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, 2022
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. ☒
If securities are registered pursuant to Section 12(b)
of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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, 2022 (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 $35.8 million.
As
of February 27, 2023, there were 9,472,000 shares 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. [Reserved] 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 56
PART IV
ITEM 15. Exhibits and Financial Statements Schedules 56
Signatures 59
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 Form 10-K 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 late stage clinical 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.
The
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 enVVeTM, 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
for enVVe. 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 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. There are
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.
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 13485-2020 certified for the design, development and manufacturing of tissue based implantable medical
devices.
CVI 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 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 patients
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. 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 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
with severe deep venous CVI in the U.S. would be candidates for the VenoValve.
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. 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 feedback to make any necessary product modifications or
adjustments to our surgical implantation procedure for the VenoValve prior to conducting the SAVVE (Surgical Anti-reflux Venous
Valve Endoprosthesis) U.S. pivotal trial. Endpoints for the VenoValve first-in-human study included safety (device related adverse
events), reflux, measured by Duplex Ultrasound, a rVCSS score used by the clinician to measure disease severity and progress, a VAS
score used by the patient to measure pain, and quality of life measurements.
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, 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.
Related safety incidences during
the one year first-in-human study for the VenoValve 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.
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.
In March 2021, we submitted an
IDE application with the FDA and in April 2021, we received notification from the FDA that our IDE application was approved. 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 SAVVE study, 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. We later received permission from the FDA to increase the number of clinical
sites to up to 30.
At the end of the VenoValve first-in-human
study, eight (8) study participants agreed to additional monitoring. In November of 2022, three-year follow-up data was presented at the
49th Annual VEITH Symposium in New York city for this cohort of patients. That data indicated no recurrences of the severe CVI that was
present pre-VenoValve, including no ulcer recurrences for those patients who had venous ulcers (C6 patients) prior to receiving the VenoValve.
There were no reported safety issues from the end of one (1) year first-in-human study to the end of the three (3) year reporting period.
In addition, the patients continued to show improvements compared to pre-surgery levels, reporting 62%, 64%, and 84%, average improvements
in reflux, VCSS, and VAS scores, respectively, at an average of three (3) years post VenoValve surgery. One DVT occurred between year
2 and year 3 due to patient non-compliance with anti-coagulation medication. In addition to presenting at leading academic and vascular
conferences around the world, results from the VenoValve first-in-human study and following observational period have been published in
the Journal of Vascular Surgery Venous and Lymphatic Disorders, the Journal of Vascular and Endovascular Surgery, and JAMA
Surgery Journal.
In
November of 2022, we announced we had passed a preliminary safety review by the FDA for the first twenty (20) patients enrolled in the
SAVVE trial. The FDA had requested that we submit preliminary safety data at thirty (30) days post VenoValve implantation for the first
twenty (20) patients enrolled in the study. The preliminary safety data included one (1) device related (mild) and two (2) procedure
related (moderate) adverse events. After review by the FDA, the study was cleared to continue without modification or interruption.
As widely reported in the media,
the lasting impact from the COVID-19 pandemic has put an enormous strain on hospital resources including their clinical staff. Hospitals
continue to be severely understaffed, which impacts the rate at which clinical trials enroll and progress. We have taken several steps
to help address the hospital staffing shortages, including our hiring of 4 Clinical Technologists, with extensive and specialized experience
in duplex sonography of the deep venous system, to assist in training site personnel, proctoring Duplex Ultrasound examinations, and
providing assistance for the SAVVE study.
As of the date of this Annual Report,
we have twenty (20) clinical trial sites activated and eligible to enroll patients in the SAVVE trial and have completed forty-three
(43) successful surgeries. Our guidance is to reach full enrollment in the SAVVE study by the end of the second quarter of 2023.
