enVVeno Medical Corp 10-Q

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 Quarterly 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 “NVNO”, “we”, “our”, “us” or the “Company” are to enVVeno Medical Corporation Overview enVVeno Medical Corporation is a late clinical-stage medical device 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 70% 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. The Company’s lead product is the VenoValve®, which is a potential first-in-class surgical replacement venous valve that is currently being evaluated in a U.S. pivotal study called the SAVVE trial (Surgical Anti-reflux Venous Valve Endoprosthesis). To date, patients in our SAVVE trial have indicated in testimonials to the Company that they have experienced reduced pain and enhanced quality of life as a result of the VenoValve. The Company is also developing a second product called enVVe®, which is a potential first-in-class, non-surgical, transcatheter based replacement venous valve system consisting of the enVVe valve, the enVVe delivery system, and the delivery system accessories. The Company is conducting pre-clinical testing on enVVe and currently expects to be ready to file for IDE approval for the enVVe pivotal trial (the Transcatheter Anti-Thrombotic, Venous Valve Endoprosthesis or TAVVE) in Q2 of 2025. 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. The VenoValve and enVVe are being developed first for approval by the U.S. Food and Drug Administration (“FDA”). We expect the VenoValve to be eligible for FDA approval in the fourth quarter of 2024 followed two to three years later by enVVe. If 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, although we cannot provide any assurance that either the VenoValve or enVVe will receive approval from the FDA. There are currently no devices approved as surgical or non-surgical replacement venous valves, and there are currently no effective treatments for deep venous CVI caused by incompetent valves. 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 develop and manufacture both the VenoValve and EnVVe in a 14,507 sq. ft. leased manufacturing facility in Irvine, California, which has been ISO 13485-2016 certified for the design, development and manufacturing of tissue based implantable medical devices. 9 CVI Background Chronic venous disease (CVD) is the world’s most prevalent chronic disease. CVD is clinically classified using a standardized system known as CEAP (clinical, etiological, anatomical, and pathophysiological). The CEAP system consists of seven clinical classifications (C0 to C6) with C4, C5 and C6 being the most severe categories of CVD. Chronic Venous Insufficiency (CVI) is a large subset of CVD and is generally used to describe patients with C4 to C6 CVD. CVI is a debilitating condition that affects the venous system of the leg causing pain, swelling, edema, skin changes, and ulcerations. The human leg contains three vein systems: the deep vein system, the superficial vein system, and the perforator vein system which connects the deep system to the superficial system. The deep venous system is located below the muscle and facia in the center portion of the leg and is responsible for approximately 90% of the blood flow. In order for blood to return to the heart from the foot, ankle, and lower leg, the calf muscle serves as a pump and pushes the blood up the veins of the leg against gravity and through a series of one-way valves. Each valve is supposed to open as blood passes through, and then close as blood progresses up the veins of the leg to the next valve. CVI occurs when the one-way valves in the veins of the leg fail and become incompetent. When the valves fail, gravity causes the blood to flow backwards and in the wrong direction (reflux). As blood pools in the lower leg, pressure inside the veins increases (venous hypertension). Reflux, and the resulting venous hypertension, causes the leg to swell, resulting in debilitating pain, and in the most severe cases, venous ulcers. Severe CVI sufferers experience a significantly reduced quality of life. Daily activities such as preparing meals, housework, and personal hygiene (washing and bathing) become difficult due to reduced mobility. For many severe CVI sufferers, intense pain, which frequently occurs at night, prevents them from getting adequate sleep. Severe CVI sufferers are known to miss approximately 40% more workdays than the average worker. A high percentage of venous ulcer patients also experience severe itching, leg swelling, and an odorous discharge. Wound dressing changes, which occur several times a week, can be extremely painful. Venous ulcers from deep venous CVI are very difficult to heal, and a significant percentage of venous ulcers remain unhealed for more than a year. Even if healed, recurrence rates for venous ulcers are known to be high (20% to 40%) within the first year and as high as 60% after five years. Patients with severe CVI often