VANI US Equity☆

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

DC 20549

FORM

10-K

(Mark

One)

For

the Fiscal Year Ended December 31, 2023

OR

For

the transition period from ________ to ________

Commission

File Number 001-36747

Vivani

Medical, Inc.

(Exact

name of registrant as specified in its charter)

(Address of principal executive offices, including zip code)

Registrant’s

telephone number, including area code: (415) 506-8462

Securities

registered pursuant to Section 12(b) of the Act:

Title of Each Class Trading Symbol Name of Each Exchange on Which Registered

Common Stock VANI NASDAQ Capital Market

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 Exchange 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 on its corporate website, if any, every Interactive Data File

required to be submitted and 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, or a smaller

reporting company. See definition 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 Act). Yes ☐ No ☒

The

aggregate market value of the shares of the registrant’s Common Stock held by non-affiliates of the registrant as of June

30, 2023, computed by reference to the closing sales price on the Nasdaq Capital Market on June 30, 2023, was approximately $38.9

million.

As

of March 22, 2024, the registrant had 54,978,000 shares of common stock, par value $0.0001 per share.

DOCUMENTS

INCORPORATED BY REFERENCE

Portions

of the registrant’s Definitive Proxy Statement for the 2024 Annual Meeting of Stockholders (the “Proxy Statement”)

are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Registrant intends

to file a definitive proxy statement pursuant to Regulation 14A with the Securities and Exchange Commission (the “SEC”)

within 120 days after the end of registrant’s fiscal year end of December 31, 2023.

1

VIVANI

MEDICAL, INC.

AND

SUBSIDIARIES

FORM

10-K

TABLE

OF CONTENTS

Page

PART I

Item 1. Business 6

Item 1A. Risk Factors 31

Item 1B. Unresolved Staff Comments 69

Item 1C. Cybersecurity 69

Item 2. Properties 69

Item 3. Legal Proceedings 69

Item 4. Mine Safety Disclosures 70

PART II

Item 6. Reserved 71

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 76

Item 8. Financial Statements and Supplementary Data 76

Item 9A. Controls and Procedures 77

Item 9B. Other Information 78

Item 9C. Disclosure regarding foreign jurisdictions that prevent inspections 78

PART III

Item 10. Directors, Executive Officers and Corporate Governance 79

Item 11. Executive Compensation 79

Item 14. Principal Accounting Fees and Services 79

PART IV

Item 15. Exhibits, Financial Statement Schedules 80

SIGNATURES 83

2

SUMMARY

OF RISK FACTORS

Below

is a summary of the principal risk factors related to the Annual Report on Form 10-K (“Form 10-K”) for the fiscal

year ended December 31, 2023.

Our

business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed

more fully in the “Risk Factors” section of this Form 10-K. These risks include, but are not limited to, the following:

3

CAUTIONARY

NOTE REGARDING FORWARD-LOOKING STATEMENTS

AND

FACTORS THAT MAY AFFECT FUTURE RESULTS

This

Annual Report on Form 10-K, or Form 10-K, includes forward-looking statements within the meaning of Section 27A of the Securities

Act of 1933, as amended, or the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange

Act. All statements other than statements of historical fact contained in this Form 10-K are forward-looking statements. In some

cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,”

“would,” “should,” “expect,” “plan,”, “anticipate,” “believe,”

“estimate,” “intend,” “predict,” “seek,” “contemplate,” “project,”

“continue,” “potential,” “ongoing” or the negative of these terms or other comparable terminology,

although not all forward-looking statements contain these identifying words. These forward-looking statements include, but are

not limited to, statements about:

● our ability to create and maintain a pipeline of product candidates;

Any

forward-looking statements in this Form 10-K reflect our current views with respect to future events or to our future financial

performance and involve known and unknown risks, uncertainties, assumptions and other factors described under the “Risk

Factors” section and elsewhere in this Form 10-K, that may cause our actual results, performance or achievements to be materially

different from any future results, performance or achievements expressed or implied by these forward-looking statements. Given

these uncertainties, you should not place undue reliance on these forward-looking statements.

In

addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject.

These statements are based upon information available to us as of the date of this report, and while we believe such information

forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be

read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements as predictions

of future events. Except as required by law, we assume no obligation to update or revise these forward-looking statements for

any reason, even if new information becomes available in the future.

4

This

Form 10-K also contains estimates, projections and other information concerning our industry, our business, and the markets for

certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical

conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently

subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this

information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research

surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications,

government data and similar sources.

5

PART

I

Item

1. Business

Our

Company

Company

Overview

Vivani

Medical, Inc. (“Vivani,” the “Company,” “we,” “us,” “our” or similar

terms) is a preclinical stage biopharmaceutical company which develops miniaturized, subdermal implants utilizing its proprietary

NanoPortalTM technology to enable long-term, near constant-rate delivery of a broad range of medicines to treat chronic diseases.

