Note
2 – Going Concern and Management’s Liquidity Plan
The
accompanying unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business.
Although
we expect to continue incurring losses for the foreseeable future, may never earn revenues large enough to support operations, and may
need to raise additional capital to sustain operations, pursue product development initiatives, and penetrate markets for the sale of
products, Management believes that our capital resources at September 30, 2021, are sufficient to meet our obligations as they become
due within one year after the date of this interim filing, and sustain operations.
ENVVENO
MEDICAL CORPORATION
f/k/a
HANCOCK JAFFE LABORATORIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note
3 – Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and disclosures required by accounting principles generally accepted in the United States
of America for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only
of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed financial statements of
the Company as of September 30, 2021 and December 31, 2020, and for the three and nine months ended September 30, 2021 and 2020. The
results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the operating results
for the full year. These unaudited condensed financial statements should be read in conjunction with the financial statements and notes
thereto for the year ended December 31, 2020 included in the Company’s Form 10-K filed with the SEC on March 31, 2021. The condensed
balance sheet as of December 31, 2020 has been derived from the Company’s audited financial statements.
Concentrations
The
Company maintains cash with major financial institutions. Cash held in United States bank institutions is currently insured by the Federal
Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. There was an aggregate uninsured cash balance
of $ 57,646,922 as of September 30, 2021.
Net
Loss per Share
The
Company computes basic and diluted loss per share by dividing net loss attributable to common stockholders by the weighted average number
of common stock outstanding during the period, including warrants exercisable for little or no cash consideration. Basic and diluted
net loss per common share are the same since the inclusion of common stock issuable pursuant to the exercise of warrants and options,
would have been anti-dilutive.
Subsequent
Events
The
Company evaluated events that have occurred after the balance sheet date through the date the financial statements were issued. Based
upon the evaluation and transactions, the Company did not identify any other subsequent events that would have required adjustment or
disclosure in the financial statements.
Recent
Accounting Standards
In
December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects
of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is
not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. ASU 2019-12
is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within those
fiscal years. There was not a significant impact to the financial statements from the adoption of this standard.
ENVVENO
MEDICAL CORPORATION
f/k/a
HANCOCK JAFFE LABORATORIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note
4 – Property and Equipment
As of September 30, 2021 and December 31, 2020, property and equipment consist of the following:
Schedule of Property and Equipment
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Laboratory equipment
|
|
$
|
501,346
|
|
|
|
320,830
|
|
|
Furniture and fixtures
|
|
|
124,093
|
|
|
|
98,392
|
|
|
Computer software and equipment
|
|
|
124,823
|
|
|
|
65,078
|
|
|
Leasehold improvements
|
|
|
188,589
|
|
|
|
158,092
|
|
|
Construction Work in Progress – Software
|
|
|
251,163
|
|
|
|
244,479
|
|
|
Property and equipment, gross
|
|
|
1,190,014
|
|
|
|
886,871
|
|
|
Less: accumulated depreciation
|
|
|
(591,038
|
)
|
|
|
(487,904
|
)
|
|
Property and equipment, net
|
|
$
|
598,976
|
|
|
|
398,967
|
|
Depreciation
expense amounted to $44,076 and $66,857 for the nine months ended September 30, 2021 and 2020, respectively. Depreciation expense is
reflected in general and administrative expenses in the accompanying statements of operations.
Note
5 – Right-of-Use Assets and Lease Liability
On
September 20, 2017, the Company renewed its operating lease for its manufacturing facility in Irvine, California, effective October 1,
2017, for five years with an option to extend the lease for an additional 60-month term at the end of lease term. The initial lease rate
was $26,838 per month with escalating payments. In connection with the lease, the Company is obligated to pay $7,254 monthly for operating
expenses for building repairs and maintenance. The Company has no other operating or financing leases with terms greater than 12 months.