become housebound and experience social isolation due to difficulty with ambulation. As a result, studies have shown that patients with active venous ulcers experience higher rates of anxiety and depression, with reported rates of anxiety of up to 30% and depression up to 40%. Rates of depression caused by venous ulcers among the elderly are even higher, with 48% of elderly venous ulcer patients having severe depressive symptoms. Prevalence is generally defined as the portion of the population that has a given condition. Estimates indicate that the prevalence of people in the U.S. with severe, deep venous CVI (C4 to C6 disease) with reflux to be approximately 20 million. Incidence is generally defined as the number of new cases of an ailment that develop in a given time period. We estimate that approximately 3.5 million new patients with severe deep venous CVI are diagnosed each year in the U.S. including patients that develop venous leg ulcers (C6 patients). The average patient seeking treatment of a venous ulcer spends as much as $30,000 a year on wound care, and the total direct medical costs from venous ulcer sufferers in the U.S. has been estimated to exceed $3 billion a year. VenoValve The VenoValve is a porcine based replacement venous valve developed at enVVeno Medical to be surgically implanted in the deep venous system of the leg to treat severe CVI caused by valvular incompetence. By lowering pressure (venous hypertension) within the deep venous system of the leg, the VenoValve has the potential to reduce or eliminate the symptoms of severe deep venous CVI, including the potential to heal recurring venous leg ulcers. The VenoValve is implanted into the femoral vein of the patient in an open surgical procedure via a 5-to-6-inch incision in the upper thigh. As our planned initial entrant to the replacement venous valve market, we estimate that approximately 2.5 million people each year with severe deep venous CVI in the U.S. would be candidates for the VenoValve. The VenoValve has been granted Breakthrough Device designation by the FDA. VenoValve Clinical Status After consultation with the FDA, and as a precursor to the U.S. pivotal trial, in 2020 we conducted a small first-in-human study for the VenoValve in Colombia which included eleven (11) patients. The purpose of the first-in-human study was to provide proof of concept, and to provide feedback to make any necessary product modifications or adjustments to our surgical implantation procedure for the VenoValve prior to conducting the VenoValve pivotal trial. Results from the one 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, revised Venous Clinical Severity Scores (rVCSS) scores improved an average of 6 points, and patients also experienced significant improvements in pain (measured via visual analog scale (“VAS”) scores), and quality of life (measured by Veines sym/qol) all at one (1) year when compared to pre-surgery levels. Revised Venous Clinical Severity Scoring (rVCSS) is a validated measurement commonly used to objectively assess outcomes in the treatment of venous disease, and include ten characteristics consisting of physician assessments and patient reported outcomes including pain, inflammation, skin changes such as pigmentation and induration, the number of active ulcers, and ulcer duration. The improvement in VCSS scores was 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. Related safety incidences during the one year first-in-human study for the VenoValve included one (1) surgical pocket hematoma (anti-coagulation related bleeding outside of the target vein within the surgical cavity), 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. At the end of the VenoValve first-in-human study, eight (8) study participants agreed to additional monitoring. In November of 2022, three-year, positive follow-up data was presented for this cohort of patients at the 49th Annual VEITH Symposium in New York city, showing that patients continued to experience the benefits from the VenoValve reported at one (1) year. In March of 2021 we received IDE approval from the FDA to begin the VenoValve pivotal study. 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. This approval allowed us to proceed with our U.S. pivotal study for the VenoValve which is called the SAVVE (Surgical Anti-reflux Venous Valve Endoprosthesis) clinical study. The SAVVE study is a prospective, non-blinded, single arm, multi-center study of seventy-five (75) CVI patients enrolled at 21 U.S. sites. Efficacy endpoints for the SAVVE pivotal study include rVCSS scores, which will be used to provide evidence of clinically meaningful benefit, as well as reflux time measurements, VAS pain scores, quality of life measurements, ulcer healing (for CEAP class C6 patients), and intra-operative and one-year vein patency and valve functionality. Safety endpoints include device related events and procedure related events including mortality, pulmonary embolism, ipsilateral deep vein thrombosis, infection and bleeding. 