UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2021
OR
☐TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from _____________ to ___________________
Commission
file number: 001-38325
enVVeno
Medical Corporation
(Exact
name of registrant as specified in its charter)
70
Doppler
Irvine,
California92618
(Address
of principal executive offices)
(949)261-2900
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Common Stock, $0.00001 par value NVNO The NASDAQ Stock Market LLC
Warrant to Purchase Common Stock NVNOW The NASDAQ Stock Market LLC
Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes
☒ No☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No ☒
The
aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of June 30, 2021 (the last
business date of the registrant’s most recently completed second fiscal quarter), based on the last sale price of the registrant’s
common stock on such date was $58.5 million.
As
of March 24, 2022, there were 9,469,850shares of common stock outstanding.
ENVVENO
MEDICAL CORPORATION
TABLE
OF CONTENTS
PART I
ITEM 1. Business 2
ITEM 1A. Risk Factors 8
ITEM 1B. Unresolved Staff Comments 29
ITEM 2. Properties 29
ITEM 3. Legal Proceedings 29
ITEM 4. Mine and Safety Disclosures 29
PART II
ITEM 6. Selected Financial Data 30
ITEM 7A. Quantitative and Qualitative Disclosures and Market Risk 33
ITEM 8. Financial Statements and Supplementary Data 33
ITEM 9A. Controls and Procedures 34
ITEM 9B. Other Information 34
ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 34
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance 35
ITEM 11. Executive Compensation 42
ITEM 14. Principal Accounting Fees and Services 55
PART IV
ITEM 15. Exhibits and Financial Statements Schedules 55
Signatures 58
Financial Statements and Supplementary Data F-1
PART
I
CAUTIONARY
NOTE ON FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K contains, or may contain, certain “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements involve significant risks and uncertainties. Such statements
may include, without limitation, statements with respect to the Company’s plans, objectives, projections, expectations and intentions
and other statements identified by words such as “may,” “will,” “could,” “would,” “should,”
“believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,”
“potential” or similar expressions. These statements are based upon the current beliefs and expectations of the Company’s
management and do not constitute guarantees of future performance. Actual results could differ materially from those contained in the
forward-looking statements and are subject to significant risks and uncertainties, including those discussed under “Risk Factors,”
as well as those discussed elsewhere in this Form 10-K. Actual results (including, without limitation, the actual timing for and results
of the clinical trials described herein, and FDA review of the Company’s products in development) may differ significantly from
those set forth in the forward-looking statements. These forward-looking statements involve risks and uncertainties that are subject
to change based on various factors (many of which are beyond the Company’s control).
You
are further cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-K
or, in the case of documents referred to or incorporated by reference, the date of those documents.
All
subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in
their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly
any revisions to these forward-looking statements to reflect events or circumstances after the date of this Form 10-K or to reflect the
occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking
statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
Unless
the context requires otherwise, references in this Annual Report on Form 10-K to “we,” “us,” “our,”
“our company,” “NVNO”, or similar terminology refer to enVVeno Medical Corporation.
We
use our registered trademarks and trade names, such as VenoValve® TM in this Annual Report on Form 10-K. Solely for convenience,
trademarks and trade names referred to in this prospectus appear without the ® and TM symbols, but those references are not
intended to indicate that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will
not assert its rights, to these trademarks and trade names. We do not intend our use or display of other companies’ trade names
or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
ITEM 1. Business
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 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. We aim to
develop products 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 develop and manufacture our products 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.
On
September 21, 2021, we announced that we were changing our name from Hancock Jaffe Laboratories, Inc. to enVVeno Medical Corporation
and that our development strategy is to focus on the treatment of deep venous CVI. 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 not pursuing further development of the CoreoGraft, which is now outside of our primary focus area.
VenoValve
The
VenoValve is a porcine based valve developed at enVVeno Medical to be implanted in the deep venous system of the leg to treat severe
CVI. By reducing reflux, and 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 current version of the VenoValve is designed to be implanted into the femoral vein of the patient in an open surgical procedure via
a 5-to-6-inch incision in the upper thigh.
