VANI — Vivani Medical, Inc.

Summary of Second Sight Medical Products Q4 2019 Earnings Call

1. Key Financial Results and Metrics

• Net Sales: $0.5 million in Q4 2019, down from $1.8 million in Q4 2018.
• Average Selling Price (ASP): Increased to $166,000 for three implants in Q4 2019, compared to $110,000 for 16 devices in Q4 2018.
• Research and Development Expenses: Increased to $4.1 million in Q4 2019 from $2.4 million in Q4 2018, attributed to costs for Orion prototypes.
• Clinical and Regulatory Expenses: Decreased slightly to $1 million in Q4 2019 from $1.2 million in Q4 2018.
• Selling and Marketing Expenses: Decreased to $1 million in Q4 2019 from $2.4 million in Q4 2018.
• General and Administrative Expenses: Slightly decreased to $2.3 million in Q4 2019 from $2.5 million in Q4 2018.
• Cash Position: $11.3 million as of December 31, 2019, with a cash burn of $7.1 million in Q4 2019, providing a runway into Q2 2020.

2. Strategic Updates and Business Highlights

• Leadership Transition: CEO Will McGuire announced his departure to a new role, with Greg Williams stepping in as interim CEO.
• Orion Early Feasibility Study: Positive results from the study, with 83% of subjects showing improved visual function. The sixth subject reached the 12-month milestone.
• Regulatory Progress: Received CE Mark certification and conditional FDA approval for next-generation wearables (Argus 2s), with plans for a limited market introduction.
• Reimbursement Efforts: Ongoing discussions with CMS for national coverage and private payers to secure reimbursement pathways for Orion.

3. Forward Guidance and Outlook

• Pivotal Study Timeline: Anticipated IDE filing for the Orion system in the first half of 2021, delayed from the end of 2020 due to ongoing discussions with the FDA regarding safety endpoints.
• Increased R&D Spending: Expected to rise in 2020 due to intensified development and clinical trial activities.
• Legislative Efforts: Engaging with lawmakers to support reimbursement for breakthrough devices.

4. Bad News, Challenges, or Points of Concern

• Revenue Decline: Significant drop in net sales year-over-year raises concerns about market demand and commercial viability.
• Leadership Uncertainty: Departure of the CEO may create instability during the transition period.
• Regulatory Delays: Ongoing discussions with the FDA regarding safety endpoints are causing delays in the pivotal trial timeline.
• COVID-19 Impact: Potential disruptions to ongoing clinical trials and validation efforts due to pandemic-related restrictions.

5. Notable Q&A Insights

• CEO Search: The board is in the early stages of searching for a new CEO, with no clear timeline provided.
• Safety Endpoints: Discussions with the FDA focus on determining acceptable serious adverse event rates, which are critical for advancing to the pivotal trial.
• Cash Burn Projections: Expected to exceed $27.6 million in 2020 due to increased R&D and clinical activities.
• Regulatory Pathway: The company is leaning towards a PMA pathway for Orion, leveraging breakthrough designation advantages.

This summary encapsulates the key points from the earnings call, highlighting both the progress and challenges faced by Second Sight Medical Products as they advance their innovative technologies.