Vivani uses this platform technology to develop and potentially commercialize drug implant candidates, alone or in collaboration

with pharmaceutical company partners to address a leading cause of poor clinical outcomes in the treatment of chronic disease,

medication non-adherence. For example, approximately 50% of patients treated for type 2 diabetes are non-adherent to their medicines,

which can lead to poor clinical outcomes. We are developing a portfolio of miniature, sub-dermal drug implant candidates that,

unlike most oral and injectable medicines, are designed with the goal of guaranteeing adherence by delivering therapeutic drug

levels for up to 6 months or longer. In addition, our aim is to minimize fluctuations in patients’ drug levels through the

use of our NanoPortal technology, which may improve the tolerability profiles for medicines that produce side effects associated

with fluctuating drug levels in the blood.

Vivani

resulted from the business combination of Second Sight Medical Products, Inc. (“Second Sight”) and Nano Precision

Medical, Inc. (“NPM”). Vivani’s main priority is the further development of the company’s

lead programs NPM-115 and NPM-119, which are miniature, 6-month, GLP-1 implant candidates for the treatment of chronic weight management and patients with type 2 diabetes, respectively. In parallel, Vivani’s management team remained committed to identifying

and exploring strategic options for the Neuromodulation Division (formerly Second Sight) that will enable further development

of its pioneering neurostimulation systems from legacy company Second Sight aimed at helping patients recover critical body functions.

Moving

forward, Vivani’s focus will be on the further development of NPM-115, NPM-119, and its emerging pipeline of innovative

miniature, long-term drug implants to treat patients with chronic diseases and high unmet medical need. The origins of this business

started while its current Vivani CEO and NPM co-founder Adam Mendelsohn and two of his graduate school colleagues, Kathleen Fischer

and Lily Peng, at the University of California, San Francisco (“UCSF”) and the University of California, Berkeley

(“UCB”), entered business school competitions leveraging their growing knowledge of chemistry, drug delivery, and

nanoscale technology to propose the development of new miniature, biocompatible, drug implant prototypes capable of releasing

therapeutic drug levels over an extended period of time. Based on their success and encouragement from professors and others,

including medical device/pharmaceutical icon Alfred E. Mann, Dr. Mendelsohn and colleagues started NPM in 2009

and operations began in 2011 in an incubator on the UCB campus. Today, the Company has grown to 37 full-time employees and its

current headquarters and operations are located at 1350 South Loop Road, Alameda, California.

Vivani’s implant technology, which

we refer to as NanoPortal, utilizes a space-efficient design that allows a miniaturized implant to provide many months of therapeutic

delivery of potent molecules. The technology has no moving parts, which is intended to minimize fluctuating drug delivery over

the duration of the implant and is also tunable. Vivani has primarily been developing implant candidates around peptide therapeutics,

but the technology has potential application across a wide range of molecular types. The key innovative component of the technology

is a biocompatible titanium-oxide nano-porous membrane which consists of millions of precisely sized nanotubes whose inner diameters

represent the only path for drug molecules to exit the reservoir once the implant is fully assembled.

In

February 2022, we announced the signing of a definitive merger agreement between NPM and Second Sight, pursuant to which NPM became

a wholly-owned subsidiary of Second Sight. On August 30, 2022, the two companies completed the merger, concurrent with which Second

Sight changed its name to Vivani Medical, Inc. and now conducts the present business of the Company. In September 2022, we announced

the formation of the Company’s Biopharm Division to advance the assets of the former NPM which includes the further development

of the Company’s lead programs, NPM-115 and NPM-119, a miniature, 6-month, GLP-1 implant candidates for the treatment of

chronic weight management and patients with type 2 diabetes, respectively. Vivani’s management team remains committed to

identifying and exploring strategic options for the Neuromodulation Division (formerly Second Sight) that will enable further

development of its pioneering neurostimulation systems from Second Sight to help patients recover critical body functions. On

December 28, 2022, the assets and liabilities of this segment were contributed to Cortigent, Inc. a newly formed wholly owned

subsidiary of Vivani, in exchange for 20,000,000 shares of common stock of Cortigent. As of December 31, 2023, after giving effect

to a 1-for-4 reverse stock split that we implemented, Cortigent had 5,000,000 shares of common stock outstanding, all owned by

Vivani.

In March 2023, Vivani announced the filing

of a Registration Statement on Form S-1 with the U.S. Securities and Exchange Commission (“SEC”) for the proposed initial

public offering of Cortigent. Cortigent, currently a wholly-owned subsidiary of Vivani, was formed for the purpose of advancing

the Company’s pioneering neurostimulation technology. The Registration Statement on Form S-1 was recently amended and filed

with the SEC in February 2024 to refresh the financial information and provide minor updates to the business.