The
Company adopted Accounting Standards Codification (“ASC”) Topic 842, Leases (Topic 842) effective January 1, 2019 using the
modified-retrospective method and elected the package of transition practical expedients for expired or existing contracts, which does
not require reassessment of previous conclusions related to contracts containing leases, lease classification and initial direct costs,
and therefore the comparative periods presented are not adjusted. In addition, the Company elected to adopt the short-term lease exception
and not apply Topic 842 to arrangements with lease terms of 12 months or less. On January 1, 2019, upon adoption of Topic 842, the Company
recorded right-of-use assets of $1,099,400, lease liabilities of $1,121,873 and eliminated deferred rent of $22,473. The Company determined
the lease liabilities using the Company’s estimated incremental borrowing rate of 8.5% to estimate the present value of the remaining
monthly lease payments.
ENVVENO
MEDICAL CORPORATION
f/k/a
HANCOCK JAFFE LABORATORIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Our
operating lease cost is as follows:
Schedule of Operating Lease Cost
|
|
|
For the Three Months Ended
September 30,
|
|
|
For the Nine
Months Ended
September 30,
|
|
|
|
|
2021
|
|
|
2021
|
|
|
Operating lease cost
|
|
$
|
85,492
|
|
|
$
|
256,475
|
|
Supplemental
cash flow information related to our operating lease is as follows:
Schedule of Supplemental Cash Flow Information Related to Operating Lease
|
|
|
For the Three Months Ended
September 30,
|
|
|
For the Nine
Months Ended
September 30,
|
|
|
|
|
2021
|
|
|
2021
|
|
|
Operating Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
Cash paid for amounts in the measurement of lease liabilities
|
|
$
|
87,981
|
|
|
$
|
263,943
|
|
Schedule of Operating Remaining Lease Term and Discount Rate
|
Remaining lease term and discount rate for our operating lease is as follows:
|
|
September 30,
2021
|
|
|
Remaining lease term
|
|
|
1 year
|
|
|
Discount rate
|
|
|
8.5
|
%
|
Maturity
of our lease liabilities by fiscal year for our operating lease is as follows:
Schedule of Maturity of Lease Liabilities
|
|
|
|
September 30,2021
|
|
|
Three months ended December 31, 2020
|
|
$
|
90,618
|
|
|
Year ended December 31, 2021
|
|
|
271,854
|
|
|
Total
|
|
$
|
362,472
|
|
|
Less: Imputed Interest
|
|
|
(30,175
|
)
|
|
Present value of our lease liability
|
|
$
|
332,297
|
|
ENVVENO
MEDICAL CORPORATION
f/k/a
HANCOCK JAFFE LABORATORIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note
6 – Accrued Expenses and Other Current Liabilities
As
of September 30, 2021, and December 31, 2020, accrued expenses and other current liabilities consist of the following:
Schedule of Accrued Expenses
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Accrued compensation costs
|
|
$
|
252,374
|
|
|
$
|
473,799
|
|
|
Accrued professional fees
|
|
|
82,500
|
|
|
|
79,650
|
|
|
Accrued franchise taxes
|
|
|
23,770
|
|
|
|
25,607
|
|
|
Accrued research and development
|
|
|
-
|
|
|
|
368,809
|
|
|
Other accrued expenses
|
|
|
-
|
|
|
|
188,104
|
|
|
Accrued expenses
|
|
$
|
358,644
|
|
|
$
|
1,135,969
|
|
Note
7 – Note Payable
On
April 12, 2020, the Company obtained a loan (the “Loan”) in the amount of $312,700, pursuant to the Paycheck Protection Program
(the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.
The
Loan, which was in the form of a Note dated April 12, 2020, was to mature on April 12, 2022, and bore interest at a rate of 1% per annum,
payable monthly commencing on November 12, 2020. On September 8, 2021, the Company was notified the Loan and any accrued interest had
been forgiven. In connection with this, the Company recorded a gain on extinguishment of debt of $312,700.
Note
8 – Commitments and Contingencies
Litigations
Claims and Assessments
In
the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course
of business. The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable
settlements.
Robert
Rankin Complaints
On
July 9, 2020, the Company was served with a civil complaint filed in the Superior Court for the State of California, County of Orange
by a former employee, Robert Rankin, who resigned his employment on or about March 30, 2020. The case is entitled Rankin v. Hancock Jaffe
Laboratories, Inc. et al., Case No. 30-2020-01146555-CU-WR-CJC and was filed on May 27, 2020. On September 3, 2020 the Company and its
Chief Executive Officer were served with a second complaint filed in the Superior Court for the State of California, County of Orange
by Mr. Rankin. The case is entitled Rankin v. Hancock Jaffe Laboratories, Inc. et al., Case No. 30-2020-01157857 and was filed on August
31, 2020.
The
complaints assert several causes of action including a cause of action for failure to timely pay Mr. Rankin’s accrued and unused
vacation and three months’ severance under his July 16, 2018 employment agreement, defamation, unlawful labor code violations,
sex-based discrimination, and unfair competition, and seeks damages for lost wages, emotional and mental distress, consequential damages,
punitive damages and attorney’s fees and costs.
The
Company intends to vigorously defend the claims, investigate the allegations, and assert counterclaims. As of the date of these financial
statements, the amount of loss associated with these complaints, if any, cannot be reasonably estimated. Accordingly, no amounts related
to these complaints are accrued as of September 30, 2021.
ENVVENO
MEDICAL CORPORATION
f/k/a
HANCOCK JAFFE LABORATORIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note
10 –Stockholders’ Equity
Common
Stock
On
February 11, 2021, the Company raised $41,400,000 in gross proceeds, with cash offering costs of approximately $3,300,000, in a public
offering of 5,914,284 shares of its common stock for a purchase price of $7.00 per share and warrants to purchase 2,957,142 shares of
its common stock. The exercise price of the warrants is $7.00 per share, subject to customary adjustments and they expire on February
11, 2026. The warrants had grant date fair value of $4.84 per share for an aggregate grant date fair value of $14,312,567, using the
Black Scholes method with the following assumptions used: stock price of $7.53, risk-free interest rate of 0.11%, volatility of 113.1%,
annual rate of quarterly dividends of 0%, and a contractual term of 2.5 years. We determined that equity classification of the warrants
was appropriate. Accordingly, their value is included in additional paid-in capital.
On
April 26, 2021, the Company issued 5,772 shares with a value of $6.51 per share, or $37,576, in satisfaction of a trade payable.
On
August 12, 2021, the Company entered into an At-the-Market Offering Agreement to create an at-the-market equity program under which it
may sell up to $25,000,000 of shares of the Company’s common stock from time to time. During the quarter ending September 30, 2021,
the Company sold 170,963 shares for aggregate net proceeds of approximately $971,000.
On
September 9, 2021, the Company entered a securities purchase agreement pursuant to which it completed a registered direct offering
in which it sold 781,615 shares
of common stock and Pre-Funded Warrants to purchase 1,759,035 shares
of common stock, for aggregate net proceeds of approximately $18,300,000. We
determined that equity classification of the warrants was appropriate. Accordingly, their value is included in additional paid-in
capital.
In
connection with this transaction, the Company also issued to the placement agent as compensation a warrant to purchase up to 152,439
shares of common stock with substantially the same terms as the warrants issued in the registered direct offering. The warrants are exercisable
immediately upon issuance, have an initial exercise price of $9.84 per share, subject to customary adjustments, and expire in April 2025.
Warrants
In
November 2020 the Company’s Board of Directors approved the issuance of warrants to purchase 6,400
shares of common stock to an advisor and warrants
to purchase 20,000
shares of common stock to certain participants
in the preferred share exchange. Separately the Company agreed to re-price warrants issued to the placement agent for the Company’s
February 25, 2020 private placement. These warrants and the re-priced warrant were issued in February 2021. The value of these warrants
when they were issued was $211,976.
The Company determined their value using the Black-Scholes method with the following assumptions: stock price of $8.91
- $9.31,
risk-free interest rate of 0.47%,
volatility of 113%,
annual rate of quarterly dividends of 0%,
and an expected term of 2.5
to 3.5
years.
Stock
Options
From
time to time, the Company issues options for the purchase of its common stock to employees and others. Share-based compensation related
to stock options is included in selling, general and administrative expenses on the accompanying statement of operations, and was $0.6
and $0.4
million of during the nine months ended September
30, 2021 and 2020, respectively.
As
of September 30, 2021, there was $1.6 million of unrecognized stock-based compensation expense related to outstanding stock options that
will be recognized over the weighted average remaining vesting period of 1.7 years.
