NanoVibronix, Inc., (NASDAQ: NAOV), a medical device company
that produces the UroShield® and PainShield® Surface Acoustic Wave
(“SAW”) Portable Ultrasonic Therapeutic Devices, today provided an
update on its business.
- Received CMS Approval for Reimbursement
- Launched PainShield Plus®
- Expanded Distribution with UPPI
- Refining Manufacturing Processes and Expanding Capacity
- Sufficiently Capitalized
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“We are nearing an inflection point in our business with the
completion of several critical milestones that have moved us much
closer to full commercialization of our products,” stated Brian
Murphy, Chief Executive Officer of NanoVibronix, Inc. “Over the
last several months, we received approval for reimbursement of
PainShield with a dedicated product code from CMS, launched our new
product, PainShield Plus, significantly expanded a distribution
agreement with one of our primary distributors and refined our
manufacturing processes and supply chain to drive our costs down
and expand capacity.”
“We are executing against a business plan that we believe will
lead to a significant increase in revenue beginning in the second
quarter of this year and pave the way for progressively improving
financial results throughout 2021 and beyond,” added Murphy. “We
are optimistic about the projected growth of our business, and we
believe that we are sufficiently capitalized to support our
near-term operating plans. We are selling our products at higher
gross margins while reducing our operational risk by pursuing
parallel manufacturing operations and targeting alternative
channels for sourcing our components. The demand for our devices
remains encouraging, as we work to penetrate a market that we
believe to be largely underserved.”
Broadening the Portfolio, Increasing Product
Availability and Improving Manufacturing
Near the end of 2020, the company launched the next generation
of its PainShield device, PainShield Plus, which extends the
functionality of its core product and broadens the opportunities
for application. The PainShield Plus sells at a higher price point
and expands the company’s target market to increase opportunities
for revenue growth. Delivery of the first devices is expected to be
in Q2 2021.
Subsequently, the company expanded and replaced its original
distribution agreement with Ultra Pain Products, Inc. (“UPPI”) to
extend the term and increase minimum purchase requirements. UPPI is
the exclusive distributor of PainShield® and PainShield® Plus™
devices to the Durable Medical Equipment (“DME”) distribution
sector of the healthcare market in the United States. In doing so,
the company increased the revenue opportunity significantly with
UPPI. The company fulfilled the first order in the second quarter
of 2021 and is working diligently to accelerate manufacturing and
fulfill subsequent orders.
Currently, the company is working to establish manufacturing
capabilities both in the United States and Israel that will run
parallel to its existing manufacturing operations located in Asia.
In addition to providing expanded capacity for output, this will
reduce operational risk from reliance on a sole manufacturer and
positions the company to negotiate private-label agreements by
complying with requirements of the Trade Agreements Act (“TAA”).
“Our business momentum is expected to increase as we bolster our
sales channels and improve and expand our manufacturing
operations,” added Murphy. “Based on what we have delivered to UPPI
thus far, we expect our 2021 second quarter results will reflect
increased sales from our revised distribution agreement.
Importantly, the configuration of our manufacturing operations
should provide us with additional resources to meet demand and
target new markets. Adding additional manufacturing operations
aligns our business with conditions identified in the Trade
Agreements Act and should clear the path for us to negotiate
private-label arrangements with governmental agencies, like the
Veterans Administration.”
Clearing Regulatory Requirements to Reach More Patients
in Need and Increase Sales
The Centers for Medicare and Medicaid Services (“CMS”) recently
expanded its reimbursement approval for the company’s PainShield
product by adding the device to its DME schedule. PainShield is now
reimbursable as an approved medical device under a unique
reimbursement code assigned by CMS, K1004. The approval expands the
original CMS approval to include reimbursement as a device for the
many millions of beneficiaries enrolled in Medicare and paves the
way for expanded distribution.
UroShield, the company’s urology therapy device, was added to
the Federal Supply Schedule during the first quarter of 2021,
making it easier for veterans being treated by the VA to secure and
utilize the UroShield device and further expanding the company’s
addressable market.
Murphy commented, “Clearing the regulatory reimbursement
requirements is a process that takes time, and we are tackling the
approval steps one by one. We are currently awaiting clearance of
the final hurdle from CMS for the PainShield which relates to
establishing reimbursement value and conditions for product
application. We believe that clearing this last remaining
regulatory requirement will pave the way for an accelerating flow
of orders from patients and their providers.”
Requesting Stockholder Approval to Increase Share
Authorization
The company will be asking stockholders to approve a proposal to
increase the number of common shares authorized for issuance from
24.1 million shares to 40 million shares at an Annual Meeting of
Stockholders to be held on August 17, 2021. The increase is being
requested to provide the company with a sufficient number of
authorized shares to meet its existing preferred stock conversion
obligations and warrant and option obligations and leave the
company with an additional capacity to pursue a modest level of
strategic transactions at the Board’s discretion if such
opportunities arise.
As of March 31, 2021, the company had approximately 24.1 million
shares of common stock authorized as well as issued and outstanding
leaving no capacity to meet future potential needs for shares upon
conversion of certain shares of Series C, Series D and Series E
Preferred Stock or the exercise of outstanding warrants and stock
options.
“There is presently no capacity for issuing new shares of common
stock to meet our obligations under existing derivative instruments
that may convert to equity,” commented Mr. Murphy. “These
instruments were previously issued to fund our growth and
incentivize employees. We believe that the inability for our
preferred shareholders and warrant holders to convert to equity has
created a significant overhang on the valuation of the company’s
stock because it creates a liability on our balance sheet as well
as a derivative liability for our warrants and leaves the company
unnecessarily exposed to potential claims if we cannot fulfill the
conversions of these securities in the future. We believe it is in
the best interest of all stockholders that our share authorization
be increased to clear the way for us to meet existing conversion
obligations as they may arise, reduce the volatility in our
earnings resulting from the quarterly mark-to-market exercise [for
our related derivative liabilities] required by GAAP and create
value for all stockholders going forward. We have sized the request
for increased shares to also provide us with the flexibility to
finance any strategic transaction that represent a compelling
opportunity to enhance stockholder value. Importantly, with
approximately $8.0 million in cash as of the end of the first
quarter, we are well-positioned to fund existing operations and
near-term, organic growth opportunities. We have no plans to issue
additional equity at this time.”
“Aligning our capital structure with the realities of our
current obligations comes at a pivotal time in our company’s
evolution,” added Murphy. "We believe an approval of an increase in
the number of authorized shares is crucial to protect the interests
of current stockholders and make NanoVibronix a more attractive
investment opportunity for new investors. Failure to approve the
proposal could create the need to issue debt and recapitalize the
company by repurchasing shares under unfavorable market conditions
in order to meet our obligations. We believe that approving the
proposal eliminates that financing risk.”
The company did not receive sufficient votes to pass a proposal
for an amendment to increase the authorized number of stocks of
common stock to 45 million shares at the company's Special Meeting
of Stockholders held on May 6, 2021. Accordingly, the company has
responded with a more modest proposal that the Board believes will
still meet the needs of the company.
The proposal would amend the company’s amended and restated
certificate of incorporation to increase the number of authorized
shares of common stock from approximately 24.1 million to 40
million.
Murphy concluded, “We have accomplished a great deal to move our
business forward and lay a foundation for long-term, sustainable
growth. Our achievements reflect the quality of our products and
our commitment to bringing innovative, home devices to market for
the benefit of millions of patients in need of alternative, at home
therapies. As we continue to execute our business plan over the
coming quarters, we believe the results of our efforts will become
more apparent in our financial results and there will be tangible
returns on the investments we are making.”
About NanoVibronix, Inc.
NanoVibronix, Inc. (NASDAQ: NAOV) is a medical device company
headquartered in Elmsford, New York, with research and development
in Nesher, Israel, focused on developing medical devices utilizing
its patented low intensity surface acoustic wave (SAW) technology.
The proprietary technology allows for the creation of low-frequency
ultrasound waves that can be utilized for a variety of medical
applications, including for disruption of biofilms and bacterial
colonization, as well as for pain relief. The devices can be
administered at home without the assistance of medical
professionals. The Company’s primary products include PainShield®
and UroShield®, all of which are portable devices suitable for
administration at home without assistance of medical professionals.
Additional information about NanoVibronix is available at:
www.nanovibronix.com.
