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 capital to advance its Orion visual cortical prosthesis system and explore its neurostimulation technology for stroke recovery.
• The IPO involves 1,500,000 shares of common stock, with an anticipated initial public offering price of $10.00 per share.
• Cortigent has applied to list its common stock on The Nasdaq Capital Market under the symbol CRGT.
• Immediately following the completion of this offering, Vivani will beneficially own shares of our common stock representing approximately 77% of the voting power of our common stock (or approximately 74% if the underwriters exercise their option to purchase additional shares of our common stock in full).
• The company's lead product, Orion, is designed to provide artificial vision for the blind, while the stroke recovery system aims to improve motor skills recovery in paralysis due to stroke.
• Cortigent is a pre-revenue company with a history of operating losses and expects to continue incurring losses for the foreseeable future.
• The company faces risks related to clinical trials, regulatory approvals, market acceptance, and competition.
• Cortigent intends to use the net proceeds from the offering primarily to conduct Orion research studies, convert the Orion prototype into a market-ready device, conduct research on its stroke recovery system, manufacture devices for clinical studies, and repay amounts owed to its parent company, Vivani.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While Cortigent has promising technology and targets large markets, it is a pre-revenue company with a history of losses and faces significant risks. The IPO is a positive step, but the company's future success is uncertain.

Positives

• Cortigent has an extensive intellectual property portfolio.
• The company is targeting large addressable markets for both Orion and its stroke recovery system.
• Orion has Breakthrough Device designation from the FDA, which could expedite the regulatory process.
• The company has completed an Early Feasibility Study for Orion with promising safety and efficacy data.
• The company has a Transition Funding, Support and Services Agreement with Vivani through December 31, 2024.

Negatives

• Cortigent is a pre-revenue company with a history of operating losses.
• The company's future success depends on successful clinical trials, regulatory approvals, and market acceptance, which are uncertain.
• The company faces competition from other medical device companies and research institutions.
• The company will be a controlled company post-IPO, which could lead to conflicts of interest with its parent company, Vivani.
• The company's stock price may be volatile, and investors could experience dilution in the future.

Risks

• Cortigent currently has no commercial products or product revenue and may never become profitable.
• Cortigents commercial and financial success depends on its future products being accepted in the market, and if not achieved, will result in its not being able to generate revenues to support its operations.
• Cortigent may face substantial competition in the future and may not be able to keep pace with the rapid technological changes, which may result from others discovering, developing, or commercializing products before or more successfully than Cortigent does.
• The results of Cortigents limited initial trials at UCLA and Baylor College of Medicine may not be predictive of, and we may fail to demonstrate the feasibility of, the Orion technology.
• Since Cortigents predecessor, Second Sight, has a history of operating losses and Cortigent has no current revenue-producing operations, the future of its business is difficult to evaluate.
• Our financial statements have been prepared on a going concern basis and our financial status creates a doubt whether we will continue as a going concern.
• Clinical development of medical devices, especially complex implantable devices such as ours, involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and initial trials may not be predictive of future trial results.
• Interim top-line and preliminary results from Cortigents clinical trials that it announces or publishes from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
• We will require substantial additional capital to support our clinical trials and growth plans, and such capital may not be available on terms acceptable to us, if at all. This could hamper our growth and adversely affect our business.
• If we raise capital in the future by issuing shares of common or preferred stock or other equity or equity-linked securities, or by convertible debt or other hybrid equity securities, then-existing stockholders may experience dilution, such new securities may have rights senior to those of the Companys common stock, and the market price of the Companys common stock may be adversely affected.
• We may be subject to litigation in the operation of our business. An adverse outcome in one or more proceedings could adversely affect our business.
• We could be subject to future governmental inspections, investigations and inquiries, or legal proceedings and enforcement actions, any of which could adversely affect our business.
• Cortigents predecessor, Second Sight, has never been profitable and Cortigent expects operating losses to continue for the foreseeable future.
• Any failure or delay in completing clinical trials or studies for new product candidates or next generation Cortigent products, and the expense of those trials could adversely affect its business.
• If Cortigent fails to recruit highly skilled personnel to replace employees who left it during the COVID-19 pandemic, Cortigents ability to identify, develop and commercialize new or next generation product candidates will be impaired, could result in loss of markets or market share and could make it less competitive.
• If Cortigent or its licensors are unable to protect its/their intellectual property, then Cortigents financial condition, results of operations and the value of Cortigents technology and products could be adversely affected.
• Litigation or third-party claims of intellectual property infringement or challenges to the validity of Cortigents patents would require it to use resources to protect its technology and may prevent or delay the development, regulatory approval or commercialization of the Orion system or new product candidates. Further, the validity of some of its patents has been challenged.
• If Cortigent fails to comply with its obligations in the agreements under which it licenses development or commercialization rights to products or technology from third parties, it could lose license rights that are important to its business.
• If Cortigent is unable to protect the intellectual property used in its products, others may be able to copy its innovations which may impair its ability to compete effectively in Cortigents markets.
• Third-party claims of intellectual property infringement may prevent or delay Cortigents development and commercialization activities for Orion and the stroke recovery system.
• Cortigent may become involved in future lawsuits to protect or enforce its patents or the patents of its licensors, which could be expensive, time consuming and unsuccessful.
• Cortigent is increasingly dependent on sophisticated information technology systems, including systems from third parties, and if it fails to properly maintain the integrity of Cortigents data or if Cortigents products do not operate as intended, Cortigents business could be materially and adversely affected.
• Legislative or regulatory reform of the health care system in the U.S. and foreign jurisdictions may adversely impact Cortigents business, operations or financial results.
• Cortigent is subject to stringent domestic and foreign medical device regulation and any unfavorable regulatory action may materially and adversely affect Cortigents financial condition and business operations.
• Any revenue from sales of Cortigent products will be dependent upon the pricing and reimbursement guidelines adopted in each country, and if pricing and reimbursement levels are inadequate to achieve profitability, Cortigents operations will suffer.
• Even if Cortigent obtains clearance or approval to sell Cortigents products, it is subject to ongoing requirements and inspections that could lead to the restriction, suspension, or revocation of Cortigents clearance.
• Cortigent has no large-scale manufacturing experience, which could limit Cortigents growth.
• The price of our common stock may be volatile, and the value of your investment could decline.
• Our securities have no prior trading market, and our stock price may decline after the offering.
• We have broad discretion in the use of proceeds and may allocate the net proceeds from this offering in ways that differ from the estimates discussed in the section titled Use of Proceeds with which you may not agree, and if we do not use those proceeds effectively your investment could be harmed.
• Because the initial public offering price of our common stock will be substantially higher than the pro forma net tangible book value per share of our outstanding common stock following this offering, new investors will experience immediate and substantial dilution.
• We have the right to issue shares of preferred stock. If we were to issue preferred stock, it is likely to have rights, preferences and privileges that may adversely affect the common stock.
• There has been no prior public market for our common stock, the stock price of our common stock may be volatile or may decline regardless of our operating performance and you may not be able to resell your shares at or above the initial public offering price.
• Provisions in our Certificate of Incorporation which provide that Delawares Court of Chancery and federal courts in that state shall be the sole forum for all disputes between us and our stockholders for Securities Act claims could limit our stockholders ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Future Outlook

