S-1/A: Cortigent Eyes $15 Million IPO to Advance Vision and Stroke Recovery Tech

Cortigent, a neurostimulation technology company, aims to raise $15 million through an IPO to fund clinical trials for its Orion artificial vision system and stroke recovery technology.

Summary

• Cortigent, Inc., a company focused on developing neurostimulation systems, is planning an initial public offering of 1,500,000 shares of common stock.
• The anticipated initial public offering price is $10.00 per share.
• The company has applied to list its common stock on The Nasdaq Capital Market under the symbol CRGT.
• Immediately following the offering, Vivani Medical, Inc. will beneficially own approximately 77% of the voting power of Cortigent's common stock (or approximately 74% if the underwriters exercise their option to purchase additional shares in full).
• Cortigent is an emerging growth company and a smaller reporting company, which allows it to take advantage of certain reduced public company reporting requirements.
• The company 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, repay amounts owed to Vivani, and for working capital.
• Cortigent's Orion system is designed to provide visual perception to profoundly blind people, targeting a U.S. market of approximately 82,000 individuals.
• The company is also developing a stroke recovery system, targeting a U.S. market estimated at approximately $6 billion.
• Cortigent has an extensive intellectual property estate with rights to 217 issued U.S. patents and 37 issued European patents.
• The company is pre-revenue and expects operating losses to continue for the foreseeable future.

Sentiment

Score: 6

Explanation: The document presents a balanced view, highlighting both the potential of Cortigent's technology and the significant risks associated with its development and commercialization. The company's pre-revenue status and reliance on future funding contribute to a moderate sentiment score.

Positives

• Promising safety and efficacy data from the Orion early feasibility study.
• Breakthrough Device designation from the FDA for the Orion system.
• Large potential market for both Orion and the stroke recovery system.
• Extensive intellectual property portfolio.
• Experienced leadership and R&D teams.
• The company has a pre-submission meeting with the FDA to discuss commencing an Early Feasibility Study of the stroke recovery system.

Negatives

• Pre-revenue company with a history of operating losses.
• Reliance on additional capital to fund clinical trials and growth plans.
• Clinical trials may not demonstrate safety and efficacy or lead to commercial products.
• Dependence on regulatory approvals and favorable product reimbursement.
• Potential competition from other medical device companies.
• Vivani will have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors and the approval of significant corporate transactions.

Risks

• Failure to achieve successful clinical trials or attain regulatory approvals.
• Inability to secure favorable product reimbursement.
• Competition from other medical device companies.
• Potential delays in completing clinical trials or studies.
• Inability to recruit highly skilled personnel.
• Failure to protect intellectual property.
• Dependence on sophisticated information technology systems.
• Legislative or regulatory reform of the health care system.
• Unfavorable regulatory action.
• Inadequate pricing and reimbursement guidelines.
• Lack of large-scale manufacturing experience.
• Volatility in the price of common stock.
• Immediate and substantial dilution for new investors.
• Economic downturns and political and market conditions beyond our control.

Future Outlook

Cortigent plans to work with the FDA to gain agreement on additional clinical studies required to secure marketing approval for Orion and the stroke recovery system, targeting market launches in 2028 and 2029, respectively, subject to clinical trial success and regulatory approvals.

Management Comments

• The timeline presented represents managements estimate of the time required to complete each stage.
• No assurance can be made that clinical trials will demonstrate safety and efficacy or will lead to commercial products.

Industry Context

The medical device industry is characterized by rapid technological change 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, MicroTransponder Inc., and Neuralink.

Comparison to Industry Standards

• MicroTransponder Inc. sells the Vivistim FDA-approved vagus nerve stimulator (VNS) for stroke rehabilitation, offering a competing technology.
• Northstar Neuroscience conducted clinical studies in the early 2000s using a single-channel electrical stimulation device for stroke recovery, but failed to achieve statistical significance in a Phase 3 study.
• Pixium Vision SA was developing the PRIMA (sub-retinal implant) in Dry-AMD patients but announced the opening of judicial liquidation proceedings in January 2024.
• Neuralink has demonstrated a penetrating electrode cortical implant in animal models and recently announced implanting its first patient with their brain computer interface (BCI) device with vision restoration as one of their stated goals.

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.
• Cortigent is a wholly owned subsidiary of Vivani Medical, Inc. (Vivani, or Parent) and includes the personnel, technologies, and other assets that formerly comprised Second Sight.
• 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.
• 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.
• 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.
• We will also be providing to Vivani the services of Edward Sedo, our chief financial officer.
• By this Agreement Vivani and we have agreed to indemnify and hold each other harmless from certain matters relating to, arising out of or resulting from the operations of Second Sights business before August 30, 2022.

Stakeholder Impact

• Shareholders: Potential for significant returns if Cortigent's technology is successful, but also faces substantial risks.
• Employees: Opportunity to work on innovative technology, but also faces job security risks due to the company's financial situation.
• Customers: Potential for life-changing technology for the blind and stroke patients, but faces uncertainty regarding availability and affordability.
• Suppliers: Potential for increased business if Cortigent's technology is successful, but also faces risks if the company fails.
• Creditors: Faces risks if Cortigent is unable to repay its debts.

Next Steps

• Manufacture and validate new Orion devices for a planned pivotal clinical trial.
• Commence the pivotal trial for Orion in early 2026.
• Complete the pivotal trial for Orion by approximately early 2028.
• Launch Orion on the US market in 2028, if successful.
• Manufacture modified clinical trial devices for the planned Early Feasibility Study (EFS) for the stroke recovery system.
• Commence the EFS for the stroke recovery system in early 2026.
• Commence a pivotal clinical trial for the stroke recovery system in mid-2027.
• Complete the pivotal clinical trial for the stroke recovery system by early 2029.
• Launch the stroke recovery system in 2029, if successful.

Key Dates

Keywords

neurostimulation, Orion, stroke recovery, artificial vision, clinical trials, FDA approval, medical device, IPO, Vivani, patents