S-1/A: Cortigent Eyes $15 Million IPO to Advance Neurostimulation Technologies

Cortigent, a neurostimulation technology company, is seeking to raise approximately $15 million through an initial public offering to fund the development of its Orion visual prosthesis and stroke recovery system.

Summary

• Cortigent, Inc., a company focused on developing neurostimulation systems, has filed an amendment to its Form S-1 registration statement for a proposed IPO.
• The company aims to raise approximately $15 million through the offering of 1,500,000 shares of common stock, with an anticipated initial public offering price of $10.00 per share.
• The primary use of proceeds will be to fund research and development of the Orion visual prosthesis and a stroke recovery system, as well as to repay amounts owed to its parent company, Vivani Medical, Inc.
• Cortigent's lead product, the Orion Visual Cortical Prosthesis System, is designed to provide artificial vision to individuals with profound blindness, targeting a market of approximately 82,000 people in the U.S.
• The company is also developing a neurostimulation system to improve motor function in stroke patients, estimating a potential addressable market of $6 billion.
• Cortigent has completed an early feasibility study of Orion and plans to commence a pivotal clinical trial by mid-2026, with a potential market launch in early 2029.
• The company is also targeting to begin an early feasibility study for its stroke recovery system in mid-2026, with a potential market launch in late 2029.
• Cortigent has a history of operating losses and expects to continue incurring losses for the foreseeable future, requiring substantial additional capital to fund its operations.
• Vivani Medical, Inc., which currently owns 100% of Cortigent's common stock, will beneficially own approximately 77% of the voting power after the IPO.
• The company has applied to list its common stock on the NYSE American under the symbol CRGT.

Sentiment

Score: 6

Explanation: The document presents a mix of positive and negative aspects. The potential of the technology and the large addressable markets are positives, but the pre-revenue status, history of losses, and need for additional funding create uncertainty.

Positives

• Cortigent's Orion system has Breakthrough Device designation from the FDA, potentially accelerating its development and review.
• The company has an extensive intellectual property estate with rights to 207 issued U.S. patents and 20 issued European patents.
• Cortigent's technology has multiple potential applications, including artificial vision and motor skills recovery.
• The company is leveraging its experience from the FDA-approved Argus II retinal implant to develop new neurostimulation systems.
• The company has completed an early feasibility study of Orion with positive efficacy data.

Negatives

• Cortigent is a pre-revenue company with a history of operating losses and expects to continue incurring losses.
• The company will require substantial additional capital to support its clinical trials and growth plans.
• Clinical trials are lengthy and expensive, with uncertain outcomes.
• The company faces competition from other medical device companies and research institutions.
• The company is subject to stringent domestic and foreign medical device regulations.

Risks

• Cortigent may not be able to achieve successful clinical trials, attain regulatory approvals, or secure favorable product reimbursement.
• The development process may take longer and be more costly than anticipated.
• The company may not achieve reimbursement levels similar to the one it received for its Argus II device.
• The company's products may not be accepted in the market, resulting in its not being able to generate revenues to support its operations.
• The company may face substantial competition in the future and may not be able to keep pace with the rapid technological changes.

Future Outlook

Cortigent is planning to work with the FDA to gain agreement on the additional clinical studies that will be required to secure marketing approval for Orion. The company intends to commence a pivotal clinical trial for Orion by mid-2026, complete it by approximately mid-2028, and if successful, obtain FDA clearance and launch Orion on the US market in early 2029. For the stroke recovery system, the company intends to commence an early feasibility study in mid-2026 and a pivotal clinical trial in late 2027, with a potential market launch in late 2029.

Management Comments

• The timeline presented represents managements estimate of the time required to complete each stage.
• No assurance can be given that these timelines will prove correct.

Industry Context

The medical device industry is highly competitive and characterized by extensive research and development and rapid technological change. Cortigent faces competition from other visual prosthesis companies, such as Pixium Vision SA, Nano Retina Inc., and Bionic Vision Technologies, as well as companies developing electrode arrays that penetrate the brain, such as the Illinois Institute of Technology and Neuralink. In the field of medical device-assisted stroke rehabilitation, MicroTransponder Inc. sells the Vivistim FDA-approved vagus nerve stimulator (VNS).

Comparison to Industry Standards

• The Argus II system was approved by the FDA under a Humanitarian Device Exemption, and the reimbursement price for Medicare patients was approved at approximately $150,000.
• Northstar Neuroscience, Inc. conducted clinical studies in the early 2000s using a single-channel electrical stimulation device that was placed on the motor cortex, but a pivotal Phase 3 study failed to achieve statistical significance at the 4-week primary endpoint.
• MicroTransponder Inc. sells the Vivistim FDA-approved vagus nerve stimulator (VNS) for medical device-assisted stroke rehabilitation.

Related Party Transactions

• Vivani Medical, Inc. is the resulting entity of the August 30, 2022 merger of Nano Precision Medical Inc. into Second Sight Medical Products, Inc.
• In December 2022 Vivani and Cortigent entered into an Asset Contribution Agreement by which Vivani contributed all of Second Sights neurostimulation assets and operations to Cortigent.
• On February 1, 2023 we entered into a lease agreement, effective March 1, 2023, to sublease office space to replace our existing headquarters. As a material inducement for the lessor to execute the lease with us Vivani guaranteed the prompt payment of all rents and all other sums payable under the lease together with all other terms and conditions to be kept and performed under the lease by the lessee.
• In March 2023, Cortigent and Vivani entered into a Transition Funding, Support and Services agreement by which Vivani will advance funds and provide or cause to be provided to Cortigent the services and funding that will 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.
• In August 2023 Vivani and we amended this funding agreement to provide for (i) repayment of $1.5 million from proceeds of this offering and (ii) issuance of a five year promissory note requiring repayment of $2 million at five percent per year upon maturity of the promissory note.
• As part of this funding and support agreement, Vivani has also agreed to provide the services of its Chief Operating Officer, Truc Le, on an interim basis to consult on operations matters, such as manufacturing planning and interactions with contract manufacturers and the services of its Chief Business Officer, Donald Dwyer, on an interim basis to consult on business development matters, such as strategic partnering and commercial readiness.

Stakeholder Impact

• Shareholders: Potential for capital appreciation if the company successfully develops and commercializes its products.
• Employees: Job opportunities and potential for career growth.
• Customers: Access to innovative neurostimulation technologies for vision restoration and stroke recovery.
• Suppliers: Potential for increased business as Cortigent expands its operations.
• Creditors: Increased financial stability and ability to repay debts if the company is successful.

Next Steps

• Cortigent is planning to work with the FDA to gain agreement on the additional clinical studies that will be required to secure marketing approval for Orion.
• The next step will be to manufacture and validate new Orion devices for a planned pivotal clinical trial that we expect will involve approximately 60 profoundly blind subjects at approximately 10 U.S. trial centers.
• For the stroke recovery system, we anticipate manufacturing modified clinical trial devices for the planned Early Feasibility Study (EFS) in parallel with manufacturing of the Orion devices.
• We plan to reapply for grant funding in early 2025.

Key Dates

Keywords

neurostimulation, Orion, stroke recovery, artificial vision, IPO, clinical trials, FDA, Vivani, medical device, retinal implant