Full Press Release Details
Medical Reports Second Quarter 2024 Results and Provides Business Update
continues to make significant progress towards disrupting the existing cochlear implant industry with its investigational, breakthrough
fully implanted Acclaim cochlear implant; Maintains goal of starting Pivotal Clinical Trial by end of the year
BEAR LAKE, Minn., August 12, 2024 (GLOBE NEWSWIRE) -- Envoy Medical , Inc. ("Envoy Medical") (Nasdaq: COCH),
a revolutionary hearing health company focused on fully implanted hearing devices, today announces its corporate and financial results
for the second quarter ended June 30, 2024.
are pleased with the steady progress that Envoy Medical has made this quarter and year-to-date in advancing our goal of becoming a leading
cochlear implant company," commented Brent T. Lucas, Envoy Medical's Chief Executive Officer. "We believe the results
of our Early Feasibility Study justify further study of our breakthrough fully implanted cochlear implant and intend to submit an IDE
application to begin a Pivotal Clinical Trial in the coming months. If our IDE application is approved, we are hopeful that we may begin
enrolling the study before year-end."
Highlights from Q2 2024
on Early Feasibility Study (EFS) at Mayo Clinic
Listening Condition Update
Results for the Quarter Ended June 30, 2024
was $68 thousand compared to $63 thousand for the same period in 2023. The increase is attributable to the sale of two Esteem FI-AMEI
units during the period, which offset reduced battery sales due to supply chain issues.
of goods sold increased by $83 thousand for the same period in 2023. The increase is attributable to manufacturing and materials scrap
for the Esteem FI-AMEI product of $62 thousand, additional contractors for manufacturing technicians and quality inspections of $20 thousand.
and supplies for the newly expanded manufacturing space of $11 thousand with offsets from other costs of $10 thousand.
expenses increased approximately $438 thousand to $2.6 million for the three months ended June 30, 2024 compared to the same period in
2023. The increase is primarily due to an increase in headcount and contractors in the engineering and clinical departments for the three
months ended June 30, 2024, as the Company increased headcount across its clinical and cochlear departments in preparation for its pivotal
clinical study for the Acclaim CI.
and marketing expenses increased by approximately $114 thousand to $497 thousand for the three months ended June 30, 2024 as compared
to the same period in 2023. The increase was primarily due to increased market access fees to secure insurance reimbursement
for the Esteem FI-AMEI product, offset by a reduction in headcount in that department.
and administrative expenses decreased by $250 thousand to $1.6 million compared to the same period in 2023. The reduction is due
primarily to reduced professional and legal fees related to the closing of the Business Combination in 2023 of $951 thousand, and
was partially offset by increases in personnel-related costs of $198 thousand, directors and officers insurance of $175 thousand,
non-cash stock option expenses of $99 thousand, loss on lease modification of $135 thousand, and other operating costs of $94
thousand, for the three months ended June 30, 2024.
of June 30, 2024, the Company had cash and cash equivalents of approximately $1.7 million.
the Fully Implanted Acclaim Cochlear Implant
Company believes the fully implanted Acclaim CI will be a first-of-its-kind fully implanted cochlear implant. Envoy Medical's fully
implanted technology includes a sensor designed to leverage the natural anatomy of the ear instead of a microphone to capture sound.
Acclaim CI is designed to address severe to profound sensorineural hearing loss that is not adequately addressed by hearing aids. The
Acclaim CI is expected to be indicated for adults who have been deemed adequate candidates by a qualified ear surgeon and audiologist.
Acclaim Cochlear Implant received the Breakthrough Device Designation from the U.S. Food and Drug Administration (FDA) in 2019.
The fully implanted Acclaim Cochlear Implant is an investigational device. Limited by Federal (or United States) law to investigational
the Esteem Fully Implanted Active Middle Ear Implant (FI-AMEI)
Esteem fully implanted active middle ear implant (FI-AMEI) is the only FDA-approved, fully implanted hearing device for adults diagnosed
with moderate to severe sensorineural hearing loss capable of delivering 24/7 hearing capability using the ear's natural anatomy.
The Esteem FI-AMEI requires no externally worn components and nothing is placed in the ear canal for it to function.* Unlike hearing
aids, you never put it on or take it off.
safety information for the Esteem FI-AMEI can be found at: https://www.envoymedical.com/safety-information.