There
are presently no FDA approved medical devices to address valvular incompetence in the deep venous system, or effective treatments for
deep venous CVI. Current treatment options include compression garments, or constant leg elevation, and would care for venous ulcers.
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.
Background
Chronic
venous disease (“CVD”) is the world’s most prevalent chronic disease. CVD is generally 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 C5 to C6 being the most severe cases of CVD.
Chronic
Venous Insufficiency (“CVI”) is a 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.
The VenoValve is being developed to treat CVI in the deep venous system with a focus on severe patients with C4b, C5 and C6 CVI.
We
estimate that approximately 2.4 million people in the U.S. have C5 to C6 CVI due to reflux in the deep venous system, including patients
that develop venous leg ulcers (C6 patients). Over one million new severe cases of CVI occur each year in the U.S., mostly from patients
who have experienced a deep vein thrombosis or blood clot. 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
$38 billion a year. Aside from the direct medical costs, 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 patients from getting adequate sleep. Severe CVI
sufferers are known to miss approximately 40% more work days 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.
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 which 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 procedure for the VenoValve prior to conducting the U.S. pivotal trial. Endpoints for the VenoValve first-in-human
study included safety (device related adverse events), reflux, measured by doppler, a VCSS score used by the clinician to measure disease
severity and progress, 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.
There
were no device related safety incidences during the one (1) year first-in-human study. Non-device related safety incidences were minor
and 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, we received notification from the FDA that our IDE application was approved. We have named
the U.S. pivotal trial 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 is evaluating 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 study.
The primary safety endpoint for the pivotal trial is a material adverse safety event (mortality, deep wound infection, major bleeding,
ipsilateral deep vein thrombosis, pulmonary embolism) in no more than twenty six percent (26%) 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, eight (8) study participants agreed to additional monitoring. In August of 2021, longer
term 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 addition, the patients continued to improve, reporting 63%, 60%, and 93%, average
improvements in reflux, VCSS, and VAS scores, respectively, at an average of two (2) years post VenoValve surgery compared to pre-VenoValve
levels.
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. As of December 31, 2021, ten (10) of our clinical trial
sites were activated and eligible to enroll patients in the SAVVE pivotal trial. As of March 24, 2022 we have sixteen (16)
clinical trial sites that are active to enroll patients in the SAVVE trial and expect to have nineteen (19) active sites by March
31, 2022. Also, as of March 24, 2022, we have completed nine (9) successful surgeries in the SAVVE pivotal trial for the VenoValve.
We expect to have our tenth surgery completed by March 31, 2022.
The
resurgence of COVID and the Omicron variant had both direct and indirect consequences on our clinical trial. Several of our clinical
sites put elective surgeries on hold and prohibited potential study subjects from coming to the hospital for screening. Further, as reported
in the media, COVID resurgences put an enormous strain on all hospital resources including clinical staffs. In addition to caring for
the influx of COVID patients, hospitals become short staffed due to their own employees’ COVID sicknesses, resulting in clinical
staff being reassigned to cover the shortfall. The lack of available clinical personnel both slows enrollment and impacts the speed at
which we can activate clinical sites.
Finally,
COVID impacts our patient population. Patients with COVID or who have had COVID within ninety (90) days of their screening, are excluded
from our study until after the ninety (90) day period has passed. In addition, concerns about getting COVID impact the patients’
willingness to undergo an elective surgical procedure with a one-night hospital stay. As hospital clinical operations return to more
normal levels, our goal is to fully enroll the SAVVE pivotal trial by the end of 2022 or the beginning of 2023. We
continue to monitor the ongoing overall impact of COVID on the SAVVE clinical trial and will issue updates when appropriate.
In
February of 2021, we raised $41.4 million of capital in a public offering of our common stock. In September of 2021, we raised
$20 million dollars of capital in a registered direct offering priced at the market under Nasdaq rules and purchased by a fund
managed by Perceptive Advisors, a leading life sciences investment firm. We finished 2021 with approximately $55 million of cash.
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.