On

July 6, 2023, Vivani changed its state of incorporation from the State of California to the State of Delaware by means of a plan

of conversion, effective July 5, 2023. The reincorporation, including the principal terms of the plan of conversion, was submitted

to a vote of, and approved by, Vivani’s stockholders at its 2023 Annual Meeting of Stockholders held on June 15, 2023. As

part of this change of incorporation the Company established a par value of $0.0001 per share and all periods have been retroactively

adjusted to reflect this change.

An

Investigational New Drug Application (“IND”) for NPM-119 (GLP-1 implant) was filed with the U.S. Food and Drug Administration

(“FDA”) on July 14, 2023, to support the initiation of the first-in-human study of NPM-119 in patients with type 2

diabetes, also named LIBERATE-1TM. On August 18, 2023, FDA provided written notification that the LIBERATE-1 study was on

full clinical hold, primarily due to insufficient Chemistry, Manufacturing, and Controls (“CMC”) information to assess

the risk to human subjects. Vivani remains actively engaged in discussions with FDA as part of its efforts to lift the clinical

hold and plans to submit a Complete Response to the FDA during the first half of 2024.

On

August 25, 2023, Vivani and Cortigent entered into an Amendment No. 1 (the “Amendment”) to the Transition Funding, Support

and Services Agreement dated March 19, 2023 (the “TFSSA”). Pursuant to the TFSSA, Vivani has agreed to advance funds

and provide or cause to be provided to Cortigent the services and funding intended to cover salaries and related costs, rent and

other overhead in order to permit Cortigent to operate in substantially the same manner in which business operations of Cortigent

were previously operated by Second Sight, prior to the formation of Cortigent, which obligations will continue, in the case of

the funding obligations, until the earlier of December 31, 2024 or the closing of an initial public offering of Cortigent (the

“Funding Support Term”). Under the Amendment, Cortigent has agreed to repay $1,500,000 to Vivani at the conclusion

of the Funding Support Term. In addition, at the conclusion of the Funding Support Term, Cortigent will enter into a five-year

promissory note at 5% interest for $2,000,000 in favor of Vivani. Consequently, Vivani will forgive any remaining amounts due

by Cortigent to it under the TFSSA. In October 2023, Vivani implemented a reduction-in-force to conserve cash that decreased Cortigent’s

employees from 14 to 7 while continuing the ongoing Orion® clinical study and basic operations.

In

the fourth quarter of 2023, Vivani Medical Australia Pty Ltd., a wholly-owned subsidiary in Australia was established to support

studies of our products and product candidates.

In February 2024, Vivani announced positive

NPM-115 preclinical weight loss data comparable to semaglutide, the active ingredient in Ozempic®/Wegovy®,

and disclosed NPM-139 as a semaglutide implant as our strategy shifted to prioritize our obesity portfolio. In a study in high-fat

diet-induced obese mice, NPM-115 generated weight loss of approximately 20% compared to a sham implant control after a 28-day

treatment duration, comparable to weight loss observed in mice treated with semaglutide injections (Ozempic®/Wegovy®)

in the same study. The Company also disclosed that semaglutide is the active pharmaceutical ingredient in NPM-139, a miniature,

subdermal GLP-1 implant in development for chronic weight management, with the added potential benefit of once-yearly administration.

On March 1, 2024, the Company announced

that it had entered into a securities purchase agreement with an institutional investor to purchase 3,947,368 shares of common

stock and warrants to purchase up to an aggregate of 3,947,368 shares of common stock at a purchase price of $3.80 per share and

accompanying warrant in a registered direct offering. The warrants have an exercise price of $3.80 per share, are exercisable immediately

upon issuance, and will expire three years following the date of issuance.

On March 6, 2024, the Company announced

the appointment of Daniel Bradbury to its Board of Directors. Under Bradbury’s leadership as CEO, Amylin Pharmaceuticals,

with partner Alkermes, secured the 2012 approval of Bydureon® (exenatide injection), the world’s first GLP-1

receptor agonist, a class of drugs that now includes blockbusters Ozempic®, Trulicity® and Wegovy®.

6

Our

Proprietary NanoPortalTM Implant Technology

Vivani’s

implant technology, which we refer to as NanoPortal, utilizes a space-efficient design that allows a miniaturized implant to provide

many months of therapeutic delivery of potent molecules. The technology has no moving parts, which is intended to minimize fluctuating

drug delivery over the duration of the implant and is also tunable. Vivani has primarily been developing implant candidates around

peptide therapeutics, but the technology has potential application across a wide range of molecular types. The key innovative

component of the technology is a biocompatible titanium-oxide nano-porous membrane which consists of millions of precisely sized

nanotubes whose inner diameters represent the only path for drug molecules to exit the reservoir once the implant is fully assembled.