10 We achieved full enrollment of 75 subjects in the SAVVE trial on September 1, 2023, having enrolled eighteen (18) patients over the final two (2) months of the study. Full enrollment occurred approximately four (4) months earlier than expected due to increased demand for the VenoValve. On November 16, 2023, we presented preliminary device related thirty-day Device Related Material Adverse Event (“MAE”) data at the 50th Annual VEITH Symposium. The preliminary device related MAE rate for the fully enrolled 75 subject study was eight percent (8%). MAEs for the SAVVE study are defined as all-cause mortality, pulmonary embolisms (“PEs”), ipsilateral deep vein thromboses (“DVTs”), bleeding, and deep wound infections, occurring within thirty (30) days of enrollment in the study, being either device or procedure related. The device related MAEs presented at the conference indicated no deaths, no pulmonary embolisms, and six (6) DVTs, from the fully enrolled cohort of 75 patients. Subsequent to the VEITH presentation, two (2) of the DVTs were adjudicated by the SAVVE Clinical Events Committee (“CEC”) as being moderate and four (4) of the DVTs were adjudicated as being mild. In addition to the DVTs, the safety report also noted a higher-than-expected rate of pocket wound hematomas (anti-coagulation related bleeding outside of the target vein within the surgical cavity) within the first two (2) weeks after surgery, which were deemed to be moderate in severity by the CEC, as well as an expected rate of procedure related wound infections at the site of the skin incisions. The bleeds and wound infections were acute in nature and had no lasting negative impact on patient health or clinical outcomes. On March 6, 2024, we released initial, six-month topline preliminary revised Venous Clinical Severity Score (rVCSS) efficacy data from the SAVVE study at the VENOUS2024 American Venous Forum Annual Meeting, in Tampa Florida. The data released at VENOUS 2024 indicated that, overall, 97% of the study patients receiving the VenoValve showed clinical improvement as measured by rVCSS at six months, compared to baseline, with 74% of the study patients improving the three (3) or more rVCSS points needed to demonstrate VenoValve’s clinical meaningful benefit (the “Clinical Meaningful Benefit”). The average improvement among the Clinical Meaningful Benefit cohort was 8 points, more than two and a half times the amount of rVCSS improvement required to demonstrate that the VenoValve provides Clinical Meaningful Benefit. On April 24, 2024, follow-on preliminary rVCSS data was presented at the 46th Annual Charing Cross Symposium in London, England. At a weighted average subject follow-up of 11.64 months, the average improvement among the Clinical Meaningful Benefit (≥ 3 point rVCSS improvement) patient cohort was 8.46 points, including 9.29 points for patients at the two-year milestone, 8.08 points for patients at the one-year milestone, and 8.71 points for patients at the six-month milestone. All rVCSS evaluations were based on the patient’s most recent clinical visit, compared to baseline. Overall, 94% of the study patients receiving the VenoValve showed clinical improvement as measured by rVCSS, at a weighted-average patient follow-up of 11.04 months for the clinical improvement cohort, and 72% of the study patients improved the three or more rVCSS points needed to demonstrate the VenoValve’s Clinical Meaningful Benefit, at a weighted-average patient follow-up of 11.64 months for the Clinical Meaningful Benefit cohort. Total patient follow-up was 762 months for the clinical improvement cohort and 582 months for the Clinical Meaningful Benefit cohort. With the FDA indicating that one-year data for all 75 patients will be necessary prior to the filing of the application seeking pre-market approval (“PMA”) for the VenoValve, the Company expects to file the PMA application seeking approval in Q4 of 2024. enVVe On September 21, 2022, we announced the development of a non-surgical transcatheter based replacement venous valve called enVVe®, for the treatment of CVI of the deep veins of the leg. The enVVe system consists of the enVVe replacement venous valve, the enVVe delivery system, and the delivery system accessories. enVVe is designed to be delivered into the femoral vein of the patient via a minimally invasive procedure requiring no general anesthesia and no overnight hospital stay. Due to the minimally invasive nature of the procedure, we expect to be able to reach patients with less severe CVI or who may otherwise be poor candidates for a surgical device, and estimate the U.S. market for enVVe to be approximately 3.5 million patients. Initial bench testing and acute pre-clinical testing for the enVVe valve were very successful. Adjustments to make it easier to load the enVVe valve into the enVVe delivery system are being finalized and the Company is currently manufacturing