Government
Regulation
Our
product candidates and our operations are subject to extensive regulation by the FDA, and other federal and state authorities in the
United States, as well as comparable authorities in foreign jurisdictions. Our product candidates are subject to regulation as medical
devices in the United States under the Federal Food, Drug, and Cosmetic Act (“FDCA”), as implemented and enforced by the
FDA. The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging,
storage, installation, distribution, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising,
promotion, marketing, and import and export of medical devices to ensure that medical devices distributed domestically are safe and effective
for their intended uses and otherwise meet the requirements of the FDCA.
PMA
Approval Pathway
Class
III devices such as the VenoValve generally require pre-market approval (PMA) before they can be marketed in the U.S. The PMA review
and approval process is more demanding than the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that
the device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical studies and human
clinical trials. The PMA also must contain a full description of the device and its components, a full description of the methods, facilities
and controls used for manufacturing, and proposed labeling. Following receipt of a PMA, the FDA determines whether the application is
sufficiently complete to permit a substantive review. If FDA accepts the application for review, it has 180 days under the FDCA to complete
its review of a PMA, although in practice, the FDA’s review often takes significantly longer, and can take several years. An advisory
panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as
to the approvability of the device. The FDA may or may not accept the panel’s recommendation. In addition, the FDA generally will
conduct a pre-approval inspection of the applicant or its third-party manufacturers’ manufacturing facility or facilities to ensure
compliance with the QSR. The FDA will approve the new device for commercial distribution if it determines that the data and information
in the PMA constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its
intended use(s).
The
FDA may approve a PMA with post-approval conditions intended to ensure the safety and effectiveness of the device, including, among other
things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical
study that supported PMA approval, or requirements to conduct additional clinical studies post-approval. The FDA may condition PMA approval
on some form of post-market surveillance when deemed necessary to protect the public health or to provide additional safety and efficacy
data for the device in a larger population or for a longer period of use. In such cases, the manufacturer might be required to follow
certain patient groups for a number of years and to make periodic reports to the FDA on the clinical status of those patients. Failure
to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval. Certain
changes to an approved device, such as changes in manufacturing facilities, methods or quality control procedures, or changes in the
design performance specifications, which affect the safety or effectiveness of the device, require submission of a PMA supplement. PMA
supplements often require submission of the same type of information as a PMA, except that the supplement is limited to information needed
to support any changes from the device covered by the original PMA and may not require as extensive clinical data or the convening of
an advisory panel. Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes
a different intended use, mode of operation and technical basis of operation, or when the design change is so significant that a new
generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change
in demonstrating a reasonable assurance of safety and effectiveness. The VenoValve will require the approval of a PMA.
Clinical
Trials in Support of PMA
Clinical
trials are almost always required to support a PMA submission. All clinical investigations of devices to determine safety and effectiveness
must be conducted in accordance with the FDA’s investigational device exemption (IDE) regulations, which govern investigational
device labeling, prohibit promotion of the investigational device and specify an array of recordkeeping, reporting and monitoring responsibilities
of study sponsors and study investigators. If the device presents a “significant risk,” to human health, as defined by the
FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human
clinical trials. A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient
and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating
disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject. The
VenoValve required IDE applications prior to human testing in the United States, and we believe any future products such as
the enVVE will also require IDE applications before human testing in the United States.
An
IDE application must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe to test the
device in humans and that the testing protocol is scientifically sound. The IDE will automatically become effective 30 days after receipt
by the FDA unless the FDA notifies the company that the investigation may not begin. If the FDA determines that there are deficiencies
or other concerns with an IDE for which it requires modification, the FDA may permit a clinical trial to proceed under a conditional
approval.
In
addition to IDE approval, a human, the study must be approved by, and conducted under the oversight of, an Institutional Review Board,
or IRB, for each clinical site. The IRB is responsible for the initial and continuing review of the study, and may pose additional requirements
for the conduct of the study. If an IDE application is approved by the FDA and one or more IRBs, human clinical trials may begin at a
specific number of investigational sites with a specific number of patients, as approved by the FDA. Acceptance of an IDE application
for review does not guarantee that the FDA will allow the IDE to become effective and, if it does become effective, the FDA may or may
not determine that the data derived from the trials support the safety and effectiveness of the device or warrant the continuation of
clinical trials. An IDE supplement must be submitted to, and approved by, the FDA before a sponsor or investigator may make a
change to the investigational plan that may affect its scientific soundness, study plan or the rights, safety or welfare of human subjects.