We

believe the key to the technology’s ability to achieve near constant release of drug without moving parts is the ability

to precisely tune the inner diameter of the nanotubes to the same size range as individual drug molecules. If the inner diameter

of the nanotubes is smaller than the size of a given drug molecule, there would be no release at all. If the inner diameter of

the nanotubes is much larger than the size of a given drug molecule, the rate at which the drug leaves the reservoir would follow

traditional physics and would decrease over time as the drug concentration decreases. However, when the opening is close enough

in size to the drug molecules, the drug release is constrained and can result in a variety of desirable delivery profiles, including

near constant release. Vivani’s NanoPortal technology has demonstrated near constant release in an animal model for six

months.

For

drug molecules with adequate potency and stability, NanoPortal can allow minimization of the implant size while extending implant

duration. A custom delivery profile can also be achieved by adjusting the number of accessible nanotubes, engineering changes

to the implant, and/or changes in formulation parameters. With the design flexibility afforded by the NanoPortal technology, Vivani

plans to develop a portfolio of drug implant candidates aimed at addressing chronic diseases with high unmet medical need.

7

Vivani’s

NanoPortal technology has demonstrated near constant in vitro release for two dose configurations (see left portion of

the chart below). In vitro testing was performed at 37°C on implant devices stored in a buffer solution adjusted to

a physiological pH of 7.4. For a high-dose configuration, the observed near-constant release was demonstrated over the 12-week

measurement period, after which the drug began to be depleted. For a low-dose configuration, the observed near-constant release

lasted for 24 weeks. In addition, the near-constant in vitro release observed has been shown to translate into sustained

exposure levels in vivo over a 6-month duration in an animal model (depicted in a separate chart below). Finally, NanoPortal

has demonstrated minimal in vitro fluctuations during 2.5-hour interval sampling periods which demonstrates a very

smooth release profile (see right portion of the chart below for individual device release rates).

Our

Emerging Portfolio

Although

Vivani’s proprietary NanoPortal implant technology may potentially be broadly applied across a wide range of therapeutic

molecules and disease areas, our initial focus is on peptide therapeutics for the treatment of patients with metabolic disease.

The pipeline table below depicts our current portfolio of four distinct pre-clinical stage programs targeting type 2 diabetes

(in humans and companion cats), and obesity/chronic weight management.

Below

is a summary description of each pipeline program:

NPM-115:

This high-dose exenatide implant candidate is in preclinical stage development for the treatment of chronic weight management

in patients with obesity or overweight. Vivani believes that higher doses of exenatide can achieve similar weight loss effects

as other GLP-1 products similar to the strategy Novo Nordisk has taken with its semaglutide injection franchise, Ozempic®

and Wegovy® for type 2 diabetes and obesity, respectively. Vivani holds all commercial rights to NPM-115.

8

Obesity

is a global epidemic. There are over 764 million people with obesity today and only approximately 2% of these people are medically

treated. Obesity affects both the individual and society at large. Obesity is associated with over 200 health complications and

is associated with over 8% of the healthcare budget per country.

Similar

to type 2 diabetes, the treatment of chronic weight management with GLP-1 products has challenges associated with medication adherence

and persistence which can lead to sub-optimal patient outcomes. As shown in the graph below, results from a large, retrospective

cohort study recently published in the research journal Obesity, shows improved medication persistence with the newer GLP-1 weight

loss products compared to previous products. That said, the one-year persistence of patients taking semaglutide was still only

40%. This highlights the potential for further improvement for the 60% of individuals who were no longer taking semaglutide after

one year. The potential benefits for a long-term implant like NPM-115 are clearly apparent when considering that body weight begins

to increase shortly after GLP-1 therapy is discontinued.

9

Preliminary

weight loss data of NPM-115 in preclinical models is encouraging. In a study in high fat diet-induced obese mice, NPM-115 generated

weight loss of approximately 20% compared to a sham implant control after a 28-day treatment duration, comparable to weight loss

observed in mice treated with semaglutide (Ozempic®/Wegovy®) in the same study. The supratherapeutic

doses provided for both NPM-115 (single administration delivering exenatide at ~530 nmol/kg/day), and semaglutide (weekly injections

of ~2,700 nmol/kg/week), were selected to maximize the weight-loss potential of both exenatide and semaglutide.

Emerging

data on the durability of effect on weight with NPM-119 provides confidence that a higher-dose exenatide implant (e.g. NPM-115)

has the potential as a treatment for chronic weight management. As depicted in the graph below, in a study in healthy rats, a

single administration of the Company’s exenatide implant NPM-119, in development for the treatment of type 2 diabetes, resulted

in body weights that were approximately 25% lower than a vehicle implant control after 15 weeks of treatment with an expected

duration of effect of six months. NPM-119 delivered exenatide at a rate of approximately 320 nmol/kg/day and has demonstrated

smooth, non-fluctuating release of exenatide in both in vitro and in vivo studies. NPM-119 has previously demonstrated

pharmacokinetic data exhibiting continuous and therapeutic exenatide exposure levels over a 6-month duration in healthy rats.