Cortigent plans 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 in early 2026, complete it by approximately early 2028, and if successful to be able to launch Orion on the US market in 2028. For the stroke recovery system, the company anticipates commencing an Early Feasibility Study in early 2026 and a pivotal clinical trial in mid-2027, with a potential launch in 2029.

Management Comments

• We are developing a platform technology with multiple potential applications: Our current-generation miniature neurostimulation device with 60 independent-cortical stimulation channels, supported by reliability data from the Argus II and Orion programs, is expected to serve as a platform for targeting other conditions with high unmet medical need.
• We believe that our most promising next target will be to apply cortical neurostimulation to improve recovery of arm and hand function in partially paralyzed stroke patients who are undergoing rehabilitation after stroke.

Industry Context

The medical device industry is characterized by rapid technological advancements and intense competition. Cortigent faces competition from other companies developing visual prostheses and stroke rehabilitation devices, including Pixium Vision SA, Nano Retina Inc., Bionic Vision Technologies, and MicroTransponder Inc.

Comparison to Industry Standards

• Cortigent's Orion system is unique in that it is placed on the brains surface, unlike other companies such as Neuralink and The Illinois Institute of Technology which are developing penetrating electrode cortical implants.
• In the field of medical device-assisted stroke rehabilitation, MicroTransponder Inc. sells the Vivistim FDA-approved vagus nerve stimulator (VNS).
• Cortigent believes direct cortical stimulation will provide superior results to VNS.

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, which obligations will continue, in the case of the funding obligations, until (i) the earlier of December 31, 2024 or (ii) receipt of proceeds from this offering.
• 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. By this amendment Vivani also agreed that we shall not be obligated to repay any funding support payments that it made to us which exceed a cumulative $3.5 million.
• 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.
• We will also be providing to Vivani the services of Edward Sedo, our chief financial officer. We and Vivani have acknowledged that any such services which we provide to the other before the completion of this offering are deemed to be equivalent in value and shall offset the value of the services provided to the other. As a result we each have acknowledged to the other that neither of us shall accrue any service fees or expenses to the other before completion of this offering and that no invoices from one of us to the other shall be required to be submitted.

Stakeholder Impact

• Shareholders: Potential for long-term growth if Cortigent's technology is successful, but also risk of dilution and volatility.
• Employees: Opportunity to work on innovative technology, but also risk of job insecurity due to the company's financial situation.
• Patients: Potential for new treatments for blindness and stroke recovery, but also risk of adverse events and limited efficacy.
• Suppliers: Opportunity to provide materials and services to Cortigent, but also risk of payment delays or contract termination.
• Creditors: Risk of default if Cortigent is unable to generate revenue or raise additional capital.

Next Steps

• Cortigent plans 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 in early 2026, complete it by approximately early 2028, and if successful to be able to launch Orion on the US market in 2028.
• For the stroke recovery system, the company anticipates commencing an Early Feasibility Study in early 2026 and a pivotal clinical trial in mid-2027, with a potential launch in 2029.

Key Dates

Keywords

neurostimulation, Orion, stroke recovery, artificial vision, medical device, IPO, clinical trials, FDA, Vivani, retinitis pigmentosa