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Item 7. Management’s Discussion and Analysis

2023-03-02 compared with 2022-03-28 · 104 added, 98 removed, 45 unchanged (82% of the section changed)

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materially from any future performance suggested below.

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 occurs when valves inside of the veins of the leg fail, resulting in insufficient blood being returned to the heart.

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 our SAVVE U.S.

pivotal trial for the

purpose of obtaining approval to market and sell the device from the U.S.

Medical Corporation is a late clinical-stage med-tech company focused on the advancement of innovative bioprosthetic (tissue-based) solutions

to improve the standard of care for the treatment of venous disease.

Chronic Venous Disease (CVD) is the world’s most prevalent

chronic disease, impacting approximately 71% of the adult population of the U.S.

Chronic Venous Insufficiency (CVI), is a large subset

of CVD, which most often occurs when valves inside of the veins of the leg become damaged, resulting in the backwards flow of blood (reflux),

blood pooling in the lower leg, increased pressure in the veins of the leg (venous hypertension) and in severe cases, venous ulcers that

are difficult to heal.

The Company is developing surgical and non-surgical replacement venous valves for patients suffering from severe

CVI of the deep venous system of the leg.

Company’s lead product is the VenoValve®, which is a first-in-class surgical replacement venous valve that is currently being

evaluated in a U.S.

pivotal study.

The Company is also developing a second product called enVVe™, which is a first-in-class, non-surgical,

transcatheter based replacement venous valve.

The Company is currently waiting for regulatory approval to begin a first-in-human study

Both the VenoValve and enVVe are designed to act as one-way valves, to help assist in propelling blood up the veins of the

leg, and back to the heart and lungs.

VenoValve and enVVe are being developed first for approval by the U.S.

Food and Drug Administration (FDA).

of officers and directors has been affiliated with numerous medical devices that have received FDA approval or CE marking and have been

commercially successful.

We currently lease a 14,507 sq.

manufacturing facility in Irvine, California, where we manufacture medical

devices for our clinical trials, and which has capacity for commercial manufacturing.

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 begun development of

a second device for the treatment of venous disease which we are calling enVVe.

In connection with this change in strategy, we indicated

that we are not pursuing further development of the CoreoGraft, which is now outside of our primary focus area.

We expect the VenoValve to

be eligible for FDA approval first, followed two to three years later by enVVe.

Once approved, we expect the VenoValve and enVVe to co-exist,

with the VenoValve as a surgical replacement venous valve option and enVVe as a non-surgical replacement venous valve option.

currently no devices approved as surgical or non-surgical replacement venous valves, and there are no effective treatments for deep venous

CVI caused by incompetent valves.

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 develop and manufacture our products in a 14,507 sq.

leased manufacturing facility in Irvine,

California, which has been ISO 13485-2020 certified for the design, development and manufacturing of tissue based implantable medical

of Operations

of the year ended December 31, 2022 to the year ended December 31, 2021

reported net losses of $16.5 million and $9.1 million for the years ended December 31, 2021 and 2020, respectively, representing an increase

in net loss of $7.4 million or 81%, resulting from, as described in further detail below, an increase in operating expenses of $7.8 million,

and an decrease in other expense (income) of $0.4 million.

a developmental stage company, our revenue, if any, is expected to be diminutive and dependent on our ability to commercialize our product

candidates which is not expected in the near future.

As a late-stage clinical med tech Company, we are not currently generating revenue and our future revenue, if any,

is dependent on our ability to commercialize our product candidates.

do not expect to begin generating revenue with respect to any of our product candidates in the near term.

We hope to eventually achieve

revenues by commercializing and selling our products or licensing our technologies to companies that have the resources and infrastructure

in place to manufacture, market and sell our products.

The commercialization and/or licensing of any of our products may take several

years, if it is to occur at all, and depends on our ability to obtain regulatory approval.

reported net losses of $24.7 million and $16.5 million for the years ended December 31, 2022 and 2021, respectively, representing an

increase in net loss of $8.2 million or 50%, resulting from, as described in further detail below, an increase in operating expenses

of $8.0 million, and a decrease in other expense (income) of $0.2 million.