ENVVENO
MEDICAL CORPORATION
f/k/a
HANCOCK JAFFE LABORATORIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note
10 – Net Loss per Share
The
following table summarizes the number of potentially dilutive common stock equivalents excluded from the calculation of diluted net loss
per common share as of September 30, 2021 and 2020:
Summary
of Potentially Dilutive Common Stock Equivalents Excluded from Diluted Net Loss Per Share
|
|
|
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Shares of common stock issuable upon exercise of warrants
|
|
|
4,554,471
|
|
|
|
1,360,883
|
|
|
Shares of common stock issuable upon exercise of options
|
|
|
485,212
|
|
|
|
212,622
|
|
|
Potentially dilutive common stock equivalents excluded from diluted net loss per share
|
|
|
5,039,683
|
|
|
|
1,573,504
|
|
Note
11 – Related Party Transactions
On
June 8, 2021, the Company updated its agreement with the vendor affiliated by common ownership and control with a shareholder holding
approximately 10% of the Company’s outstanding common stock. The Company engaged this vendor to provide support in the VenoValve
U.S. pivotal trial. Expenditures to that vendor were approximately $0.6 million during the nine months ending September 30, 2021, and
are included in in Research and Development expenses in the accompanying statement of operations.
Item 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion should be read in conjunction with our unaudited condensed financial statements and notes thereto included herein.
In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, we caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this
report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission.
Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial
results or other developments. Such forward-looking statements involve significant risks and uncertainties. Forward looking statements
are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties
and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to
change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those
expressed in any forward-looking statements made by, or on our behalf. Words such as “anticipate,” “estimate,”
“plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,”
“may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking
statements. Such forward-looking statements also involve other factors which may cause our actual results, performance or achievements
to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements and
to vary significantly from reporting period to reporting period. Although management believes that the assumptions made and expectations
reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove
to be correct or that actual future results will not be different from the expectations expressed in this Quarterly Report. We undertake
no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise,
except as required by applicable law.
Unless
the context requires otherwise, references in this document to “enVVeno” “we”, “our”, “us”
or the “Company” are to enVVeno Medical Corporation.
Overview
enVVeno
Medical Corporation is a med-tech company focused on improving the standard of care in the treatment of venous disease. We
are developing tissue-based solutions that are designed to be life sustaining or life enhancing for patients with deep venous Chronic
Venous Insufficiency (CVI). CVI occurs when valves inside of the veins of the leg fail, resulting in insufficient blood being returned
to the heart. Our products are being developed to address large unmet medical needs by either offering treatments where none currently
exist or by substantially increasing the current standards of care. Our lead product is a porcine based device to be surgically
implanted in the deep venous system of the leg, and is called the VenoValve®. The VenoValve is currently being evaluated in the
SAVVE U.S. pivotal trial for the purpose of obtaining approval to market and sell the device from the U.S. Food and Drug Administration
(“FDA”). Our team of officers and directors has been affiliated with numerous medical devices that have received
FDA approval or CE marking and that have been commercially successful. We currently lease a 14,507 sq. ft. manufacturing facility
in Irvine, California, where we manufacture medical devices for our clinical trials, and which has capacity for commercial
manufacturing.
On
September 21, 2021, we announced that we were changing our name from Hancock Jaffe to enVVeno Medical Corporation and that our development
strategy is to focus on the treatment of venous disease. In addition to the VenoValve, we announced that we have a second product in
the early stages of development called enVVe. In connection with this change in strategy, we indicated that we are deferring further
development of the CoreoGraft, which is now outside of our primary focus area.
Each
of our products will be required to successfully complete significant clinical trials to demonstrate safety and efficacy before it will
be able to be approved by the FDA.
VenoValve
The
VenoValve is a porcine based valve developed at enVVeno to be implanted in the deep venous system of the leg to treat severe CVI. By
reducing reflux, and lowering venous hypertension, the VenoValve has the potential to reduce or eliminate the symptoms of deep venous,
severe CVI, including venous leg ulcers. The current version of the VenoValve is designed to be surgically implanted into the femoral
vein of the patient via a 5 to 6 inch incision in the upper thigh.