Information and Where to Find It
of the documents filed by Envoy Medical with the SEC may be obtained free of charge at the SEC's website at www.sec.gov.
press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the
United States Private Securities Litigation Reform Act of 1995. Forward-Looking statements may be identified by the use of words such
as "estimate," "plan," "project," "forecast," "intend," "will,"
"expect," "anticipate," "believe," "seek," "target" or other similar expressions
that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does
not mean that a statement is not forward-looking. Such statements may include, but are not limited to, statements regarding the expectations
of Envoy Medical concerning the outlook for its business, productivity, plans and goals for future operational improvements and capital
investments, the availability and benefits of future funding, the Acclaim CI being the first to market fully implanted cochlear implant,
the timing of Envoy Medical's IDE submission and beginning of its clinical trial, the effect of such clinical trial on the development
of Envoy Medical's business, the impact of proposed legislation on the hearing health market, reimbursement for the Esteem FI-AMEI
device, and the Envoy Medical business, and future market conditions or economic performance, as well as any information concerning possible
or assumed future operations of Envoy Medical. The forward-looking statements contained in this press release reflect Envoy Medical's
current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances
that may cause its actual results to differ significantly from those expressed in any forward-looking statement. Envoy Medical does not
guarantee that the transactions and events described will happen as described (or that they will happen at all). These forward-looking
statements are subject to a number of risks and uncertainties, including, but not limited to changes in the market price of shares of
Envoy Medical's Class A Common Stock; Envoy Medical's success in retaining or recruiting, or changes required in, its officers,
key employees or directors; unpredictability in the medical device industry, the regulatory process to approve medical devices, and the
clinical development process of Envoy Medical products; competition in the medical device industry, and the failure to introduce new
products and services in a timely manner or at competitive prices to compete successfully against competitors; disruptions in relationships
with Envoy Medical's suppliers, or disruptions in Envoy Medical's own production capabilities for some of the key components
and materials of its products; changes in the need for capital and the availability of financing and capital to fund these needs; changes
in interest rates or rates of inflation; legal, regulatory and other proceedings could be costly and time-consuming to defend; changes
in applicable laws or regulations, or the application thereof on Envoy Medical; a loss of any of Envoy Medical's key intellectual
property rights or failure to adequately protect intellectual property rights; the effects of catastrophic events, including war, terrorism
and other international conflicts; and other risks and uncertainties set forth in the section entitled "Risk Factors" and
"Cautionary Note Regarding Forward Looking Statements" in the Annual Report on Form 10-K filed by Envoy Medical on April
1, 2024, and in other reports Envoy Medical files, with the SEC. If any of these risks materialize or Envoy Medical's assumptions
prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. While forward-looking
statements reflect Envoy Medical's good faith beliefs, they are not guarantees of future performance. Envoy Medical disclaims any
obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information,
data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should
not place undue reliance on any forward-looking statements, which are based only on information currently available to Envoy Medical.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
| June 30, 2024 | December 31, 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 1,746 | $ | 4,218 | ||||
| Accounts receivable | 174 | 70 | ||||||
| Other receivables | 28 | 176 | ||||||
| Inventories | 1,582 | 1,404 | ||||||
| Prepaid expenses and other current assets | 1,466 | 957 | ||||||
| Total current assets | 4,996 | 6,825 | ||||||
| Property and equipment, net | 632 | 351 | ||||||
| Operating lease right-of-use assets (related party) | 1,109 | 464 | ||||||
| Total assets | $ | 6,737 | $ | 7,640 | ||||
| Liabilities and stockholders' deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,589 | $ | 1,554 | ||||
| Accrued expenses | 6,004 | 4,613 | ||||||
| Product warranty liability, current portion | 290 | 311 | ||||||
| Operating lease liabilities (related party), current portion | 175 | 158 | ||||||
| Total current liabilities | 8,058 | 6,636 | ||||||
| Term loan payable (related party) | 7,292 | - | ||||||
| Product warranty liability, net of current portion | 1,923 | 1,923 | ||||||
| Operating lease liabilities (related party), net of current portion | 1,121 | 404 | ||||||
| Publicly traded warrant liability | 708 | 332 | ||||||
| Forward purchase agreement put option liability | - | 103 | ||||||
| Forward purchase agreement warrant liability | 22 | 4 | ||||||
| Total liabilities | 19,124 | 9,402 | ||||||
| Commitments and contingencies (see Note 14) | ||||||||