Since NPM-115 is a higher-dose version of an otherwise similar product as NPM-119, the durability of the effect on weight demonstrated

in this study is expected to translate to future studies utilizing NPM-115.

NPM-119:

This exenatide implant candidate is in preclinical stage development for the treatment of patients with type 2 diabetes with an

anticipated duration of six months. Exenatide is a GLP-1 receptor agonist (GLP-1 RA or GLP-1) and was originally approved as the

twice-daily subdermal injection, Byetta® (exenatide) injection, approved in 2005 by the U.S. Food and Drug Administration

(“FDA”) as adjunctive therapy to improve glycemic control in patients with type 2 diabetes mellitus who are taking

metformin, a sulfonylurea, or a combination of metformin and a sulfonylurea but have not achieved adequate glycemic control. Byetta

was the first GLP-1 to reach the U.S. marketplace. Bydureon BCise® (exenatide extended-release) injection

is a once-weekly administration and was approved for use in the US in 2017.

10

According

to the CDC, more than 37 million Americans have diabetes and 90-95% have type 2 diabetes. The total number of people living worldwide

with diabetes today is 537 million and is projected to rise to 643 million by 2030 and 783 million by 2045. Of the 537 million

people with diabetes today, only 15% have good glycemic control. According to the American Diabetes Association (“ADA”),

the total cost of diagnosed diabetes in the U.S. was $327 billion in 2017, including $237 billion for direct medical costs and

$90 billion for reduced productivity. In 2022, global sales of GLP-1 receptor agonists products were nearly $20 billion. Because

the current drug adherence rate for type 2 diabetes is only 40-60% for oral and injectable GLP-1 products, Vivani believes there

is significant unmet need for a GLP-1 implant that could address non-adherence. Vivani holds all commercial rights to NPM-119.

We

believe NPM-119, our lead drug implant candidate, has the potential to address two important limitations of the GLP-1 category,

namely, poor real-world medication adherence, and a potentially undesirable gastrointestinal tolerability profile.

A

well-documented side effect of the GLP-1 class is poor gastrointestinal (“GI”) tolerability. GI intolerance can present

as nausea, vomiting, and/or diarrhea which can lead to volume loss (“hypovolemia”), acute kidney injury (“AKI”)

and potentially major cardiovascular adverse events. GI-related issues are the most commonly reported side effect for all drugs

in the GLP-1 class. In responding to a marketing application filed for Intarcia Therapeutics’ ITCA 650 exenatide implant

candidate, with a proposed indication for use as an adjunct to diet and exercise to improve glycemic control in adults with type

2 diabetes mellitus (“T2DM”), the FDA stated in a July 29, 2022 letter that they believe that marked increases in

the dose of a GLP-1 are responsible for increased risk of GI intolerance. The establishment of marked GLP-1 dose increases being

responsible for GI intolerance combined with the daily in vitro variability exhibited by ITCA 650 resulted in the FDA summarizing

their findings as “The clinical data in the three pivotal clinical trials for ITCA 650–including the high rates of

nausea, vomiting, and diarrhea, the high rates of discontinuations due to these adverse gastrointestinal reactions, and most notably,

the increased risk of AKI comprise safety signals whose root cause can reasonably be concluded to be irregular and uncontrolled

exenatide release” and “The data provided to validate the limits of the in vitro dose delivery specifications did

not support the safe and effective use of the device constituent of ITCA 650.” We believe Vivani’s NanoPortal technology,

which is specifically designed and tested to deliver regular and controlled exenatide release, may overcome these challenges.

Our NanoPortal implant technology has no moving parts that could otherwise contribute to variations in drug release rates. NanoPortal

has demonstrated the ability to release exenatide with minimal fluctuations in vitro on time scales that are even shorter

than a day as exhibited by the 2.5-hour in vitro release rates that are shown in the NanoPortal Implant Technology section

above. Since the half-life of exenatide in humans is 2.4-4 hours, steady release from one 2.5-hour interval to the next is expected

to be associated with minimal device-related exposure fluctuations, potentially minimizing the opportunity for gastrointestinal

events.