During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting
clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping
and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them. The clinical investigators
in the clinical study are also subject to FDA’s regulations and must obtain patient informed consent, rigorously follow the investigational
plan and study protocol, control the disposition of the investigational device and comply with all reporting and recordkeeping requirements.
Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons,
including a belief that the risks to study subjects outweigh the anticipated benefits.
Post-market
Regulation
After
a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply. These include: establishing
registration and device listing with the FDA; QSR requirements, which require manufacturers, including third-party manufacturers, to
follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and
manufacturing process; labeling regulations and FDA prohibitions against the promotion of investigational products, or “off-label”
uses of cleared or approved products; requirements related to promotional activities; clearance or approval of product modifications
that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared
devices; medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused
or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely
to cause or contribute to a death or serious injury, if the malfunction were to recur; correction, removal and recall reporting regulations,
which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to
health posed by the device or to remedy a violation of the FDCA; and post-market surveillance activities and regulations.
Regulation
Outside of the U.S.
Each
country or territory outside of the U.S. has its own rules and regulations with respect to the manufacture, marketing and sale of medical
devices. For example, in December of 2018, we received regulatory approval from Instituto Nacional de Vigilancia de Medicamentos y Alimentos,
the Colombian equivalent of the U.S. Food and Drug Administration, for our first-in-human study for the VenoValve in Colombia.
At this time, other than the first-in-human trial in Colombia, we have not determined which countries outside of the U.S., if any, we
will seek approval for our product candidates.
Our
Competitive Strengths
We
believe we will offer the venous disease treatment market a compelling value proposition with the launch of our product candidates,
if approved, for the following reasons:
Intellectual
Property
We
possess an extensive proprietary processing and manufacturing methodology specifically applicable to the design, processing, manufacturing
and sterilization of biologic devices. This includes FDA compliant quality control and assurance programs, proprietary tissue processing
technologies demonstrated to eliminate recipient immune responses, trusted relationship with abattoir suppliers, and a combination of
tissue preservation and gamma irradiation that enhances device functions and guarantees sterility. We have filed several patent applications
for the VenoValve with the U.S. Patent and Trademark Office (USPTO) and throughout the world. In February of 2021, we
received a notice for allowance from the USPTO for an application focusing on novel aspects of the VenoValve Frame.
Employees
As
of March 24, 2022, we had 24 full-time employees. None of our employees are represented by a collective bargaining agreement,
and we have never experienced any work stoppage. We believe we have good relations with our employees.
Corporate
Information
We
were incorporated in Delaware on December 22, 1999. Our principal executive offices are located at 70 Doppler, Irvine, California, 92618,
and our telephone number is (949) 261-2900. Our corporate website address is www.envveno.com. The information contained on or accessible
through our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual
reference only.
ITEM 1A. Risk Factors
Investing
in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together
with all of the other information contained in this Annual Report, before deciding to invest in our securities. If any of the following
risks materialize, our business, financial condition, results of operation and prospects will likely be materially and adversely affected.
In that event, the market price of our common stock could decline, and you could lose all or part of your investment.
Summary
The
risk factors described below are a summary of the principal risk factors associated with an investment in us. These are not the only
risks we face. You should carefully consider these risk factors and the other reports and documents filed by us with the SEC.
● Changes in external competitive market factors;
● Uncertainties in generating sustained revenue or achieving profitability;
● Unanticipated working capital or other cash requirements;
Risks
Related to Our Business and Strategy
We
have incurred significant losses since our inception, expect to incur significant losses in the future and may never achieve or sustain
profitability.