| Stockholders' deficit: | ||||||||
| Series A Preferred Stock, $0.0001 par value; 10,000,000 shares authorized as of June 30, 2024 and December 31, 2023, respectively; 4,500,000 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | - | - | ||||||
| Class A Common Stock, $0.0001 par value; 400,000,000 shares authorized as of June 30, 2024 and December 31, 2023 respectively; 19,599,982 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | 2 | 2 | ||||||
| Additional paid-in capital | 257,920 | 255,596 | ||||||
| Accumulated deficit | (270,189 | ) | (257,242 | ) | ||||
| Accumulated other comprehensive loss | (120 | ) | (118 | ) | ||||
| Total stockholders' deficit | (12,387 | ) | (1,762 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 6,737 | $ | 7,640 |
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except share and per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net revenues | $ | 68 | $ | 63 | $ | 127 | $ | 141 | ||||||||
| Cost and operating expenses: | ||||||||||||||||
| Cost of goods sold | 245 | 162 | 398 | 337 | ||||||||||||
| Research and development | 2,591 | 2,153 | 4,951 | 4,080 | ||||||||||||
| Sales and marketing | 497 | 383 | 822 | 754 | ||||||||||||
| General and administrative | 1,595 | 1,845 | 3,714 | 3,221 | ||||||||||||
| Total costs and operating expenses | 4,928 | 4,543 | 9,885 | 8,392 | ||||||||||||
| Operating loss | (4,860 | ) | (4,480 | ) | (9,758 | ) | (8,251 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Loss from changes in fair value of convertible notes payable (related party) | - | (8,766 | ) | - | (18,143 | ) | ||||||||||
| Change in fair value of forward purchase agreement put option liability | - | - | 103 | - | ||||||||||||
| Change in fair value of forward purchase agreement warrant liability | 244 | - | (18 | ) | - | |||||||||||
| Change in fair value of publicly traded warrant liability | 801 | - | (376 | ) | - | |||||||||||
| Interest expense, related party | (132 | ) | - | (168 | ) | - | ||||||||||
| Other expense | - | - | - | (105 | ) | |||||||||||
| Total other income (expense), net | 913 | (8,766 | ) | (459 | ) | (18,248 | ) | |||||||||
| Net loss | $ | (3,947 | ) | $ | (13,246 | ) | $ | (10,217 | ) | $ | (26,499 | ) | ||||
| Accrued preferred stock dividend | $ | (1,365 | ) | $ | - | $ | (2,730 | ) | $ | - | ||||||
| Net loss attributable to common stockholders, basic and diluted | $ | (5,312 | ) | $ | (13,246 | ) | $ | (12,947 | ) | $ | (26,499 | ) | ||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.27 | ) | $ | (1.31 | ) | $ | (0.66 | ) | $ | (2.62 | ) | ||||
| Weighted-average common stock outstanding, basic and diluted | 19,599,982 | 10,122,581 | 19,599,982 | 10,122,581 | ||||||||||||
| Other comprehensive loss: | ||||||||||||||||
| Foreign currency translation adjustment | (1 | ) | (1 | ) | (2 | ) | - | |||||||||
| Other comprehensive loss | (1 | ) | (1 | ) | (2 | ) | - | |||||||||
| Comprehensive loss | $ | (3,948 | ) | $ | (13,247 | ) | $ | (10,219 | ) | $ | (26,499 | ) |
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (10,217 | ) | $ | (26,499 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 76 | 56 | ||||||
| Stock-based compensation | 265 | - | ||||||
| Change in fair value of convertible notes payable (related party) | - | 18,143 | ||||||
| Change in fair value of warrant liability (related party) | - | 104 | ||||||
| Change in fair value of publicly traded warrant liability | 376 | - | ||||||
| Change in fair value of forward purchase agreement warrant liability | 18 | - | ||||||
| Change in fair value of forward purchase agreement put option liability | (103 | ) | - | |||||
| Change in operating lease right-of-use assets (related party) | (645 | ) | 52 | |||||
| Change in inventory reserve | 262 | (17 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (104 | ) | (14 | ) | ||||
| Other receivables | 148 | - | ||||||
| Inventories | (440 | ) | 6 | |||||
| Prepaid expenses and other current assets | 33 | (165 | ) | |||||
| Accounts payable | 35 | 1,357 | ||||||
| Operating lease liabilities (related party) | 734 | (75 | ) | |||||
| Accrued expenses | (1,171 | ) | 139 | |||||
| Product warranty liability | (21 | ) | (132 | ) | ||||
| Net cash used in operating activities | $ | (10,754 | ) | $ | (7,045 | ) | ||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (357 | ) | (70 | ) | ||||
| Deposit on equipment not yet placed in service | (542 | ) | - | |||||
| Net cash used in investing activities | $ | (899 | ) | $ | (70 | ) | ||
| Cash flows from financing activities | ||||||||
| Proceeds from the issuance of convertible notes payable (related party) | - | 7,000 | ||||||
| Proceeds from the issuance of term loan (related party) | 7,500 | - | ||||||
| Proceeds from the sale of common stock associated with the forward purchase agreement, net of transaction costs | 1,683 | - | ||||||
| Net cash provided by financing activities | $ | 9,183 | $ | 7,000 | ||||
| Effect of exchange rate changes on cash | (2 | ) | - | |||||
| Net decrease in cash | (2,472 | ) | (115 | ) | ||||
| Cash, beginning of period | 4,218 | 183 | ||||||
| Cash, end of period | $ | 1,746 | $ | 68 | ||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Non-cash investing and financing activities | ||||||||
| Deemed capital contribution from related party | $ | - | $ | 2,988 | ||||
| Dividends on Series A Preferred Shares | $ | 2,730 | $ | - | ||||
| Warrants issued with term note | $ | 376 | $ | - |
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.