UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ___________________

Commission file number: 001-38325

enVVeno Medical Corporation

(Exact name of registrant as specified in its charter)

Delaware

33-0936180

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

70 Doppler

Irvine, California 92618

(Address of principal executive offices)

(949) 261-2900

(Registrant’s telephone number, including area code)

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

Title of Each Class:

Name of Each Exchange on Which Registered:

Ticker Symbol

Common Stock, $0.00001 par value

Warrant to Purchase Commons Stock

The NASDAQ Stock Market LLC

NVNO

NVNOW

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 every Interactive Data File required to be submitted 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, a smaller reporting company, or an emerging growth company. See the definitions 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of October 27, 2022, there were 9,471,932 shares of common stock outstanding.

ENVVENO MEDICAL CORPORATION

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION	1

ITEM 1. Financial Statements	1

Condensed Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	1

Unaudited Condensed Statements of Operations for the three and nine months ended September 30, 2022 and 2021	2

Unaudited Condensed Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2022 and 2021	3

Unaudited Condensed Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	4

Notes to Unaudited Condensed Financial Statements	6

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	16

ITEM 4. Controls and Procedures	16

PART II

OTHER INFORMATION	17

ITEM 1. Legal Proceedings	17

ITEM 1A. Risk Factors	17

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	17

ITEM 3. Defaults Upon Senior Securities	17

ITEM 4. Mine Safety Disclosures	17

ITEM 5. Other Information	17

ITEM 6. Exhibits	18

Signatures	19

PART I – FINANCIAL INFORMATION

ITEM 1 – Financial Statements

ENVVENO MEDICAL CORPORATION

CONDENSED BALANCE SHEETS

(Unaudited)

	September 30,			December 31,
	2022			2021
(In thousands except par values, unless otherwise indicated)
Assets
Current Assets:
Cash and cash equivalents	$	2,895		$	54,728
Short-term investments		37,432			-
Prepaid expenses and other current assets		381			312
Total Current Assets		40,708			55,040
Property and equipment, net		566			618
Operating lease right-of-use assets, net		1,750			1,987
Long-term investments		2,398			-
Security deposits and other assets		34			54
Total Assets	$	45,456		$	57,699

Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	501		$	560
Accrued expenses and other current liabilities		495			729
Current portion of operating lease liabilities		308			291
Total Current Liabilities		1,304			1,580
Long-term operating lease liabilities		1,481			1,715
Total Liabilities		2,785			3,295

Commitments and Contingencies		-			-
Stockholders’ Equity:
Preferred stock, par value $0.00001, 10,000 shares authorized: no shares issued or outstanding		-			-
Common stock, par value $0.00001, 250,000 shares authorized, 9,472 and 9,470 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		-			-
Additional paid-in capital		143,011			136,255
Accumulated deficit		(100,340	)		(81,851	)
Total Stockholders’ Equity		42,671			54,404
Total Liabilities and Stockholders’ Equity	$	45,456		$	57,699

See Notes to these Unaudited Condensed Financial Statements

ENVVENO MEDICAL CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	2022			2021			2022			2021
	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
(In thousands, except per share data)
Operating Expenses:
Selling, general and administrative expenses		3,659			1,482			11,355			3,954
Research and development expenses		2,492			1,225			7,117			3,946
Loss from Operations		(6,151	)		(2,707	)		(18,472	)		(7,900	)

Other (Income) Expense:
Gain on extinguishment of note payable		-			(313	)		-			(313	)
Interest income, net		(75	)		(5	)		(117	)		(14	)
Unrealized loss from investments		21			-			134			-
Other expense		-			-			-			(33	)
Total Other (Income) Expense		(54	)		(318	)		17			(360	)
Net Loss	$	(6,097	)	$	(2,389	)	$	(18,489	)	$	(7,540	)

Net Loss Per Basic and Diluted Common Share:	$	(0.54	)	$	(0.26	)	$	(1.65	)	$	(0.96	)

Weighted Average Number of Common Shares Outstanding:
Basic and Diluted		11,229			9,180			11,229			7,840

See Notes to these Unaudited Condensed Financial Statements

ENVVENO MEDICAL CORPORATION

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, unless otherwise indicated)