We
have historically incurred substantial net losses, including net losses of $16.5 million and $9.1 million for the years ended December
31, 2021 and 2020, respectively. As a result of our historical losses, we had an accumulated deficit of $81.9 million as of December
31, 2021. Our losses have resulted primarily from costs related to general and administrative expenses relating to our operations, as
well as our research programs and the development of our product candidates. Currently, we are not generating revenue from operations,
and we expect to incur losses for the foreseeable future as we seek to obtain regulatory approval for our lead product candidate. Additionally,
we expect that our general and administrative expenses will increase due to the additional operational costs associated with our SAVVE
study as well as the projected expansion of our operations. We do not expect to generate significant revenue until any of our product
candidates are licensed or sold, if ever. We may never generate significant revenue or become profitable. Even if we do achieve profitability,
we may be unable to sustain or increase profitability on a quarterly or annual basis. Our failure to achieve and subsequently sustain
profitability could harm our business, financial condition, results of operations and cash flows.
We
currently depend entirely on the successful and timely regulatory approval and commercialization of our current lead product candidate,
and any future product candidates, which may not receive regulatory approval or, if any of our product candidates do receive regulatory
approval, we may not be able to successfully commercialize them.
We
currently have one product candidate, the VenoValve, and our business presently depends entirely on our success with this product candidate.
In order for our current lead and any future product candidates to succeed they need to be approved by regulatory authorities,
which may never happen. Our product candidates are based on technologies that have not been used previously in the manner we propose.
Market acceptance of our product candidates will largely depend on our ability to demonstrate their relative safety, efficacy, cost-effectiveness
and ease of use. We may not be able to successfully develop and commercialize our product candidates. If we fail to do so, we will not
be able to generate substantial revenues, if any.
We
are subject to rigorous and extensive regulation by the FDA in the United States and by comparable agencies in other jurisdictions, including
the European Medicines Agency, or EMA, in the European Union, or EU. Our lead product candidate is currently in development and we have
not received FDA approval for our product candidate. Our product candidates may not be marketed in the United States until they have
been approved by the FDA and may not be marketed in other jurisdictions until they have received approval from the appropriate foreign
regulatory agencies. Each product candidate requires significant research, development, preclinical testing and extensive clinical investigation
before submission of any regulatory application for marketing approval.
Obtaining
regulatory approval requires substantial time, effort and financial resources, and we may not be able to obtain approval of any of our
product candidates on a timely basis, or at all. The number, size, design and focus of preclinical and clinical trials that will be required
for approval by the FDA, the EMA or any other foreign regulatory agency varies depending on the device, the disease or condition that
the product candidates are designed to address and the regulations applicable to particular products. Preclinical and clinical data
can be interpreted in different ways, which could delay, limit or preclude regulatory approval. The FDA, the EMA and other foreign regulatory
agencies can delay, limit or deny approval of a product for many reasons, including, but not limited to:
● a product candidate may not be shown to be safe or effective;
● we may not be able to enroll enough patients to complete our product studies;
● a product candidate may fail to comply with regulatory requirements; and/or
If
our product candidates are not approved at all or quickly enough to provide net revenues to defray our operating expenses, our business,
financial condition, operating results and prospects could be harmed.
If
we are unable to successfully raise additional capital, our future clinical trials and product development could be limited and our long-term
viability may be threatened.
We
have experienced negative operating cash flows since our inception and have funded our operations primarily from proceeds received from
sales of our capital stock, the issuance of the convertible and non-convertible notes, and the sale of our products to larger medical
device companies. We will need to seek additional funds in the future through equity or debt financings, or strategic alliances with
third parties, either alone or in combination with equity financings, to complete our product development initiatives. These financings
could result in substantial dilution to the holders of our common stock, or require contractual or other restrictions on our operations
or on alternatives that may be available to us. If we raise additional funds by issuing debt securities, these debt securities could
impose significant restrictions on our operations. Any such required financing may not be available in amounts or on terms acceptable
to us, and the failure to procure such required financing could have a material and adverse effect on our business, financial condition
and results of operations, or threaten our ability to continue as a going concern.
Our
present and future capital requirements will be significant and will depend on many factors, including:
● the costs, timing and outcome of regulatory review of our product candidates;
● the effect of competing technological and market developments;
● market acceptance of our product candidates;
● the ability to achieve revenue growth and improve gross margins;
We
may not be able to acquire additional funds on acceptable terms, or at all. If we are unable to raise adequate funds, we may have to
liquidate some or all of our assets or delay, reduce the scope of or eliminate some or all of our development programs.