the necessary enVVe valves and enVVe delivery systems to begin a six-month chronic GLP study, which the Company expects to start in Q3 of 2024. The GLP study should be the final step necessary before filing for IDE approval to begin the enVVe pivotal study, which the Company expects to file in Q2 of 2025. Capital We finished 2023 with approximately $46.4 million of cash and investments and had approximately $42.9 million of cash and investments at March 31, 2024. Our future capital requirements will remain dependent upon a variety of factors, especially including the success of our clinical trials, related product development costs, and our ability to successfully bring products to market. We anticipate that our cash burn rate will increase from current levels of approximately $4 million to $5 million per quarter as we conduct our clinical trials and work toward bringing our product candidates to market. 11 Results of Operations Comparison of the three months ended March 31, 2024 and 2023 Overview We reported net losses of $5.0 million and $6.4 million for the three months ended March 31, 2024 and 2023, respectively, representing a decrease in net loss of $1.4 million, or 22%, resulting from a decrease in operating expenses and an increase in other income. 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. We are not currently generating revenue and do not expect significant revenue until we successfully commercialize our lead product candidate. Research and Development Expenses For the three months ended March 31, 2024, research and development expenses decreased by $0.5 million or 14%, to $3.1 million from $3.6 million for the three months ended March 31, 2023. This decrease primarily resulted from $0.9 million in lower costs related the SAVVE study as the study was fully enrolled during 2023 resulting in the reduction of outreach and enrollment related activities and related costs. This decrease was offset by a $0.3 million increase in personnel costs to support the SAVVE study and enVVe development, and $0.2 million in lab costs related to enVVe development. Selling, General and Administrative Expenses For the three months ended March 31, 2024, selling, general and administrative expenses decreased $0.7 million or 22%, to $2.5 million from $3.2 million for the three months ended March 31, 2023. The decrease was due to a decrease in share based compensation, which decreased to $1.2 million in 2024 from $1.9 million in 2023, primarily because of the decrease in the expense associated with grants made in 2021, which was $0.7 million lower in 2024 than in 2023. Other Income For the three months ended March 31, 2024, other income increased $0.1 million or 25% to $0.5 million from $0.4 million for the three months ended March 31, 2023. Other income in both periods reflects realized gains, interest, and unrealized gains from our program to invest excess cash in US Treasury bills. Liquidity and Capital Resources For the three-months ended March 31, 2024, the Company incurred losses from operations of $5.5 million and used $3.6 million cash in operating activities. The net cash used in operating activities during the 2024 period decreased by $1.5 million from $5.1 million for the quarter ended March 31, 2023. 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 our product candidates, currently the VenoValve and enVVe. The Company will continue to incur these costs, and anticipates these costs will increase, as the Company works to complete its clinical trials, enhance products, develop new products, bring those products to market, and operate as a public company. We are not currently generating revenue and do not expect significant revenue until we successfully commercialize one or more of our product candidates. We do not currently have material commitments for capital expenditures or other expenditures except for 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 the SAVVE study, plan for commercialization of the VenoValve and continue development of enVVe. 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. We anticipate that our cash burn rate will increase from current levels of approximately $4 million to $5 million per quarter as we conduct our clinical trials and work toward bringing our product candidates to market. We have historically funded our operations through financing activities, such as the capital raise completed in 2023, and will need to raise additional capital in the future. Any inability to raise additional financing would have a material adverse effect on us. Based on our cash and working capital as of March 31, 2024, we have sufficient capital resources to meet our obligations as they become due for at least one year after the date of this Quarterly Report and sustain operations. 12 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. Item 3. Quantitative and Qualitative Disclosure About Market Risk As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.