There
are presently no FDA approved medical devices to address valvular incompetence, or effective treatments for deep venous CVI. Current
treatment options include compression garments, or constant leg elevation. These treatments are generally ineffective, as they attempt
to alleviate the symptoms of CVI without addressing the underlying causes of the disease. In addition, we believe compliance with
compression garments and leg elevation is extremely low, especially among the elderly. The premise behind the VenoValve is that by reducing
the underlying causes of CVI, reflux and venous hypertension, the debilitating symptoms of CVI will decrease, resulting in improvement
in the quality of the lives of CVI sufferers.
We
estimate that there are approximately 2.4 million people in the U.S. that suffer from deep venous CVI due to valvular incompetence.
VenoValve
Clinical Status
After
consultation with the FDA, and as a precursor to the U.S. pivotal trial, we conducted a small first-in-human study for the VenoValve
in Colombia. The first-in-human trial included eleven (11) patients. In addition to providing safety and efficacy data, the
purpose of the first-in-human study was to provide proof of concept, and to provide valuable feedback to make any necessary product
modifications or adjustments to our surgical implantation procedures for the VenoValve prior to conducting the U.S. pivotal trial.
Endpoints for the VenoValve first-in-human study include safety (device related adverse events), reflux, measured by doppler, a VCSS
score used by the clinician to measure disease severity, and a VAS score used by the patient to measure pain, and a quality of life
measurement.
Final
results from the one (1) year first-in-human study were presented at the Charing Cross International Symposium in April of
2021. Among the eleven (11) patients in the study, reflux improved an average of 54%, Venous Clinical Severity Scores
(“VCSSs”) improved an average of 56%, and visual analog scale (VAS) scores, which are used by patients to measure pain, improved
an average of 76%, all at one (1) year when compared to pre-surgery levels. VCSS scores are commonly used by clinicians in practice
and in clinical trials to objectively assess outcomes in the treatment of venous disease, and include ten characteristics including pain,
inflammation, skin changes such as pigmentation and induration, the number of active ulcers, and ulcer duration. The improvement in VCSS
scores is significant and indicates the VenoValve patients who had severe CVI pre-surgery, had mild CVI or the complete
absence of disease at one-year post surgery. Quality of life measured by a VEINES score showed statistically significant improvement.
VenoValve
safety incidences during the one (1) year first-in-human study were minor with no reported device related adverse events. Minor
non-device related adverse safety issues included one (1) fluid pocket (which was aspirated), intolerance from Coumadin anticoagulation
therapy, three (3) minor wound infections (treated with antibiotics), and one occlusion due to patient non-compliance with anti-coagulation
therapy.
In
preparation for the VenoValve U.S. pivotal trial, on March 5, 2021, we submitted an IDE application with the FDA.
An
investigational device exemption or IDE from the FDA is required before a medical device company can proceed with a pivotal trial for
a class III medical device. On April 1, 2021, twenty-seven days after filing the IDE application, we received notification from the FDA
that our IDE application was approved. We have named the U.S. pivotal for the VenoValve the SAVVE (Surgical Anti-reflux Veno Valve Endoprosthesis)
study. It is a prospective, non-blinded, single arm, multi-center study of seventy-five (75) CVI patients to be enrolled at up
to 20 U.S. sites.
No
product modifications for the VenoValve were necessary following the first-in-human study and the SAVVE trial will evaluate the same
device that was used in the first-in-human study. Endpoints for the
SAVVE trial mirror those endpoints used for the first-in-human trial. The primary safety endpoint for the pivotal trial is
the absence of material adverse safety events (mortality, deep wound infection, major bleeding, ipsilateral deep vein thrombosis,
pulmonary embolism) in twenty six percent (26%) or less of the patients at one (1) month post implantation, and the primary
effectiveness endpoint for the pivotal trial is improvement in reflux of at least thirty percent (30%), measured at six (6) months
post VenoValve implantation. In the first-in-human study there were no reported material adverse safety events at one (1) month post
implantation, and reflux improved an average of fifty six percent (56%) at six (6) months post implantation. VCSS scoring to measure
disease manifestations, VAS scores to measure pain, and quality of life measurements will also be monitored in the study.