(Unaudited)

					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Equity
Balance at January 1, 2022		9,470	$	-	$	136,255	$	(81,851	)	$	54,404
Shared-Based Compensation		-		-		2,243		-			2,243
Net loss		-		-		-		(5,330	)		(5,330	)
Balance at March 31, 2022		9,470	$	-	$	138,498	$	(87,181	)	$	51,317
Shared-Based Compensation		-		-		2,303		-			2,303
Net loss		-		-		-		(7,062	)		(7,062	)
Balance at June 30, 2022		9,470		-		140,801		(94,243	)		46,558
Share-Based Compensation		2		-		2,210		-			2,210
Net loss		-		-		-		(6,097	)		(6,097	)
Balance at September 30, 2022		9,472		-		143,011		(100,340	)		42,671

					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Equity
Balance at January 1, 2021		2,542	$	-	$	72,421	$	(65,323	)	$	7,098
Common stock issued in public offering		5,914		-		38,128		-			38,128
Common stock issued for exercise of warrants		52		-		240		-			240
Shared-Based Compensation		-		-		107		-			107
Fair Value of Warrants Issued		-		-		212		-			212
Net loss		-		-		-		(2,773	)		(2,773	)
Balance at March 31, 2021		8,508	$	-	$	111,108	$	(68,096	)	$	43,012
Shared-Based Compensation		-		-		203		-			203
Shares issued in satisfaction of trade payable		6		-		37		-			37
Net loss		-		-		-		(2,378	)		(2,378	)
Balance at June 30, 2021		8,514		-		111,348		(70,474	)		40,874
Common stock issued in at the market transactions		171		-		971		-			971
Common stock issued in registered direct offering		781		-		18,274					18,274
Shared-Based Compensation		-		-		325		-			325
Net loss		-		-		-		(2,389	)		(2,389	)
Balance at September 30, 2021		9,466		-		130,918		(72,863	)		58,055

See Notes to these Unaudited Condensed Financial Statements

ENVVENO MEDICAL CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands, unless otherwise indicated)

(Unaudited)

	2022			2021
	For the Nine Months Ended
	September 30,
	2022			2021
Cash Flows from Operating Activities
Net loss	$	(18,489	)	$	(7,540	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation		6,756			656
Depreciation and amortization		158			103
Amortization of right-of-use assets		237			228
Gain on extinguishment of note payable		-			(313	)
Unrealized loss from investments, net		134			-
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(69	)		(35	)
Security deposit and other assets		20			(25	)
Accounts payable		(59	)		(998	)
Accrued expenses and other current liabilities		(234	)		(587	)
Operating lease liabilities		(217	)		(235	)
Total adjustments		6,726			(1,206	)
Net Cash Used in Operating Activities		(11,763	)		(8,746	)

Cash Flows from Investing Activities
Purchase of property and equipment		(106	)		(303	)
Purchases of investments		(42,214	)		-
Maturities of investments		2,250			-
Net Cash Used in Investing Activities		(40,070	)		(303	)

Cash Flows from Financing Activities
Proceeds from shares issued under ATM, net		-			970
Proceeds from registered direct offering, net		-			18,273
Proceeds from public offering, net		-			38,128
Proceeds from Warrant Exercises		-			240
Net Cash Provided by Financing Activities		-			57,611

Net (Decrease) Increase in Cash, Cash Equivalents		(51,833	)		48,562
Cash, cash equivalents - Beginning of period		54,728			9,334
Cash, cash equivalents - End of period	$	2,895		$	57,896

See Notes to these Unaudited Condensed Financial Statements

ENVVENO MEDICAL CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS (Continued)

(In thousands, unless otherwise indicated)

(Unaudited)

	For the Nine Months Ended
	September 30,
	2022		2021
Supplemental Disclosures of Cash Flow Information:
Cash Received During the Period For:
Interest, net	$	67	$	14

Non-Cash Financing Activities:
Fair value of common stock issued in satisfaction of trade payable	$	-	$	38
Fair value of warrants issued in satisfaction of trade payables and accrued expenses	$	130	$	212

See Notes to these Unaudited Condensed Financial Statements

ENVVENO MEDICAL CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Business Organization and Nature of Operations

enVVeno Medical Corporation is a late clinical-stage med-tech company focused on the advancement of innovative bioprosthetic (tissue-based) solutions to improve the standard of care for the treatment of venous disease. The Company’s lead product, the VenoValve®, is a first-in-class surgical replacement venous valve being developed for the treatment of deep venous Chronic Venous Insufficiency (CVI). The Company is also developing a non-surgical, transcatheter based replacement venous valve for the treatment of deep venous CVI called enVVe™. CVI occurs when valves inside of the veins of the leg become damaged, resulting in the backwards flow of blood (reflux), blood pooling in the lower leg, increased pressure in the veins of the leg (venous hypertension) and in severe cases, venous ulcers that are difficult to heal and become chronic. Both the VenoValve and enVVe are designed to act as one-way valves, to help assist in propelling blood up the leg, and back to the heart and lungs. The VenoValve is currently being evaluated in the SAVVE U.S. pivotal study and the company is currently waiting for regulatory approval to begin the TAVVE first-in-human trial for enVVe. Our team of officers and directors has been affiliated with numerous medical devices that have received FDA approval or CE marking and that have been commercially successful. We develop and manufacture our products in a 14,507 sq. ft. leased manufacturing facility in Irvine, California, which has been ISO 13485-2016 certified for the design, development and manufacturing of tissue based implantable medical devices.

Note 2 – Management’s Liquidity Plan

As of September 30, 2022, the Company had a cash balance of $2.9 million, investments of $39.8 million and working capital of $39.4 million. Although the Company expects to continue incurring losses for the foreseeable future and may need to raise additional capital to sustain its operations, pursue its product development initiatives and penetrate markets for the sale of its products, Management believes that our capital resources at September 30, 2022 are sufficient to meet our obligations as they become due within one year after the date of this Quarterly Report, and sustain operations.

ENVVENO MEDICAL CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed financial statements of the Company as of September 30, 2022 and December 31, 2021, and for the three and nine months ended September 30, 2022 and 2021. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the operating results for the full year. These unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2021 included in the Company’s Form 10-K filed with the SEC on March 28, 2022. The condensed balance sheet as of December 31, 2021 has been derived from the Company’s audited financial statements.

Investments

We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. Investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year are classified as long-term investments.

Debt investments are classified as trading securities and realized gains and losses are recorded using the specific identification method. Changes in fair value, excluding credit losses and impairments, are recorded in unrealized gains (losses) from investments. Fair value is calculated based on publicly available market information. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. We recognize interest income based on the stated coupon rate of the investments purchased.

Note 4 – Investments

The components of investments were as follows at September 30, 2022:

Schedule of Investments

(In thousands)

	Cash Equivalents		Short-Term Investment		Long Term Investment
Fair Value Level 1
U.S. Government securities	$	2,126	$	37,432	$	2,398
Total debt investments	$	2,126	$	37,432	$	2,398

Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. Management does not believe any remaining unrealized losses represent impairments based on our evaluation of available evidence. There were no similar investments at December 31, 2021.

ENVVENO MEDICAL CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 5 – Concentrations

The Company maintains cash with major financial institutions. Cash held in United States bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250 at each institution. There were aggregate uninsured cash balances of $2.6 million and $54.5 million as of September 30, 2022 and December 31, 2021, respectively.

Note 6 – Accrued Expenses and Other Current Liabilities

As of September 30, 2022, and December 31, 2021, accrued expenses and other current liabilities consist of the following:

	September 30,		December 31,
(In thousands)	2022		2021
Accrued compensation costs	$	394	$	525
Accrued professional fees		40		84
Accrued research and development		-		60
Other accrued expenses		61		60
Accrued expenses	$	495	$	729

Note 7 – Commitments and Contingencies

Litigations Claims and Assessments

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.

Robert Rankin Complaints

On July 9, 2020, the Company was served with a civil complaint filed in the Superior Court for the State of California, County of Orange by a former employee, Robert Rankin, who resigned his employment on or about March 30, 2020. The case is entitled Rankin v. Hancock Jaffe Laboratories, Inc. et al., Case No. 30-2020-01146555-CU-WR-CJC and was filed on May 27, 2020. On September 3, 2020 the Company and its Chief Executive Officer were served with a second complaint filed in the Superior Court for the State of California, County of Orange by Mr. Rankin. The case is entitled Rankin v. Hancock Jaffe Laboratories, Inc. et al., Case No. 30-2020-01157857 and was filed on August 31, 2020. The complaints assert several causes of action including a cause of action for failure to timely pay Mr. Rankin’s accrued and unused vacation and three months’ severance under his July 16, 2018 employment agreement, defamation, unlawful labor code violations, sex-based discrimination, and unfair competition, and seeks damages for lost wages, emotional and mental distress, consequential damages, punitive damages and attorney’s fees and costs. The Company has denied all claims in both matters (which have now been consolidated) and has filed a counterclaim asserting that Rankin has breached his employment agreement with the Company to the Company’s damage. The Company continues to believe it has meritorious defenses to both matters which are currently set for trial on June 12, 2023.

As of the date of these financial statements, the amount of loss associated with these complaints, if any, cannot be reasonably estimated.

ENVVENO MEDICAL CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 8 –Stockholders’ Equity

Stock Options

From time to time, the Company issues options for the purchase of its common stock to employees and others. During the nine-months ended September 30, 2022, the Company granted options to employees for the purchase off forty-three thousand shares with a weighted average exercise price of $6.76 per share.

The Company recognized $6.6 million and $0.7 million of share-based compensation related to stock options during the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, there was $8.6 million of unrecognized stock-based compensation expense related to outstanding stock options that will be recognized over the weighted average remaining vesting period of 1.6 years.

Note 9 – Net Loss per Share

The following table summarizes the number of potentially dilutive common stock equivalents excluded from the calculation of diluted net loss per common share as of September 30, 2022 and 2021:

	2022		2021
	September 30,
(In thousands)	2022		2021
Shares of common stock issuable upon exercise of warrants		4,570		4,554
Shares of common stock issuable upon exercise of options		3,438		485
Potentially dilutive common stock equivalents excluded from diluted net loss per share		8,008		5,039

Item 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our unaudited condensed financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Such forward-looking statements involve significant risks and uncertainties. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on our behalf. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements. Such forward-looking statements also involve other factors which may cause our actual results, performance or achievements to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements and to vary significantly from reporting period to reporting period. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual future results will not be different from the expectations expressed in this Quarterly Report. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Unless the context requires otherwise, references in this document to “NVNO”, “we”, “our”, “us” or the “Company” are to EnVVeno Medical Corporation

Overview

VenoValve

The VenoValve is a porcine based replacement venous valve developed at enVVeno Medical to be implanted in the deep venous system of the leg to treat severe CVI. By reducing reflux and lowering pressure (venous hypertension) within the deep venous system of the leg, the VenoValve has the potential to reduce or eliminate the symptoms of severe deep venous CVI, including the potential to heal recurring venous leg ulcers. The VenoValve is implanted into the femoral vein of the patient in an open surgical procedure via a 5-to-6-inch incision in the upper thigh.

There are presently no FDA approved medical devices to address valvular incompetence in the deep venous system, or effective treatments for deep venous CVI. Current treatment options include compression garments, or constant leg elevation, and wound care for venous ulcers. These treatments are generally ineffective, as they attempt to alleviate the symptoms of CVI without addressing the underlying causes of the disease. In addition, we believe compliance with compression garments and leg elevation is extremely low, especially among the elderly. The premise behind the VenoValve is that by reducing the underlying causes of CVI, reflux and venous hypertension, the debilitating symptoms of CVI will decrease, resulting in improvement in the quality of the lives of CVI sufferers.

We estimate that there are approximately 2.4 million people in the U.S. who would be candidates for the VenoValve.

VenoValve Clinical Status

After consultation with the FDA, and as a precursor to the U.S. pivotal trial, we conducted a small first-in-human study for the VenoValve in Colombia which included eleven (11) patients. Endpoints for the VenoValve first-in-human study included safety (device related adverse events), reflux, measured by doppler, an rVCCS score, which is used by the clinician to measure disease regression and progression, a VAS score used by the patient to measure pain, and a quality of life measurement.

Final results from the one (1) year first-in-human study were presented at the Charing Cross International Symposium in April of 2021. Among the eleven (11) patients in the study, reflux improved an average of 54%, Venous Clinical Severity Scores (“VCSSs”) improved an average of 56%, and visual analog scale (VAS) scores, which are used by patients to measure pain, improved an average of 76%, all at one (1) year when compared to pre-surgery levels. VCSS scores are commonly used by clinicians in practice and in clinical trials to objectively assess outcomes in the treatment of venous disease, and include ten characteristics including pain, inflammation, skin changes such as pigmentation and induration, the number of active ulcers, and ulcer duration. The improvement in VCSS scores is significant and indicates the VenoValve patients who had severe CVI pre-surgery, had mild CVI or the complete absence of disease at one-year post surgery.

There were no device related safety incidences during the one (1) year first-in-human study. Non-device related safety incidences were minor and included one (1) fluid pocket (which was aspirated), intolerance from Coumadin anticoagulation therapy, three (3) minor wound infections (treated with antibiotics), and one occlusion due to patient non-compliance with anti-coagulation therapy.

An IDE from the FDA is required before a medical device company can proceed with a pivotal trial for a class III medical device. On April 1, 2021, we received notification from the FDA that our IDE application for the VenoValve U.S. pivotal trial was approved. We have named the U.S. pivotal trial for the VenoValve the SAVVE (Surgical Anti-reflux Venous Valve Endoprosthesis) study. It is a prospective, non-blinded, single arm, multi-center study of seventy-five (75) CVI patients to be enrolled at up to twenty (20) U.S. sites.

No product modifications for the VenoValve were necessary following the first-in-human study and the SAVVE trial is evaluating the same device that was used in the first-in-human study. Endpoints for the SAVVE trial mirror those endpoints used for the first-in-human study. The primary safety endpoint for the pivotal trial is a material adverse safety event (mortality, deep wound infection, major bleeding, ipsilateral deep vein thrombosis, pulmonary embolism) in no more than twenty six percent (26%) of the patients at one (1) month post implantation, and the primary effectiveness endpoint for the pivotal trial is improvement in reflux of at least thirty percent (30%), measured at six (6) months post VenoValve implantation in at least fifty five percent (55%) of the patients. In the first-in-human study there were no reported material adverse safety events at one (1) month post implantation, and reflux improved an average of fifty six percent (56%) at six (6) months post implantation. At least a thirty percent (30%) improvement in reflux occurred in ninety percent (90%) of the patients. rVCSS scoring to measure disease manifestations, VAS scores to measure pain, and quality of life measurements will also be monitored in the study.

On August 3, 2020, we announced that the FDA granted Breakthrough Device Designation status to the VenoValve. The FDA’s Breakthrough Devices Program was established to enable priority review for devices that provide more effective treatment or diagnosis of life threatening or irreversibly debilitating diseases or conditions. The goal of the FDA’s Breakthrough Devices Program is to provide patients and health care providers with timely access to medical devices by speeding up their development, assessment, and review, while preserving the FDA’s mission to protect and promote public health.

At the end of the VenoValve first-in-human study, eight (8) study participants agreed to additional monitoring. In August of 2021, longer-term two (2) year follow-up data was presented at the Society of Vascular Surgery Conference in San Diego, for the cohort of eight (8) patients. That data indicated no recurrences of the severe CVI that was present pre-VenoValve, including no ulcer recurrences for those patients whose venous ulcers had healed following VenoValve surgery. There were no reported safety issues from the end of one (1) year first-in-human study to the end of the two (2) year reporting period. In addition, the patients continued to improve, reporting 63%, 60%, and 93%, average improvements in reflux, VCSS, and VAS scores, respectively, at an average of two (2) years post VenoValve surgery compared to pre-VenoValve levels.

In October of 2021, we announced that the first patient in the SAVVE pivotal trial underwent successful VenoValve implantation surgery and had been discharged from the hospital. During April 2022 our twentieth site in the SAVVE study became active and is eligible to enroll patients.

COVID continues to have indirect consequences on the SAVVE clinical trial. As reported in the media, the effects of COVID COVID have resulted in an exodus of health care providers leaving the profession. These staffing issues continue to put an enormous strain on all hospital resources including clinical staffs. This lack of available clinical personnel continues to slow enrollment at our clinical sites.

COVID also impacts our patient population. Patients with COVID or who are unwilling to get vaccinated, are currently excluded from our study. In addition, concerns about getting COVID impact the patients’ willingness to undergo an elective surgical procedure with a one-night hospital stay. Our goal continues to be to fully enroll the SAVVE pivotal trial by the end of the first quarter of 2023. We continue to monitor patient enrollment and will change our enrollment guidance for SAVVE, if necessary, when we have sufficient information to do so.

enVVe

On September 21, 2022, we announced the development of a non-surgical transcatheter based replacement venous valve called enVVe™, for the treatment of CVI of the deep veins of the leg. Preliminary bench testing and animal testing for enVVe have already been successfully completed and the Company has filed an application seeking approval to begin first-in-human (FIH) testing in Columbia, which we expect to receive by the end of 2022.

The enVVe first-in-human trial, which will take place in Colombia, will be known as the Transcatheter Anti-reflux, Venous Valve Endoprosthesis (TAVVE) FIH study. The initial phase of the TAVVE-FIH study will seek to enroll 3 to 5 patients across multiple sites. Several parameters will be evaluated over the course of the study including safety and technical success of the enVVe venous valve delivery system, and the safety and clinical performance of the enVVe venous valve.

enVVe is delivered into the femoral vein of the patient via a minimally invasive procedure requiring no general anesthesia and no overnight hospital stay. Due to the minimally invasive nature of the procedure, we estimate the U.S. market for enVVe to be approximately 3.5 million patients.

Capital

In February of 2021, we raised $41.4 million of capital in a public offering of our common stock. In September of 2021, we raised $20 million dollars of capital in a registered direct offering priced at the market under Nasdaq rules and purchased by a fund managed by Perceptive Advisors, a leading life sciences investment firm. We finished 2021 with approximately $55 million of cash and had approximately $2.9 million of cash and $39.8 million of investments at September 30, 2022. At our existing cash burn rate of approximately $4 million per quarter, we should have sufficient cash to fund operations through the end of 2024 and into 2025.

Comparison of the three months ended September 30, 2022 and 2021

Overview

We reported net losses of $6.1 million and $2.4 million for the three months ended September 30, 2022 and 2021, respectively, representing an increase in net loss of $3.7 million or 154%, due to an increase in operating expenses of $3.4 million, and a net decrease in other income and expense of $0.3 million.

Revenues

As a developmental stage Company, we are not currently generating revenue and our future revenue, if any, is expected to be diminutive and dependent on our ability to commercialize our product candidates.

Selling, General and Administrative Expenses

For the three months ended September 30, 2022, selling, general and administrative expenses increased by $2.1 million or 140%, to $3.6 million from $1.5 million for the three months ended September 30, 2021. Of this increase, $1.9 million was due to share-based compensation from grants made during 2021, which increased share-based compensation cost to $2.2 million in 2022 from $0.3 million in 2021. The remaining $0.2 million increase reflects higher legal expenses related to building the Company’s patent portfolio.

Research and Development Expenses

For the three months ended September 30, 2022, research and development expenses increased by $1.3 million or 108%, to $2.5 million from $1.2 million for the three months ended September 30, 2021. This increase primarily resulted from $0.8 million in costs related the SAVVE study, $0.3 million in lab costs to support the SAVVE study and VenoValve continued development, and $0.2 million increase in personnel costs due to additional staff.

Gain on Extinguishment of Note Payable

For the quarter ended September 30, 2021 the Company recorded a one-time $0.3 million gain on extinguishment of note payable due to the forgiveness of the loan it had obtained under the PPP program authorized by the CARES act.

Comparison of the nine months ended September 30, 2022 and 2021

Overview

We reported net losses of $18.5 million and $7.5 million for the nine months ended September 30, 2022 and 2021, respectively, representing an increase in net loss of $11.0 million, or 147%, due to an increase in operating expenses of $10.6 million, and a decrease in other income and expense of $0.4 million.

Revenues

Selling, General and Administrative Expenses

For the nine months ended September 30, 2022, selling, general and administrative expenses increased $7.3 million or 183%, to $11.3 million from $4.0 million for the nine months ended September 30, 2021. Of this increase, $6.1 million was due to share-based compensation from grants made during 2021, which increased share-based compensation cost to $6.7 million in 2022 from $0.6 million in 2021.

The remaining $1.2 million increase in expenses is attributable to $0.4 million from higher legal costs mainly related to building the Company’s patent portfolio, $0.3 million of consulting costs for reimbursement codes for the Company’s product to be used once the product is commercially approved, if ever, $0.3 million from higher information technology and other office expense to support increases in staff, $0.1 million from higher compensation cost, and $0.1 million from higher insurance costs related to increased coverages for cyber risks and higher D&O insurance premiums.

Research and Development Expenses

For the nine months ended September 30, 2022, research and development expenses increased by $3.1 million or 78%, to $7.1 million from $4.0 million for the nine months ended September 30, 2021.

This increase primarily resulted from $2.8 million in costs related the SAVVE study, $0.2 million in lab costs to support the SAVVE study and VenoValve continued development, and $0.1 million in travel costs to support the SAVVE study.

Gain on Extinguishment of Note Payable

For the nine months ended September 30, 2021 the Company recorded a $0.3 million gain on extinguishment of note payable due to the forgiveness of the loan it had obtained under the PPP program authorized by the CARES act.

Liquidity and Capital Resources

For the nine-months ended September 30, 2022, the Company incurred losses from operations of $18.5 million and used $11.7 million cash in operating activities. The net cash used in operating activities during the 2022 period increased by $3.0 from $8.7 million for the nine-months ended September 30, 2021.

The losses and the uses of cash are primarily due to the Company’s administrative and product research and development activities. Administrative functions relate to costs to support the Company’s public reporting and investor relations activities as well as internal administrative functions. Research and development activities are for continued product development and clinical trials for the VenoValve, currently primarily the SAVVE study. The Company will continue to incur these costs to complete its clinical trials, enhance products, develop new products, and operate as a public company. Although we have discretion in how we use the Company’s cash resources, we expect to continue these activities for the foreseeable future as we seek to obtain regulatory approval for our lead product candidate. We are not currently generating revenue and do not expect significant revenue until we successfully commercialize our lead product candidate.

Our cash flows from investing activity have historically consisted of purchases of property and equipment for our lab and offices. However, during the period ending September 30, 2022, we commenced a program to invest excess cash in US Treasury bills. In the nine months ended September 30, 2022, we purchased $42.2 million of these investments and expect to continue investing as the treasury bills mature and as allowed by the cash requirements of our operations. Also, during the nine months ending September 30, 2022, we purchased $0.1 million of property and equipment consisting primarily of lab and test equipment.

We do not currently have material commitments for capital expenditures or other expenditures with the exception of our facility lease commitment of $0.4 million per year. However, we expect a modest increase in purchases of property and equipment as we continue SAVVE and plan for commercialization of the VenoValve.

The Company has historically funded its operations through financing activities such as the capital raises completed in 2021. During 2021, the Company raised an aggregate of $57.4 million in net proceeds in private and public placements of its securities. Our cash balance as of September 30, 2022, is $2.9 million. In addition, we have $39.8 million in investments, for total cash and investments of $42.7 million.

Our future capital requirements will remain dependent upon a variety of factors, especially including the success of our clinical trials and related product development costs and our ability to successfully bring products to market. At our existing cash burn rate of approximately $4 million per quarter, we should have sufficient cash to fund operations through the end of 2024 and into 2025. With primary endpoints following full enrollment in the SAVVE pivotal trial of thirty (30) days for safety, and six (6) months for effectiveness, we expect to have primary endpoint data well in advance of the need to raise additional capital. Any inability to raise additional financing would have a material adverse effect on us.

Based upon our cash and working capital as of September 30, 2022, we have sufficient capital resources to meet our obligations as they become due for at least one year after the date of this Report and sustain operations.

As of October 25, 2022, our cash balance was $2.0 million and our investment balance was $39.9 million.