Enrollment continues to be somewhat inconsistent, with strong enrollment months interspersed with slower enrollment months. We will
change the guidance, if necessary, if and when we determine that new guidance is necessary.
enVVe
On September 21, 2022, we announced
the development of a non-surgical transcatheter based replacement venous valve called enVVeTM, for the treatment of CVI of the deep
veins of the leg. Preliminary bench testing and animal testing for enVVe were completed before our announcement. We also filed an application
seeking approval to begin first-in-human (FIH) testing in Columbia which we expect to receive by the end of the first quarter of 2023.
The enVVe first-in-human trial
will be known as the Transcatheter Anti-reflux, Venous Valve Endoprosthesis first-in-human (TAVVE-FIH) study. The initial phase of the
TAVVE-FIH study will seek to enroll 3 to 5 patients across multiple sites. Several parameters will be evaluated over the course of the
study including safety and technical success of the enVVe venous valve delivery system, and the safety and clinical performance of the
enVVe venous valve.
enVVe is 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 are otherwise not good candidates
for a surgical device, and estimate the U.S. market for enVVe to be approximately 3.5 million patients.
Cash Position
During 2021 we raised $61.4 million
in gross proceeds from capital in offerings of our securities including a public offering in February, and a registered direct offering
in September priced at the market under Nasdaq rules and purchased by a fund managed by Perceptive Advisors, a leading life sciences investment
firm. We finished 2022 with approximately $39.1 million of cash and investments. At our existing cash burn rate of approximately $4 to
$5 million per quarter, we should have sufficient cash to fund operations through the end of 2024 and into 2025.
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 and enVVe 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 the 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 PMA 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 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 numerous patent applications
for the VenoValve with the U.S. Patent and Trademark Office (USPTO) and throughout the world. We currently have seventeen (17) patents
granted from agencies around the world including four (4) from the USPTO.
Employees
As
of February 27, 2023, we had thirty (30) 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 Annual Report, and the inclusion of our website address in this Annual Report 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;
● Our ability to obtain and maintain intellectual property protection;
Risks
Related to Our Business and Strategy
We
have incurred losses since our inception, expect to incur losses in the future and may never achieve or sustain
profitability.
We
have historically incurred losses, including net losses of $24.7 million and $16.5 million for the years ended December 31, 2022 and
2021, respectively. Our losses have resulted primarily from our research programs and the development of our product candidates as
well as from costs related to general and administrative expenses relating to our operations. 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
product candidates. Additionally, we expect that our general and administrative expenses will increase due to the additional
operational costs associated with our SAVVE and TAVVE studies, 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 two product candidates, the VenoValve and the enVVe, and our business presently depends entirely on our success with these
product candidates. In order for our 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 product candidates are currently in development and we
have not received FDA approval for them. 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, and the issuance of the convertible and non-convertible notes. 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 significantly negatively impacted our business.
The
COVID-19 pandemic disrupted the global economy and negatively impacted large populations including people and businesses that are or
may be directly or indirectly involved with the operation of our Company, the manufacturing, development, and testing of our product
candidates, and the clinical trials for our product candidates. The full scope and economic impact of COVID-19 is still unknown. There
are many risks from COVID-19 and any future resurgence 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, disruption to hospital staffs including staffing at the sites of our SAVVE trial, 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 in 2021 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 COVID-19 have also negatively impacted hospital staffing in all departments, including clinical research. In addition
to caring for the influx of COVID patients, hospitals became short staffed due to their own employees’ COVID sicknesses, resulting
in clinical staff being reassigned to cover the shortfall. The disruption to hospital staffing, and particularly to clinical staffing,
has continues to be felt. The lack of available clinical personnel both impacted the speed at which we can activate clinical sites and
continues to slow enrollment.
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, COVID-19 has, and any future resurgence
may, slow patient enrollment for the SAVVE clinical trial. Further, although we now have all planned clinical sites activated, COVID
delayed our ability to do so, and, if additional sites are necessary, a future COVID resurgence may have a similar impact.
At
this time, we have identified the following COVID 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 candidates and the loss of a supplier could have an adverse impact on
our business.
We
rely on two domestic third-party vendors to supply porcine tissue for our product candidates. 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 these suppliers 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 timely 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 candidates, 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 candidates. 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