11

On

July 14, 2023, an investigational new drug application (“IND”) to support the initiation of clinical studies

with NPM-119 was submitted. Vivani’s First-in-Human (“FIH”) study, called LIBERATE-1, is designed as a

12-week, randomized, clinical study to investigate the safety, tolerability, and full pharmacokinetic profile of NPM-119 in

patients with type 2 diabetes. The study will include a Bydureon BCise® (exenatide extended-release

injectable suspension) comparator and will also measure changes in glycemic control and changes in body weight. The study

will recruit patients on a non-exenatide GLP-1 therapy which will be discontinued prior to randomization. Conditional

institutional review board (“IRB”) approval has been obtained pending IND clearance. On August 18, 2023, FDA

provided written notification that the LIBERATE-1 study was on full clinical hold due primarily to insufficient Chemistry,

Manufacturing and Controls (“CMC”) information. Vivani remains actively engaged in discussions with the FDA as

part of its efforts to lift the clinical hold and enable the expeditious initiations of LIBERATE-1. In parallel, Vivani

submitted an application to a Human Research Ethics Committee in Australia to support the initiation of the Company’s

FIH study in that country. This initial application was not approved and the only cited reason was the existing FDA

clinical hold. Vivani remains in discussions with the Human Research Ethics Committee towards obtaining approval in Australia

once the FDA clinical hold is lifted. If available, Vivani intends

to utilize research and development incentives and rebates from the Australian government in order to defray a portion of the

costs from the trial. Since clinical studies conducted in Australia comply with the International Conference on Harmonization

guidelines and data generated in Australia are acceptable to the FDA and other regulatory authorities. Vivani plans to use

relevant clinical data generated in Australia to support regulatory submissions in other geographies including the US.

Additional guidance will be provided as new information becomes available.

The

LIBERATE-1 study design was discussed in multiple FDA interactions and our Complete Response to the clinical hold is planned for

submission to FDA during the first half of 2024. The pharmacokinetic profile obtained in a preclinical study with the NPM-119

configuration (n=8) intended for use in LIBERATE-1 is provided in the graphic below. The left axis shows experimentally measured

exenatide plasma concentrations from rats implanted with NPM-119. The right axis shows expected exenatide plasma concentrations

in humans, assuming there are no NPM-119 specific translation effects, based on previously established clearance rate differences

between rats and humans when exposed to steady state delivery of exenatide. Since the EC50 (concentration of exenatide

which provides half maximal response) is 0.0835 ng/mL, this pharmacokinetic profile is expected to provide therapeutic exposure

levels of exenatide in humans unless, for example, there are any device-specific pharmacokinetic translation effects from rats

to humans which the results of LIBERATE-1 will determine.

12

Vivani

has also made progress towards preparing for future clinical development of NPM-119. In September 2023, Vivani relocated into

a new facility designed to provide suitable capacity for manufacturing of clinical materials for registration studies as well

as commercial-scale supply. Based on preliminary discussions with the FDA, Vivani intends to explore the potential use of the

505(b)(2) pathway and believes that a single pivotal trial evaluating a 6-month NPM-119 configuration that is representative of

the proposed commercial configuration may be sufficient to support registration in the U.S. That said, throughout the NPM-119

development process, we also intend to further engage with regulatory authorities on the timing, duration, endpoints, number of

enrolled patients and other aspects of trial design for future clinical trials of NPM-119.

We

have conducted a preclinical study to evaluate proof-of-concept activity of NPM-119. In that study, a six-month implantation of

NPM-119 into rats was associated with steady exenatide concentration over the duration of the implant, as depicted in the figure

below.

NPM-139:

The Company recently identified semaglutide as the active pharmaceutical ingredient in NPM-139, a miniature, subdermal GLP-1 implant

in development for chronic weight management, with the added potential benefit of once-yearly administration.

The

market for GLP-1 therapy in the treatment of patients with obesity is also attractive and growing rapidly. As an example, Novo

Nordisk’s Wegovy® (semaglutide injection) sold approximately nearly $4.5 billion in 2023 and continues to

grow rapidly.

OKV-119:

This exenatide implant is under development for metabolic diseases in cats including for the treatment of obesity and diabetes.

In 2017, there were over 90 million cats in the U.S. It is estimated that up to 40% of cats are clinically obese, and 1-4 million

cats have diabetes. Americans spent $136.8 billion on their pets in 2022, an increase of 10.68% from 2021. Spending on pets is

expected to triple over the next 10 years, with pet health representing the fastest-growing sub-segment of this market. Since

cats are difficult to medicate, we believe that a small subdermal implant administered by a veterinarian at a routine clinic visit

can be a welcome option for many pet owners.

The

program is partnered with Okava Pharmaceuticals, Inc. (“Okava”) who is responsible for all clinical development and

regulatory activities of OKV-119 and, if approved, ultimate commercialization of this product. In 2022, OKV-119 advanced out of

the feasibility stage after having produced data demonstrating adequate exenatide exposure and sustained weight loss in cats over

a 12-week study. Vivani does not anticipate any significant Vivani focus beyond the support of implant development and manufacturing

activities.

13

Beyond

our current pipeline, Vivani intends to apply its extensive experience and proprietary implant technology to develop a pipeline

of drug implant candidates that have the potential to address chronic diseases with high unmet medical needs across multiple therapeutic

categories and disease areas. For example, Vivani is also following the evaluation of the GLP-1 agonist semaglutide in the treatment

of MASH (metabolic associated steatohepatitis) and Alzheimer’s disease. If one or more of these trials shows encouraging

results, Vivani believes that a miniature long-term drug implant could have the potential to be an attractive alternative treatment

option in these underserved patient populations.