The COVID-19 pandemic continues to disrupt the global economy and has negatively impacted large populations including people and businesses that may be directly or indirectly involved with the operation of our Company and the manufacturing, development, and testing of our product candidates. COVID with its variants continues to have both direct and indirect consequences on our clinical trial. Several of our clinical sites put elective surgeries on hold and prohibited potential study subjects from coming to the hospital for screening. Further COVID resurgences put an enormous strain on all hospital resources including clinical staffs. The lack of available clinical personnel both slows enrollment and impacts the speed at which we can activate clinical sites.

COVID has also impacted our patient population. Patients with COVID or who have had COVID within ninety (90) days of their screening, are excluded from our study until after the ninety (90) day period has passed. In addition, concerns about getting COVID impact the patients’ willingness to undergo an elective surgical procedure with a one-night hospital stay. As hospital clinical operations return to more normal levels, our goal is to fully enroll the SAVVE pivotal trial by the end of 2022 or the beginning of 2023. We continue to monitor the ongoing overall impact of COVID on the SAVVE clinical trial and will issue updates when appropriate.

Off-Balance Sheet Arrangements

None.

Contractual Obligations

As a smaller reporting company, we are not required to provide the information requested by paragraph (a)(5) of this Item.

Critical Accounting Policies and Estimates

For a description of our critical accounting policies, see Note 4 – Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

Item 4: Controls and Procedures

Disclosure Controls and Procedures

Our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (who is our Principal Executive Officer) and our Chief Financial Officer (who is our Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of September 30, 2022, pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2022.

Changes in Internal Control over Financial Reporting

During the nine months ended September 30, 2022, there were no changes in our internal controls over financial reporting, or in other factors that could significantly affect these controls, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. Controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time we may be subject to litigation and arbitration claims incidental to its business. Such claims may not be covered by our insurance coverage, and even if they are, if claims against us are successful, they may exceed the limits of applicable insurance coverage.

On July 9, 2020, the Company was served with a civil complaint filed in the Superior Court for the State of California, County of Orange by a former employee, Robert Rankin, who resigned his employment on or about March 30, 2020. The case is entitled Rankin v. Hancock Jaffe Laboratories, Inc. et al., Case No. 30-2020-01146555-CU-WR-CJC and was filed on May 27, 2020. The complaint asserts several causes of action, including a cause of action for failure to timely pay Mr. Rankin’s accrued and unused vacation and three months’ severance under his July 16, 2018 employment agreement with the Company. Mr. Rankin alleges that he was forced to resign, however, we believe that he did not give the Company notice or an opportunity to cure the allegations. The complaint seeks, inter alia, back pay, unpaid wages, compensatory damages, punitive damages, attorneys’ fees, and costs. On September 3, 2020 the Company and its Chief Executive Officer were served with a second complaint filed in the Superior Court for the State of California, County of Orange by Mr. Rankin. The case is entitled Rankin v. Hancock Jaffe Laboratories, Inc. et al., Case No. 30-2020-01157857 and was filed on August 31, 2020. The complaint asserts several causes of action, including defamation, unlawful labor code violations, sex-based discrimination, unfair competition, and seeks damages for lost wages, emotional and mental distress, consequential damages, punitive damages and attorney’s fees and costs. Mr. Rankin resigned as the Company’s Chief Financial Officer, Secretary and Treasurer on March 30, 2020. The Company has denied all claims in both matters (which have now been consolidated) and has filed a counterclaim asserting that Rankin has breached his employment agreement with the Company to the Company’s damage. The Company continues to believe it has meritorious defenses to both matters, which are currently set for trial June 12, 2023.

Item 1A. Risk Factors

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. Our current risk factors are set forth in our Form 10-K, filed with the SEC on March 28, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine and Safety Disclosure

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.

Exhibit		Description

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act. *
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Sarbanes-Oxley Act. *
32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act**
101.INS		Inline XBRL Instance Document*
101.SCH		Inline XBRL Taxonomy Extension Schema Document*
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document*
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	Filed herewith.
**	Furnished herewith.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: October 27, 2022	ENVVENO MEDICAL CORPORATION

	By:	/s/ Robert Berman
		Robert Berman
		Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Craig Glynn
		Craig Glynn
		Chief Financial Officer
		(Principal Financing and Accounting Officer)

SEC Form 10-Q filed by enVVeno Medical Corporation