General and Administrative Expenses

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Of this increase, $2.8 million was due to share-based compensation from

grants made during 2021, which increased share-based compensation cost to $6.0 million in 2021 from $0.7 million in 2020.

remaining $1.0 million increase reflects $0.3 million in higher compensation due to the elevation of our chief financial

officer from interim, with the related costs included in consulting expenses, to full-time, with the related costs

included in compensation, and directors’ cash compensation in 2021, an increase in insurance expense of $0.2 million

primarily from the Company’s D&O insurance, $0.2 million from higher Delaware franchise taxes in 2021, $0.2 million from

consulting for reimbursement codes for the Company’s product once commercially approved, $0.4 million from higher information

technology and other office expense to support increases in staff, partially offset by a $0.3 million decrease in legal expenses

which decreased because of the resolution of several matters in 2020.

grants made during 2021, and $0.2 million from warrants issued to a vendor in 2022 which together increased share-based compensation

cost to $9.0 million in 2022 from $6.0 million in 2021.

remaining $0.8 million increase reflects $0.5 million from higher information technology and other office expense to support

increases in staff, $0.2 million from consulting for

reimbursement codes for the Company’s product once commercially approved, and an increase in insurance expense of $0.1 million

primarily from the Company’s D&O and cyber insurance policies.

and Development Expenses

the year ended December 31, 2021, research and development expenses increased by $1.4 million or 35%, to $5.7 million from $4.3 million

for the year ended December 31, 2020.

The increase is primarily due to an increase of $1.1 million in compensation from the increases

in staffing to support the SAVVE trial and continued product development, $0.5 million in higher lab costs and supplies, also

to support the SAVVE trial and product development, an increase of $0.4 million for lab quality testing to prepare for regulatory audits

and the SAVVE trial, partially offset by a $0.6 million decrease in trial related consulting as the Columbian first in human trial wrapped

up in 2020 and the SAVVE trial was not launched until late in 2021.

We expect our research and development costs will continue at

these levels with more moderate increases as we move through the SAVVE trial.

the year ended December 31, 2022, research and development expenses increased by $4.2 million or 74%, to $9.9 million from $5.7

million for the year ended December 31, 2021.

The increase is primarily due to an increase of $2.5 million in costs for the SAVVE

trial and preparation for the enVVe first-in-human trial, $1.1 million in higher lab quality testing to prepare for regulatory

audits, support the SAVVE trial and support enVVe product development, $0.3 million in compensation from the increases in staffing

also to support the SAVVE trial and continued product development, and $0.3 million in higher travel costs primarily for the SAVVE

on Extinguishment of Note Payable

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of the loan it had obtained under the PPP program authorized by the CARES act.

in Fair Value of Derivative Liability

the year ended December 21, 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 year ended December 31, 2021.

expenses in 2020 primarily consisted of and $0.1 million in charges for warrants to purchase 6,400 shares of common stock issued to a

consultant and for repricing of warrants issued to the placement agent in the Company’s February 2020 private placement, and a

$0.1 million expense for warrants issued to certain participants in the exchange of preferred stock for common stock.

income in 2022 was $0.3 million consisting of $0.2 million in interest income and realized gains, and $0.1 million of unrealized losses,

all related to our investments in US Treasury securities.

and Capital Resources

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operating activities.

The net cash used in operating activities during 2021 increased by $4.1

from $7.7 million for the year ended December 31, 2020.

The losses and the uses

of cash are primarily due to the Company’s administrative and product research and development activities.

Administrative

functions relate to costs to support the Company’s public reporting and investor relations activities as well as internal

administrative functions.

Research and development activities are for continued product development and clinical trials for the

The Company will continue to incur these costs to complete its clinical trials, enhance products, develop new products, and

operate as a public company.

Although we have discretion in how we use the Company’s cash resources, we expect to continue

these activities for the foreseeable future as we seek to obtain regulatory approval for our lead product candidate.

currently generating revenue.

Our cash flows from investing activity have historically consisted of purchases

of property and equipment for our lab and offices.

In the year ended December 31, 2021 we purchased $0.4 million of property and equipment

consisting of $0.2 million for lab and test equipment, and $0.2 million for other computer equipment and software.

In the year ended December

31, 2020 we purchased $0.2 million of property and equipment consisting of $0.1 million for lab and test equipment and $0.1 million for

other computer equipment and software.

We do not currently have material commitments for capital expenditures or other expenditures with

the exception of our facility lease commitment of $0.4 million per year.

However, we expect a modest increase in cash used in investment

activities as we continue SAVVE and plan for commercialization of the VenoValve.