Our

Strategy

Vivani’s

mission is to provide people with the freedom to live healthier. Vivani develops miniaturized drug implants using its proprietary

NanoPortal implant technology to enable delivery of a broad range of medicines to treat chronic diseases. These products, designed

to address poor medication adherence, are anticipated to significantly improve the health of otherwise non-adherent patients and

to provide assurance to their family members and to the health care professionals who treat them.

Vivani

plans to initially test its technology and business model through the clinical and regulatory development of its lead programs,

NPM-115 (high-dose exenatide) and NPM-119 (exenatide implant). The active drug, exenatide, is a member of the GLP-1 receptor agonist

class of drugs. Drug products, including drug substances within this relatively new drug class, have already been successfully

developed and marketed for the treatment of both type 2 diabetes and obesity and GLP-1 products are the category leader in revenue

for both the type 2 diabetes and obesity drug treatment categories. In addition, GLP-1 receptor agonists have shown promising

early clinical results in MASH and they are being evaluated in other therapeutic areas including Alzheimer’s disease. Vivani

completed IND-enabling studies and submitted an IND to permit a FIH study of NPM-119 in type 2 diabetes in 2023. In addition,

Vivani intends to advance its early-stage programs in chronic weight management in obese and overweight individuals. Its business

strategy includes:

● Advancing the feasibility assessments for NPM-139 in 2024;

● Maintaining, expanding, and protecting our intellectual property portfolio;

14

Competition

Our

industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products.

We face competition and potential competition from a number of sources, including pharmaceutical and biotechnology companies,

generic drug companies, drug delivery companies and academic and research institutions. Some of these companies are developing

therapies that are directly competitive to our approach. We believe the key competitive factors that will affect the development

and commercial success of our product candidates include ease of administration and convenience of dosing, therapeutic efficacy,

safety and tolerability profiles and cost. Many of our potential competitors have substantially greater financial, technical,

and human resources than we do, as well as more experience in the development of product candidates, obtaining FDA and other foreign

regulatory approvals of products, and the commercialization of those products. Consequently, our competitors may develop similar

products to address the indications targeted by our current product candidates or for other indications we may pursue in the future,

and such competitors’ products may be more effective, better tolerated and less costly than our product candidates. Our

competitors may also be more successful in manufacturing and marketing their products than we are. We will also face competition

in recruiting and retaining qualified personnel and establishing clinical trial sites and patient enrollment in clinical trials.

The

competition for Vivani will be dependent upon the individual product candidate in development. For Vivani’s lead assets,

NPM-115 and NPM-119, the competition could be defined as any drug product/manufacturer approved for use in the treatment of patients

with obesity or type 2 diabetes, respectively. However, we believe that our more direct competitors comprise other GLP-1 receptor

agonist and combination products with a GLP-1 receptor agonist component approved or in development for those respective indications.

In May 2022, Lilly’s MounjaroTM (tirzepatide) was approved as the first and only combination GIP and GLP-1 receptor

agonist for the treatment of adults with type 2 diabetes and in November 2023, Lilly secured approval of a higher dose formulation

of tirzepatide injection with the brand name Zepbound® for chronic weight management in adults with obesity or

overweight with at least one weight-related condition. Manufacturers with approved GLP-1 receptor agonists or dual receptor agonists

include Lilly, Novo Nordisk, AstraZeneca, and Sanofi.

In

addition to the marketed GLP-1 products, Intarcia Therapeutics has continued to seek approval of ITCA 650 (six-month exenatide

implant) for the treatment of patients with type 2 diabetes since 2016. In public correspondence, FDA asserted that the ITCA 650

New Drug Application did not meet criteria for approval because (i) data submitted in the application do not show that the product

would be safe under the proposed conditions of use and (ii) the methods used in, and the facilities and controls used for, the

manufacture, processing, or packing of the product are not shown to be adequate to preserve its identity, strength, quality, and

purity. Further correspondence disclosed additional deficiencies which included, but were not limited to, data that did not demonstrate

adequate device reliability in regard to dose delivery. At the conclusion of the September 28, 2023, FDA Public Forum to debate

the approvability of the ITCA 650, Advisory Committee members voted 19-0 that “based on the available data, the Applicant

has not demonstrated that the benefits of the ITCA 650 drug-device combination outweigh its risks for the treatment of T2DM”.

As a result, the ultimate fate of ITCA 650 (exenatide implant) remains unclear.