On
August 3, 2020, we announced that the FDA granted Breakthrough Device Designation status to the VenoValve. The FDA’s Breakthrough
Devices Program was established to enable priority review for devices that provide more effective treatment or diagnosis of life threatening
or irreversibly debilitating diseases or conditions. The goal of the FDA’s Breakthrough Devices Program is to provide patients
and health care providers with timely access to medical devices by speeding up their development, assessment, and review, while preserving
the FDA’s mission to protect and promote public health.
At
the end of the VenoValve first-in-human study, we asked the study participants if we could continue to monitor them for an additional
one (1) year period. Eight patients agreed to be monitored and in August of 2021, two (2) year follow-up data was presented at the Society
of Vascular Surgery Conference in San Diego, for the cohort of eight (8) patients. That data indicated no recurrences of the severe CVI
that was present pre-VenoValve, including no ulcer recurrences for those patients whose venous ulcers had healed following VenoValve
surgery. There were no reported safety issues from the end of one (1) year first-in-human study to the end of the two (2) year reporting
period.
In
October of 2021, we announced that the first patient in the SAVVE pivotal trial underwent successful VenoValve implantation surgery and
had been discharged from the hospital. The surgery was performed by Dr. Adriana Laser, associate professor of surgery at Albany Medical
College and a vascular surgeon with Albany Med Vascular Surgery. At the time of the first implantation, we had five (5) clinical sites
that are actively enrolling patients in the SAVVE study and additional sites will become active on a rolling basis over the next several
weeks.
Comparison
of the three months ended September 30, 2021 and 2020
Overview
We
reported net losses of $2.4 million and $2.0 million for the three months ended September 30, 2021 and 2020, respectively,
representing an increase in net loss of $0.4 million or 21%, due to an increase in operating expenses of $0.8 million, and a net increase
in other income and expense of $0.4 million.
Revenues
As
a developmental stage Company, our revenue, if any, is expected to be diminutive and dependent on our ability to commercialize our product
candidates.
Selling,
General and Administrative Expenses
For
the three months ended September 30, 2021, selling, general and administrative expenses increased by $0.3 million or 27%, to $1.5
million from $1.2 million for the three months ended September 30, 2020. The net increase reflects increases of $0.2 million in compensation
due to higher share-based compensation in 2021, $0.1 million in outside services related to human resources and information technology
support fees which were higher primarily because of increases in personnel, $0.1 million in higher insurance and other office expense
due to higher D&O insurance premiums, travel, and cleaning, all mainly due to increases in personnel and returning to full time use
of the office in the 2021 period. These increases were partially offset by lower legal expenses, which were $0.1 million lower in 2021
because of the resolution of a number of legal matters during 2020.
Research
and Development Expenses
For
the three months ended September 30, 2021, research and development expenses increased by $0.5 million or 62%, to $1.2 million from $0.8
million for the three months ended September 30, 2020. The increase is primarily due to increases of $0.3 million in compensation and
related costs due to a larger team in 2021, and $0.1 million in higher consulting costs and $0.1 million in lab testing, both related
to preparations for SAVVE.
Gain
on Extinguishment of Note Payable
For
the quarter ended September 30, 2021 the Company recorded a one-time $0.3 million gain on extinguishment of note payable due to
the forgiveness of the loan it had obtained under the PPP program authorized by the CARES act.
Change
in Fair Value of Derivative Liability
For
the quarter ended September 30, 2020, we recorded a loss on the change in fair value of derivative liabilities of $0.1 million. Our derivative
liabilities were related to warrants issued in connection with our Bridge Offering in February 2020. There were no similar instruments
outstanding during the quarter ended September 30, 2021.
Comparison
of the nine months ended September 30, 2021 and 2020
Overview
We
reported net losses of $7.5 million and $4.8 million for the nine months ended September 30, 2021 and 2020, respectively, representing
an increase in net loss of $2.8 million, or 58%, due to an increase in operating expenses of $2.9 million, and an increase in other income
and expense of $0.1 million.
Revenues
As
a developmental stage Company, our revenue, if any, is expected to be diminutive and dependent on our ability to commercialize our product
candidates.