Company has historically funded its operations through financing activities such as the capital raises completed in 2020 and 2021.

The net cash used in operating activities during 2022 increased by $3.8 million from $11.8 million for the year

ended December 31, 2021.

operating losses and the uses of cash are primarily due to the Company’s product research and development and administrative

Administrative functions relate to costs to support the Company’s public reporting and investor relations

activities as well as internal administrative functions.

Research and development activities are for continued product development

and clinical trials for the VenoValve and for the enVVe.

The Company will continue to incur these costs to complete its clinical

trials, enhance products, develop new products, and operate as a public company.

Although we have discretion in how we use the

Company’s cash resources, we expect to continue these activities for the foreseeable future as we seek to obtain regulatory

approval for our studies and product candidates.

We are not currently generating revenue.

cash flows from investing activity have historically consisted of purchases of property and equipment for our lab and offices.

during 2022, we commenced a program to invest excess cash in US Treasury bills.

During the year we purchased $48.1 million of these investments

and $13.7 million of them matured generating $0.2 million in realized gains and interest income.

We expect to continue investing as the

treasury bills mature and as allowed by the cash requirements of our operations.

Also, during 2022, we purchased $0.1 million of property

and equipment consisting primarily of lab and test equipment.

do not currently have material commitments for capital expenditures or other expenditures with the exception of our facility lease commitment

of $0.4 million per year.

However, we expect a modest increase in purchases of property and equipment as we continue SAVVE and plan for

commercialization of the VenoValve.

Company has historically funded its operations through financing activities such as the capital raises completed in 2021.

the Company raised an aggregate of $57.4 million in net proceeds in private and public placements of its securities.

the Company raised an aggregate of $14.7 million in net proceeds in private and public placements of its common stock and of its preferred

Our cash balance as of December 31, 2021, is $54.7 million.

Our future capital requirements

will remain dependent upon a variety of factors, especially including the success of our clinical trials and related product development

costs and our ability to successfully bring products to market.

At our existing cash burn rate of approximately $4 million per quarter, we should have sufficient cash to fund operations through the

end of 2024 and into 2025.

With primary endpoints following full enrollment in the SAVVE pivotal trial of thirty (30) days for safety,

and six (6) months for effectiveness, we expect to have primary endpoint data well in advance of the need to raise additional capital.

Any inability to raise additional financing would have a material adverse effect on us.

Our cash balance

as of December 31, 2022, is $4.6 million.

In addition, we have $34.5 million in investments, for total cash and investments of $39.1

future capital requirements will remain dependent upon a variety of factors, especially including the success of our clinical trials

and related product development costs and our ability to successfully bring products to market.

At our existing cash burn rate of

approximately $4 million to $5 million per quarter, we should have sufficient cash to fund operations through the end of 2024 and

With primary endpoints following full enrollment in the SAVVE pivotal trial of thirty (30) days for safety, and six (6)

months for effectiveness, we expect to have primary endpoint data well in advance of the need to raise additional capital.

inability to raise additional financing would have a material adverse effect on us.

upon our cash and working capital as of December 31, 2022, we have sufficient capital resources to meet our obligations as they become

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Significant estimates and assumptions include the valuation allowance related to the

Company’s deferred tax assets, and the valuation of warrants and derivative liabilities.

Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award.

fair value of the award is measured on the grant date and recognized over the period services are required to be provided in exchange

for the award, usually the vesting period.

Company’s deferred tax assets, and the valuation of warrants.

Company measures the cost of services received in exchange for awards of equity instruments based on the grant date fair value of the

award and recognized on a straight-line basis over the period services are provided in exchange for the award, usually the vesting period.

The fair value of the Company’s stock options is estimated at the date of grant using the Black-Scholes based option valuation

The inputs for determining fair value are expected term, volatility, expected dividend yield and the risk-free interest rate.

The Company estimated the expected term of the options using the simplified method.

The Company uses its stock’s historical market

information to calculate volatility.

The dividend yield assumption is based on the Company’s history and expectation of future

dividend payouts on the common stock.

The risk-free interest rate is based on the implied yield available on U.S.

treasury zero-coupon

issues with an equivalent remaining expected term.

Forfeitures of unvested stock options are recorded when they occur.

Concentrations

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 were aggregate uninsured cash balances of

$54.5 million and $9.1 million as of December 31, 2021 and 2020, respectively.

and Qualitative Disclosure About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis