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, 2023
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
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. ☐
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 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, 2023 (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 $29.2 million.
As
of February 27, 2024, there were 13,317,000 shares of common stock outstanding.
ENVVENO
MEDICAL CORPORATION
TABLE
OF CONTENTS
PART I
ITEM 1. Business 2
ITEM 1A. Risk Factors 9
ITEM 1B. Unresolved Staff Comments 27
ITEM 1C. Cybersecurity 27
ITEM 2. Properties 27
ITEM 3. Legal Proceedings 27
ITEM 4. Mine and Safety Disclosures 27
PART II
ITEM 6. [Reserved] 28
ITEM 7A. Quantitative and Qualitative Disclosures and Market Risk 31
ITEM 8. Financial Statements and Supplementary Data 31
ITEM 9A. Controls and Procedures 32
ITEM 9B. Other Information 32
ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 32
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance 33
ITEM 11. Executive Compensation 40
ITEM 14. Principal Accounting Fees and Services 52
PART IV
ITEM 15. Exhibits and Financial Statements Schedules 52
Signatures 55
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 clinical-stage medical device company focused on the advancement of innovative bioprosthetic (tissue-based)
solutions to improve the standard of care for the treatment of venous disease. Chronic Venous Disease (CVD) is the world’s most
prevalent chronic disease, impacting approximately 70% of the adult population of the U.S. Chronic Venous Insufficiency (CVI), is a large
subset of CVD, which most often occurs when valves inside of the veins of the leg become damaged, resulting in the backwards flow of
blood (reflux), blood pooling in the lower leg, increased pressure in the veins of the leg (venous hypertension) and in severe cases,
venous ulcers that are difficult to heal. The Company is developing surgical and non-surgical replacement venous valves for patients
suffering from severe CVI of the deep venous system of the leg.
The
Company’s lead product is the VenoValve®, which is a first-in-class surgical replacement venous valve that is currently being
evaluated in a U.S. pivotal study. The Company is also developing a second product called enVVe®, which is a first-in-class, non-surgical,
transcatheter based replacement venous valve. The Company is currently conducting pre-clinical testing on 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. If approved, we expect the VenoValve and enVVe to co-exist,
with the VenoValve as a surgical replacement venous valve option and enVVe as a non-surgical replacement venous valve option, although
we cannot provide any assurance that either the VenoValve or enVVe will receive approval from the FDA (see the section entitled “Risk
Factors” in this Annual Report on Form 10-K). There are currently no devices approved as surgical or non-surgical replacement venous
valves, and there are currently no effective treatments for deep venous CVI caused by incompetent valves.
Our
team of officers and directors has been affiliated with numerous medical devices that have received FDA approval or CE marking and
that have been commercially successful. We develop and manufacture our products in connection with our clinical trials 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.
CVI
Background
Chronic
venous disease (“CVD”) is the world’s most prevalent chronic disease. CVD is clinically classified using a
standardized system known as CEAP (clinical, etiological, anatomical, and pathophysiological). The CEAP system consists of seven
clinical classifications (C0 to C6) with C4, C5 and C6 being the most severe categories of CVD.
Chronic
Venous Insufficiency (“CVI”) is a large subset of CVD and is generally used to describe patients with C4 to C6 CVD. CVI is
a debilitating condition that affects the venous system of the leg causing pain, swelling, edema, skin changes, and ulcerations.
The
human leg contains three vein systems: the deep vein system, the superficial vein system, and the perforator vein system which connects
the deep system to the superficial system. The deep venous system is located below the muscle and facia in the center portion of the
leg and is responsible for approximately 90% of the blood flow. In order for blood to return to the heart from the foot, ankle, and lower
leg, the calf muscle serves as a pump and pushes the blood up the veins of the leg against gravity and through a series of one-way valves.
Each valve is supposed to open as blood passes through, and then close as blood progresses up the veins of the leg to the next valve.
CVI occurs when the one-way valves in the veins of the leg fail and become incompetent. When the valves fail, gravity causes the blood
to flow backwards and in the wrong direction (reflux). As blood pools in the lower leg, pressure inside the veins increases (venous hypertension).
Reflux, and the resulting venous hypertension, causes the leg to swell, resulting in debilitating pain, and in the most severe cases,
venous ulcers.
Severe
CVI sufferers experience a significantly reduced quality of life. Daily activities such as preparing meals, housework, and personal hygiene
(washing and bathing) become difficult due to reduced mobility. For many severe CVI sufferers, intense pain, which frequently occurs
at night, prevents them from getting adequate sleep. Severe CVI sufferers are known to miss approximately 40% more workdays than the
average worker. A high percentage of venous ulcer patients also experience severe itching, leg swelling, and an odorous discharge. Wound
dressing changes, which occur several times a week, can be extremely painful. Venous ulcers from deep venous CVI are very difficult to
heal, and a significant percentage of venous ulcers remain unhealed for more than a year. Even if healed, recurrence rates for venous
ulcers are known to be high (20% to 40%) within the first year and as high as 60% after five years. Patients with severe CVI often become
housebound and experience social isolation due to difficulty with ambulation. As a result, studies have shown that patients with active
venous ulcers experience higher rates of anxiety and depression, with reported rates of anxiety of up to 30% and depression up to 40%.
Rates of depression caused by venous ulcers among the elderly are even higher, with 48% of elderly venous ulcer patients having severe
depressive symptoms.
Prevalence
is generally defined as the portion of the population that has a given condition. Estimates indicate that the prevalence of people in
the U.S. with severe, deep venous CVI (C4 to C6 disease) with reflux to be approximately 20 million. Incidence is generally defined as
the number of new cases of an ailment that develop in a given time period. We estimate that approximately 3.5 million new patients with
severe deep venous CVI are diagnosed each year in the U.S. including patients that develop venous leg ulcers (C6 patients). The average
patient seeking treatment of a venous ulcer spends as much as $30,000 a year on wound care, and the total direct medical costs from venous
ulcer sufferers in the U.S. has been estimated to exceed $3 billion a year.
VenoValve
The
VenoValve® is a porcine based replacement venous valve developed at enVVeno Medical to be surgically implanted in the deep
venous system of the leg to treat severe CVI caused by valvular incompetence. By 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 each year 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. The purpose of the first-in-human study was to provide proof of concept,
and to provide feedback to make any necessary product modifications or adjustments to our surgical implantation procedure for the
VenoValve prior to conducting the VenoValve pivotal trial. Endpoints for the VenoValve first-in-human study included safety (device
related adverse events), popliteal reflux time, measured by Duplex Ultrasound, rVCSS scoring, which is a measurement created by
international vascular societies and is used by the clinician to measure disease progression and regression, 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, rVCSS scores improved an average of 6 points, popliteal reflux time improved an average of 54%,
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. Revised Venous Clinical Severity Scoring (rVCSS) is a validated measurement commonly used to
objectively assess outcomes in the treatment of venous disease, and include ten characteristics consisting of physician assessments
and patient reported outcomes including pain, inflammation, skin changes such as pigmentation and induration, the number of active
ulcers, and ulcer duration. The improvement in VCSS scores was significant and indicates the VenoValve patients who had severe CVI
pre-surgery, had mild CVI or the complete absence of disease at one-year post surgery.
Related
safety incidences during the one year first-in-human study for the VenoValve included one (1) 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.
At
the end of the VenoValve first-in-human study, eight (8) study participants agreed to additional monitoring. In November of 2022, three-year, positive
follow-up data was presented for this cohort of patients at the 49th Annual VEITH Symposium in New York city.
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 U.S. pivotal study for the VenoValve which
is called the SAVVE (Surgical Anti-reflux Venous Valve Endoprosthesis) clinical study. The SAVVE study is a prospective, non-blinded,
single arm, multi-center study of seventy-five (75) CVI patients enrolled at 21 U.S. sites.