NPM-115

NPM-115

(high-dose exenatide implant) candidate is a GLP-1 receptor agonist in development for the treatment of chronic weight management

in obese and/or overweight patients. Competition in the GLP-1 class for this indication includes the following:

● Teva’s Adipex® (phentermine) and generics

● Roche’s Xenical® (orlistat) generics

● Vivus’s Qsymia® (phentermine/topiramate extended release)

● Orexigen’s Contrave® (bupropion/naltrexone)

● Lilly (Zepbound®/tirzepatide)

● Novo Nordisk (Saxenda®/liraglutide); and (Wegovy®/semaglutide)

In

addition to the approved products noted above, there are multiple GLP-1 monotherapy agonists, dual agonists and triple agonists

in various stages of clinical development.

15

We

believe NPM-115, our lead drug implant candidate for chronic weight management, has the potential to address two important aspects

of the GLP-1 category which are associated with the above-mentioned products, namely, poor real-world medication adherence and

potential undesirable gastrointestinal tolerability.

NPM-119

NPM-119

(exenatide implant) candidate is a GLP-1 receptor agonist in development for the treatment of type 2 diabetes. Competition in

the GLP-1 class for this indication includes the following:

● Lilly (Trulicity®/dulaglutide) and (Mounjaro®/ tirzepatide)

● AstraZeneca (Bydureon BCise®/exenatide); and (Byetta®/exenatide)

● Sanofi (Adlyxin®/lixisenatide)

In

addition to the approved products noted above, there are multiple GLP-1 monotherapy agonists, dual agonists and triple agonists

in various stages of clinical development which include but are not limited to Lilly (retatrutide) and (orforglipron), Altimmune

(pevidutide), Novo Nordisk (CagriSema); Structure Therapeutics (GSBR-1290), and Amgen AMG 133.

We

believe NPM-119, our lead drug implant candidate for type 2 diabetes, has the potential to address two important aspects of the

GLP-1category which are associated with the above-mentioned products, namely, poor real-world medication adherence and potential

undesirable gastrointestinal tolerability.

NPM-139

NPM-139

(semaglutide implant) candidate is in feasibility testing for the treatment of chronic weight management in obese and/or overweight

patients. According to the World Obesity Atlas 2022, one billion adults globally will have obesity (BMI ≥30 kg/m2), or about

18% of the adult population, by 2030. In addition, it is expected that there will be 103 million children and 150 million adolescents

living with obesity by 2030 as well.

Competition

in the treatment of obesity includes the following:

● Teva’s Adipex® (phentermine) and generics

● Roche’s Xenical® (orlistat) generics

● Vivus’s Qsymia® (phentermine/topiramate extended release)

● Orexigen’s Contrave® (bupropion/naltrexone)

● Lilly (Zepbound®/tirzepatide)

● Novo Nordisk’s Saxenda® (liraglutide) and Wegovy® (semaglutide)

● Roche CT-388 (Phase 2); CT-868 (Phase 2) and CT-996 (Phase 1)

Sales

and Marketing

Vivani

currently does not have a commercial infrastructure in any geography. As we progress our programs through development, we may

build a commercial infrastructure in the United States and selected other territories to support the commercialization of each

of our product candidates when we believe a regulatory approval in a particular territory is likely. We intend to conduct market

research in connection with designing our commercialization strategy for each of our product candidates. We may seek licensing

or other strategic collaborations with, for example, global pharmaceutical company partners, to support our commercialization

efforts. We will consider a range of options including building a commercial capability internally, leveraging third-party biopharmaceutical

commercialization organizations, other strategic partners, distributors and/or contract sales forces to expand the commercial

availability of our product candidates when appropriate.

Our

Corporate Information

Vivani

was incorporated under the laws of California on December 17, 2009. Its operations began in 2010.

16

On

July 6, 2023, Vivani changed its state of incorporation from the State of California to the State of Delaware by means of a plan

of conversion, effective July 5, 2023.

Vivani’s

corporate office is located at 1350 South Loop Road, Alameda, CA 94502; its telephone number is (415) 506-8462; and its website

is located at www.vivani.com.

Chemistry,

Manufacturing, and Controls

Vivani

has developed production processes and quality systems to support the manufacture of NPM-119 clinical materials for use in the

currently planned FIH (LIBERATE-1) clinical study. A small number of processes are continuing to be refined prior to the production

of the materials to be used in the study. In addition, efforts have also been initiated to support potential subsequent clinical

investigations.

Vivani has established in-house

research, development, and manufacturing capabilities in its corporate headquarters in Alameda, California, U.S. Vivani has

also engaged with contract manufacturers and/or analytical laboratories for selected processes when appropriate. In general,

Vivani purchases the drug substance from a third-party manufacturer. Vivani intends to conduct all assembly processes in

which the drug substance is present, including the associated in-process testing, when producing materials for Phase 1 and

Phase 2 clinical trials. Vivani anticipates that all assembly processes in which the drug substance is present, including the

associated in-process testing, will be performed by contract manufacturers when producing materials for any registration

trial or commercial use. Several device components and all raw materials are purchased from outside vendors according to

established specifications. The device assembly processes, including the associated in-process testing, and final product