Forward-looking Statements
This press release contains “forward-looking statements.” Such
statements may be preceded by the words “intends,” “may,” “will,”
“plans,” “expects,” “anticipates,” “projects,” “predicts,”
“estimates,” “aims,” “believes,” “hopes,” “potential” or similar
words. Forward-looking statements are not guarantees of future
performance, are based on certain assumptions and are subject to
various known and unknown risks and uncertainties, many of which
are beyond the Company’s control, and cannot be predicted or
quantified; consequently, actual results may differ materially from
those expressed or implied by such forward-looking statements. Such
risks and uncertainties include, without limitation, risks and
uncertainties associated with: (i) our history of losses and
expectation of continued losses; (ii) the geographic, social and
economic impact of COVID-19 on the Company’s business operations;
(iii) our ability to raise funding for, and the timing of, clinical
studies and eventual U.S. Food and Drug Administration approval of
our product candidates; (iv) the risk that we may not obtain the
requisite votes at our annual meeting to increase the number of
authorized shares of common stock; (v) regulatory actions that
could adversely affect the price of or demand for our approved
products; (vi) market acceptance of existing and new products;
(vii) favorable or unfavorable decisions about our products from
government regulators, insurance companies or other third-party
payers; (viii) risks of product liability claims and the
availability of insurance; (vix) our ability to successfully
develop and commercialize our products and to generate internal
growth; (x) risks related to computer system failures and
cyber-attacks; (xi) our ability to obtain regulatory approval in
foreign jurisdictions; (xii) uncertainty regarding the success of
our clinical trials for our products in development; (xiii) risks
related to our operations in Israel, including political, economic
and military instability; (xiv) the price of our securities is
volatile with limited trading volume; (xv) our ability to comply
with the continued listing requirements of the NASDAQ capital
market; (xvi) our ability to maintain effective internal control
over financial reporting and to remedy identified material
weaknesses; (xvii) our intellectual property portfolio and our
ability to protect our intellectual property rights; (xviii) our
ability to recruit and retain qualified regulatory and research and
development personnel; (xix) unforeseen changes in healthcare
reimbursement for any of our approved products; (xx) the adoption
of health policy changes and health care reform; (xxi) lack of
financial resources to adequately support our operations; (xxii)
difficulties in maintaining commercial scale manufacturing capacity
and capability; (xxiii) changes in our relationship with key
collaborators; (xxiv) changes in the market valuation or earnings
of our competitors or companies viewed as similar to us; (xxv) our
failure to comply with regulatory guidelines; (xxvi) uncertainty in
industry demand and patient wellness behavior; and (xxvii) general
economic conditions and market conditions in the medical device
industry. More detailed information about the Company and the risk
factors that may affect the realization of forward looking
statements is set forth in the Company’s filings with the
Securities and Exchange Commission (SEC), including the Company’s
Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q.
Investors and security holders are urged to read these documents
free of charge on the SEC’s web site at: http://www.sec.gov. The
Company assumes no obligation to publicly update or revise its
forward-looking statements as a result of new information, future
events, or otherwise, except as required by law.
Important Other Information
The Company, its directors and certain of its executive officers
and employees may be deemed to be participants in the solicitation
of proxies from the Company’s stockholders in connection with the
Company’s 2021 Annual Meeting of Stockholders (“Annual Meeting”).
In connection with the Annual Meeting, the Company filed with the
Securities and Exchange Commission (“SEC”) a preliminary proxy
statement on May 28, 2021. When completed, a definitive proxy
statement and proxy card will be filed with the SEC in connection
with any such solicitation of proxies from the Company’s
stockholders for the Annual Meeting. STOCKHOLDERS OF THE
COMPANY ARE STRONGLY ENCOURAGED TO READ THE DEFINITIVE PROXY
STATEMENT AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND
IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN
IMPORTANT INFORMATION. The Company’s preliminary proxy statement
for the Annual Meeting contains information regarding the direct
and indirect interests, by securities holdings or otherwise, of the
Company’s directors and executive officers in the Company’s
securities. If the holdings of the Company’s securities change from
the amounts provided in the Company’s preliminary proxy statement
for the Annual Meeting, such changes will be set forth in SEC
filings on Forms 3, 4, and 5, which can be found through the
Company’s website at www.nanovibronix.com or through the SEC’s
website at www.sec.gov. Information can also be found in the
Company’s other SEC filings, including its Annual Report on Form
10-K for the year ended December 31, 2020. Updated information
regarding the identity of potential participants, and their direct
or indirect interests, by security holdings or otherwise, will be
set forth in the definitive proxy statement and other materials to
be filed with the SEC in connection with the Annual Meeting.
Stockholders will be able to obtain the definitive proxy statement,
any amendments or supplements to the definitive proxy statement and
other documents filed by the Company with the SEC at no charge at
the SEC’s website at www.sec.gov. Copies will also be available at
no charge at the Company’s website at www.nanovibronix.com.
Brian Murphy
NanoVibronix, Inc.
630-338-5022
bmurphy@nanovibronix.com
Brett Maas
Hayden IR, LLC
646-536-7331
brett@haydenir.com
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