Efficacy
endpoints for the SAVVE pivotal study include rVCSS scores, which will be used to provide evidence of clinically meaningful benefit,
as well as reflux time measurements, VAS pain scores, quality of life measurements, ulcer healing (for CEAP class C6 patients), and intra-operative
and one-year vein patency and valve functionality. Safety endpoints include device related events and procedure related events –including mortality, pulmonary embolism, ipsilateral deep vein thrombosis, infection and bleeding.
The
first patient in the SAVVE pivotal study was enrolled in October of 2021. Following enrollment of the first patient the SAVVE study was
delayed due to COVID-19 restrictions. 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.
On
October 6, 2023, we announced we had achieved full enrollment (75 subjects) in the SAVVE trial, having enrolled eighteen (18) patients
over the final two (2) months of the study. Full enrollment occurred approximately four (4) months earlier than expected due to increased
demand for the VenoValve.
On
November 16, 2023, we presented positive preliminary device related Material Adverse Event (MAE) data at the 50th Annual VEITH
Symposium. The preliminary device related MAE rate for the fully enrolled 75 subject study was eight percent (8%). MAEs for the
SAVVE study are defined as all-cause mortality, pulmonary embolisms (PEs), ipsilateral deep vein thromboses (DVTs), bleeding, and
deep wound infections, occurring within thirty (30) days of enrollment in the study. The report on MAEs presented at the conference
indicated no deaths, no pulmonary embolisms, and six (6) deep vein thromboses (DVTs), from the fully enrolled cohort of 75
patients. All DVTs were adjudicated as being mild in severity. Left untreated, post-thrombotic patients with severe CVI are
known to DVT recurrence rates as high as eighteen percent (18%) at one year.
We
expect to release initial, topline rVCSS efficacy data from the SAVVE study at the VENOUS2024 American Venous Forum Annual Meeting on March 6, 2024. With the FDA indicating that one-year
data for all 75 patients will be necessary prior to the filing of the application seeking pre-market (PMA) approval for the VenoValve,
the Company will be eligible to file the PMA application seeking approval in Q4 of 2024.
enVVe
On
September 21, 2022, we announced the development of a non-surgical transcatheter based replacement venous valve called enVVe®, for
the treatment of CVI of the deep veins of the leg. Initial preliminary bench testing and pre-clinical testing for enVVe have been successfully
completed.
On
October 6, 2023, contemporaneously with the announcement of a twenty-eight-million-dollar capital raise, we announced plans to
expedite the development of enVVe. The Company expects to begin a six (6) month Good Laboratory Practice animal study for enVVe in the
first quarter of 2024 and to be ready to file for IDE approval for the enVVe pivotal trial, the Transcatheter Anti-Reflux, Venous
Valve Endoprosthesis or TAVVE, by the end of 2024.
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 may otherwise not be good candidates for a surgical device, and estimate the U.S. market for enVVe to be approximately 3.5 million
patients.
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 much 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. Both the VenoValve and enVVe 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 twenty-six (26) patents
granted from agencies around the world including seven (7) from the USPTO.
Employees
As
of February 27, 2024, we had thirty-one (31) 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 $23.5 million and $24.7 million for the years ended December 31, 2023 and 2022,
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 anticipated 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 product candidates, 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 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.
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 and foreign regulators, (iv) market and sell product candidates, (v) successfully gain market acceptance of our product
candidates by doctors and patients, 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
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.
We
face significant competition and our business prospects will depend on our ability to develop and commercialize our current product
candidates and may also depend on our ability to develop additional product candidates.
The
medical device industry is highly competitive and subject to rapid change and technological advancements. New technologies,
techniques or products could emerge that might make our products obsolete or offer better combinations of price and performance than
the products and services that we plan to offer. Therefore, it is important to our business that we continue to develop and enhance
our product candidate offerings and potentially 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;
● develop an effective and dedicated sales and marketing team;
● avoid infringing upon the intellectual property rights of others;
● provide adequate training to potential users of our product candidates; and
If
we are unsuccessful in developing and commercializing additional devices in other areas, our ability to realize our revenue may be impaired.
Existing markets for surgical devices are characterized by rapid technological change and innovation.