If
we do not have, or are not able to obtain, sufficient funds, we may be required to delay development or commercialization of our product
candidates. We also may have to reduce the resources devoted to our product candidates or cease operations. Any of these factors could
harm our operating results.
The
COVID-19 pandemic has significantly negatively impacted our business.
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, the manufacturing, development, and testing of our product candidate, and the
clinical trials for our product candidate. The full scope and economic impact of COVID-19 is still unknown. There are many risks
from 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 NVNO. To-date, the primary impacts of
COVID-19 to our operations were stay-at-home work requirements, travel restrictions limiting our ability to initiate and continue
animal studies and patient trials, suspensions of elective surgeries at trial sites limiting our ability to enroll patients in
SAVVE, and disruptions to scheduled meetings with regulatory agencies such as the FDA. Notwithstanding these impacts, we were able
to use remote work tools, communications solutions, and other methods to continue our trials and regulatory submissions. The
resurgence of COVID and the Omicron variant caused several of our activated clinical sites to put elective surgeries on hold and
prohibit potential study subjects from coming to the hospital for screening. Labor shortages due to Omicron have also negatively
impacted hospital staffing in all departments, including clinical research. In addition to caring for the influx of COVID patients,
hospitals become short staffed due to their own employees’ COVID sicknesses, resulting in clinical staff being reassigned to
cover the shortfall. The lack of available clinical personnel both slows enrollment and impacts the speed at which we can activate
clinical sites. COVID also impacts our patient population. Patients with COVID or who have had COVID within ninety (90) days of
their screening, are excluded from our study until after the ninety (90) day period has passed. In addition, concerns about getting
COVID impact the patients’ willingness to undergo an elective surgical procedure with a one-night hospital stay. As a result,
the COVID resurgence has slowed patient enrollment for the SAVVE clinical trial and has resulted in delays in new clinical sites
being activated for enrollment. We are increasing the number of SAVVE sites and ensuring they are geographically dispersed to attempt
to mitigate the impact of reductions in elective surgery schedules. At this time, we have identified the following COVID-19
related risks that we believe have a greater likelihood of negatively impacting our Company, including, but not limited
to:
We
may never be able to generate sufficient revenue from the commercialization of our product candidates to achieve and maintain profitability.
Our ability to operate profitably
in the future will depend upon, among other items, our ability to (i) fully develop product candidates, (ii) scale up our business and
operational structure, (iii) obtain regulatory approval of product candidates from the FDA, (iv) market and sell product candidates,
(v) successfully gain market acceptance of our product candidates, and (vi) obtain sufficient and on-time supply of components from our
third-party suppliers. If our product candidates are never successfully commercialized, we may never receive a return on our investments
in product development, regulatory compliance, manufacturing, and quality assurance, which may cause us to fail to generate revenue
and gain economies of scale from such investments.
We
only utilize a few suppliers for porcine tissue for our product candidate and the loss of a supplier could have an adverse impact on
our business.
We
rely on one domestic third-party vendor to supply porcine tissue for our product candidate. Our ability to supply our current
and future product candidates commercially, if approved, depends, in part, on our ability to obtain this porcine
tissue in accordance with our specifications and with regulatory requirements and in sufficient quantities to meet demand. Our ability
to obtain porcine tissue may be affected by matters outside our control, including that this supplier may cancel our arrangements
on short notice or have disruptions to their operations.
If
we are required to establish additional or replacement suppliers for the porcine tissue, it may not be accomplished quickly and our operations
could be disrupted. Even if we are able to find replacement suppliers, the replacement suppliers may need to be qualified and may require
additional regulatory authority approval, which could result in further delay. In the event of a supply disruption, our product inventories
may be insufficient to supply our customers and the development of any future product candidates would be delayed, limited or prevented,
which could have an adverse impact on our business.
We
depend upon third-party suppliers for certain components of our product candidate, making us vulnerable to supply problems and price
fluctuations, which could harm our business.