Selling,
General and Administrative Expenses
For
the nine months ended September 30, 2021, selling, general and administrative expenses increased by $1.0 million or 32%, to $4.0 million
from $3.0 million the nine months ended September 30, 2020. The increase is primarily due to increases of approximately $0.3 million
in stock-based compensation expense, $0.3 million in other compensation primarily from the additional personnel and directors’
cash compensation in 2021, $0.3 million in other administrative expenses due to higher Delaware franchise tax resulting from changes
in the Company’s capital structure, and increases in cleaning and other office related expenses due to returning to full time use
of the office in the 2021 period, $0.1 million in higher insurance due to higher D&O insurance premiums, and $0.1 million increase
in outside services related to the Company’s increased investor outreach in 2021. These increases were partially offset by lower
legal expenses, which were $0.1 million lower in 2021 because of the resolution of a number of legal matters during 2020.
Research
and Development Expenses
For
the nine months ended September 30, 2021, research and development expenses increased by $2.0 million or 100%, to $4.0 million from $2.0
million for the nine months ended September 30, 2020. The increase is due to expanded activity related to SAVVE and includes $0.8 million
in higher compensation from additional personnel, $0.5 million in consulting costs for SAVVE, $0.4 million for testing related to FDA
submissions and SAVVE preparation, and $0.3 million in lab supplies and other related lab costs to support those activities.
Change
in Fair Value of Derivative Liability
For
the nine months ended September 30, 2020, we recorded a gain on the change in fair value of derivative liabilities of $0.2 million. Our
derivative liabilities were related to warrants issued in connection with our Bridge Offering in February 2020. There were no similar
instruments outstanding during the period ended September 30, 2021.
Gain
on Extinguishment of Note Payable
For
the nine months ended September 30, 2021 the Company recorded a $0.3 million gain on extinguishment of note payable due to the forgiveness
of the loan it had obtained under the PPP program authorized by the CARES act.
Liquidity
and Capital Resources
We
have incurred losses since inception and negative cash flows from operating activities for the nine months ended September 30, 2021.
Since inception, we have funded our operations primarily through our public and private offerings of equity and private placement of
convertible debt securities as well as modest revenues from royalties, contract research and sales of the ProCol Vascular Bioprosthesis.
As
of November 8, 2021, we had a cash balance of approximately $56,900,000.
We
measure our liquidity in a variety of ways, including the following:
|
|
|
September 30
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
Cash
|
|
$
|
57,896,922
|
|
|
$
|
9,334,584
|
|
|
Working capital
|
|
$
|
57,088,836
|
|
|
$
|
6,382,818
|
|
Based
upon our cash and working capital as of September 30, 2021, we have sufficient cash to sustain the Company’s operations at least
one year after the date of this Report. We have historically funded our operations through public and private issuances of debt and
equity. Our current cash on hand is the result equity issuances completed in February and September of this year. We expect to use this
cash to fund continued research and trials for our products such as the SAVVE for our VenoValve. If our trials are successful, we believe
it may be necessary to raise additional capital to take our products to market. If this is necessary, we believe the Company could have
access to additional capital resources through possible public or private equity offerings, debt financings, corporate collaborations
or other means. However, there can be no assurance the Company will be able to raise additional capital or obtain new financing when
needed on commercially acceptable terms, if at all.
The
COVID-19 pandemic has disrupted the global economy and has negatively impacted large populations including people and businesses that
may be directly or indirectly involved with the operation of our Company and the manufacturing, development, and testing of our product
candidates. The full scope and economic impact of COVID-19 is still unknown and there are many risks from the COVID-19 that could generally
and negatively impact economies and healthcare providers in the countries where we do business, the medical device industry as a whole,
and development stage, pre-revenue companies such as enVVeno.
Off-Balance
Sheet Arrangements
None.
Contractual
Obligations
As
a smaller reporting company, we are not required to provide the information requested by paragraph (a)(5) of this Item.
Critical
Accounting Policies and Estimates
For
a description of our critical accounting policies, see Note 4 – Significant Accounting Policies in Part 1, Item 1 of this Quarterly
Report on Form 10-Q.