)[110] - The company is pursuing a spin-off of its Neurostimulation Division (Cortigent) into an independent public company, shifting from an IPO strategy[112] - The LIBERATE-1 clinical trial for NPM-115 (exenatide implant) in obese and overweight patients initiated screening and enrollment in Australia at the end of 2024, with the first implant administered and full enrollment achieved by March 13, 2025. Top-line results are expected in mid-2025[125][127][128] Funding and Liquidity This section discusses the company's primary sources of funding, including equity sales and grants, and its capital-raising activities - Operations are primarily funded through equity sales. Recent activities include a March 2024 registered direct offering ($13.7 million net proceeds), an April 2024 Open Market Sale Agreement (up to $75.0 million), a November 2024 private sale ($5.0 million), and a March 2025 private sale ($8.25 million)[131][132][133] - The company also receives grants, such as from the NIH, to fund specific development programs, with $35,000 received in Q1 2025[138] Liquidity This section assesses the company's ability to meet its short-term and long-term financial obligations, highlighting cash position and working capital - The company has incurred recurring operating losses and negative operating cash flows since inception and expects this to continue, necessitating additional capital to fund operations and clinical trials[139][140][157] - Management estimates currently available cash will provide sufficient funds for at least the next twelve months, but continued operation as a going concern depends on developing profitable operations or raising additional capital[142][156] | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :------------------------------------------ | :----------------------------- | :------------------------------ | :------- | | Cash, cash equivalents and restricted cash | $14,300 | $19,700 | -$5,400 | | Working capital | $8,700 | $14,500 | -$5,800 | | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash used in operating activities | $(5,200) | $(4,500) | | Net cash used in investing activities | $(5) | $(200) | | Net cash used in financing activities | $(170) | $13,700 | Critical Accounting Policies and Estimates This section identifies the accounting policies that require significant judgment and estimates, which are crucial to the financial statements - No material changes to critical accounting policies were reported during the three months ended March 31, 2025, compared to the fiscal year ended December 31, 2024[144] Results of Operations This section analyzes the company's financial performance by comparing operating expenses and other income for the reported periods | Operating Expense | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | :----------- | | Research and development | $4,200 | $3,700 | +$500 | | General and administrative | $2,300 | $2,500 | -$200 | | Other income, net | $300 | $200 | +$100 | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to market risks, specifically focusing on interest rate sensitivity related to cash equivalents and exchange rate sensitivity for foreign operations, and the strategies (or lack thereof) to manage these risks - The company's investment activities prioritize safety of principal and liquidity, with cash invested in money market funds and short-term certificates of deposit, which are generally not subject to significant interest rate risk[167] - The majority of operating expenses are denominated in U.S. dollars, and the company has not entered into foreign currency forward contracts to hedge exchange rate exposure[168] Item 4. Controls and Procedures This section details management's evaluation of the effectiveness of the company's disclosure controls and procedures, concluding their effectiveness, and reports on any changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025[169] - No material changes in internal control over financial reporting occurred during the quarter, though the company is updating its internal control environment to address changes in risks, staffing, and segregation of duties[170] PART II OTHER INFORMATION This section provides additional disclosures on legal proceedings, risk factors, equity sales, and other relevant corporate information Item 1. Legal Proceedings This section provides updates on significant legal matters, including the abandonment of a European patent and the ongoing appeal related to litigation with Pixium Vision SA concerning a terminated business combination - The company abandoned a European patent in February 2025, which was challenged by Pixium Vision SA, and does not expect a material impact on operations[172] - Vivani is appealing a Paris Commercial Court judgment ordering it to pay Pixium Vision SA approximately €1.55 million. The appeal was struck out on October 23, 2024, for failure to enforce the judgment, but can be reinstated within two years[173][174] Item 1A. Risk Factors This section highlights key risks facing the company, including the substantial need for additional financing, the inherent uncertainties and high costs of pharmaceutical development, and potential adverse impacts from global economic and political developments, such as inflation, geopolitical conflicts, and trade policy changes - The company requires substantial additional financing for product development and commercialization, which may not be available on acceptable terms, potentially forcing delays or termination of programs[177] - Global economic and political developments, including inflation, capital market disruptions, geopolitical conflicts (e.g., Russia-Ukraine, Israel-Hamas), and potential health crises, could materially and adversely affect the business, including the ability to raise capital and supply chain stability[178] - Recent changes to U.S. trade policies, sanctions, and tariffs could lead to higher input costs and negatively impact global economic conditions, potentially affecting the company's financial results[179] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section discloses recent unregistered sales of equity securities, specifically a private sale transaction in March 2025 to an affiliated entity, detailing the number of shares and gross proceeds - On March 26, 2025, the company entered into a private sale transaction to sell 7,366,071 shares of common stock to an affiliated entity for approximately $8.25 million[180] Item 3. Defaults upon Senior Securities This section confirms that the company has not experienced any defaults upon senior securities during the reporting period - The company reported no defaults upon senior securities during the period[181] Item 4. Mine Safety Disclosures This section states that the disclosures related to mine safety are not applicable to the company's operations - This item is not applicable to the company[182] Item 5. Other Information This section provides miscellaneous information, including the adoption of an amended executive severance policy and disclosures regarding Rule 10b5-1 trading plans by officers and directors - The company adopted an Amended and Restated Executive Severance Policy as of April 29, 2025, providing severance benefits under specific termination conditions related to a change in control[183] - No Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by officers or directors during the quarter ended March 31, 2025[184] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, providing references to various agreements, corporate documents, and certifications - The exhibit index lists various documents filed, including merger agreements, corporate governance documents, share purchase agreements, the amended severance policy, and certifications[187][188] SIGNATURES This section formally attests to the accuracy and completeness of the financial report by the company's principal executive and financial officers - The report is signed by Adam Mendelsohn, Chief Executive Officer, and Brigid A. Makes, Chief Financial Officer, on May 13, 2025[190][191]