We
rely on a number of third-party suppliers to provide certain components of our product candidate. We do not have long-term supply agreements
with most of our suppliers, and, in many cases, we purchase goods on a purchase order basis. Our suppliers may encounter problems for
a variety of reasons, including unanticipated demand from larger customers, failure to follow specific protocols and procedures, failure
to comply with applicable regulations, equipment malfunction, quality or yield problems and environmental factors, any of which could
delay or impede their ability to meet our demand. Our reliance on these third-party suppliers also subjects us to other risks that could
harm our business, including:
In
addition, there are a limited number of suppliers and third-party manufacturers that operate under the FDA’s Quality System Regulation,
or QSR, requirements, maintain certifications from the International Organization for Standardization that are recognized as harmonized
standards in the European Economic Area, or EEA, and that have the necessary expertise and capacity to supply components for our product
candidates. As a result, it may be difficult for us to locate manufacturers for our anticipated future needs, and our anticipated growth
may strain the ability of our current suppliers to deliver products, materials and components to us. If we are unable to arrange for
third-party manufacturing of components for our product candidates, or to do so on commercially reasonable terms, we may not be able
to complete development of, market and sell our current or new product candidates. Further, any supply interruption from our suppliers
or failure to obtain additional suppliers for any of the components used in our product candidates would limit our ability to manufacture
our product candidates. Failure to meet these commitments could result in legal action by our customers, loss of customers or harm to
our ability to attract new customers, any of which could have a material and adverse effect on our business, financial condition, results
of operations and growth.
If we successfully develop
product candidates, we will have to demonstrate the efficacy and financial viability of our products to doctors, hospitals,
insurance companies, and other stakeholders.
There
are multiple stakeholders that determine the success of a medical device, including doctors, hospitals, medical insurance companies,
and others. Educating these stakeholders on the benefits of product candidates will require a significant commitment by a marketing
team and sales organization. Surgeons and hospitals may be slow to change their practices because of familiarity with existing devices
and/or treatments, perceived risks arising from the use of new devices, lack of experience using new devices, lack of clinical data supporting
the benefits of such devices or the cost of new devices. There may never be widespread adoption of our product candidates by surgeons
and hospitals. In addition, medical insurance companies would need to understand the costs and benefits of our product candidates compared
to the existing standards of care, if they are to provide reimbursement for the cost of our product candidates and the procedures to
implant our product candidates. We may have difficulty and may never achieve the market acceptance that we need from doctors, hospitals,
medical insurance companies and others that are necessary for a successful product.
We may be
unable to convince hospital facilities to approve the use of our product candidates.
In the United States, in
order for surgeons to use our product candidates, the hospital facilities where these surgeons treat patients will typically require
that the product candidates receive approval from the facility’s VAC. VACs typically review the comparative effectiveness and
cost of medical devices used in the facility. The makeup and evaluation processes for VACs vary considerably, and it can be a
lengthy, costly and time-consuming effort to obtain approval by the relevant VAC. For example, even if we have an agreement
with a hospital system for the purchase of a product, in most cases, they must obtain VAC approval by each hospital
within the system to sell at that particular hospital. Additionally, hospitals typically require separate VAC approval for each
specialty in which a product is used, which may result in multiple VAC approval processes within the same hospital even if
such product has already been approved for use by a different specialty group. VAC approval is often needed for each different
product to be used by the surgeons in that specialty. In addition, hospital facilities and group purchasing organizations, or GPOs,
which manage purchasing for multiple facilities, may also require us to enter into a purchasing agreement and satisfy
numerous elements of their administrative procurement process, which can also be a lengthy, costly and time-consuming effort. If we
do not receive access to hospital facilities in a timely manner, or at all, via these VAC and purchasing contract processes, or
otherwise, or if we are unable to secure contracts on commercially reasonable terms in a timely manner, or at all, our
costs may increase, our sales may decrease and our operating results may be harmed.
Our
long-term growth depends on our ability to develop and commercialize additional product candidates.
The
medical device industry is highly competitive and subject to rapid change and technological advancements. Therefore, it is important
to our business that we continue to enhance our product candidate offerings and introduce new product candidates. Developing new product
candidates is expensive and time-consuming. Even if we are successful in developing additional product candidates, the success of any
new product candidates or enhancements to existing product candidates will depend on several factors, including our ability to:
● properly identify and anticipate surgeon and patient needs;