Vivani Medical, Inc.

Our Company

Company Overview

Vivani Medical, Inc. (“Vivani,” the “Company,” “we,” “us,” “our” or similar terms) is a clinical stage biopharmaceutical company which develops miniaturized, subdermal drug implants utilizing its proprietary NanoPortal™ technology, which is designed to enable ultra long-acting, near constant-rate delivery of a broad range of medicines to treat chronic diseases. Vivani uses this platform technology to develop and potentially commercialize drug implant candidates, alone or in collaboration with pharmaceutical company partners, to address a leading cause of poor clinical outcomes in the treatment of chronic disease, medication non-adherence. According to the U.S. Centers for Disease Control and Prevention, adherence is defined as the extent to which an individual’s behavior, including taking medications, corresponds to recommendations from a health care provider. An alarmingly high proportion of patients, approximately 50%, do not take their medicine as prescribed in the real world, a statistic that applies to both daily oral as well as weekly injectable medicines. For example, a recent study has shown that 64% of patients taking Wegovy® (semaglutide injection) discontinue therapy within the first year of treatment, a number that increases to 76% by the second year. Unfortunately, GLP-1 discontinuation may result in a quick reversal of the health benefits in the majority of patients.

At Vivani, we are developing a portfolio of miniature, subdermal drug implant candidates that, unlike most oral and injectable medicines, are designed with the goal of guaranteeing medication adherence by delivering therapeutic drug levels for up to six months or longer. In addition, our aim is to minimize fluctuations in patients’ drug levels through the use of our NanoPortal technology, which may improve the tolerability profiles for medicines, including GLP-1 receptor agonists, that produce side effects associated with fluctuating drug levels in the blood.

We believe our emerging portfolio of miniature, ultra long-acting drug implants has the potential to revolutionize the treatment of chronic diseases by directly addressing poor medication adherence and improving patient tolerability to their treatments which has the potential to translate into better health outcomes for patients in the real-world setting. Vivani's lead programs include NPM-115 (high-dose exenatide) and NPM-139 (semaglutide). These miniature, subdermal, GLP-1 implants are under development for chronic weight management in obese and overweight individuals with once or twice-yearly dosing.ent NPM-115, is a miniature, six-month, GLP-1 (high-dose exenatide) implant currently in clinical-stage testing for chronic weight management in obese and overweight individuals. This first-in-human clinical study, also called LIBERATE-1™, is being conducted in Australia and is anticipated to report top-line data in mid-2025. NPM-139, a semaglutide implant, also in development for the treatment of chronic weight management, is currently in preclinical-stage development and has recently generated encouraging preclinical weight loss data. NPM-139 has the added potential benefit of once-yearly dosing.

Other programs include, NPM-119 (exenatide implant) in development for the treatment of type 2 diabetes and OKV-119, another GLP-1 based implant in development for the treatment of cardiometabolic disorders in cats in collaboration with animal health partner Okava Pharmaceuticals, Inc. (“Okava”). Finally, the company is also considering the development of a semaglutide implant for the treatment of type 2 diabetes.

Vivani resulted from the business combination of Second Sight Medical Products, Inc. (“Second Sight”) and Nano Precision Medical, Inc. (“NPM”). On August 30, 2022, Second Sight and NPM completed their merger pursuant to which NPM became a wholly owned subsidiary of Second Sight and the combined company of NPM and Second Sight was renamed Vivani Medical, Inc. Vivani’s main priority is the further development of its lead programs NPM-115 (exenatide implant) and NPM-139 (semaglutide implant) for chronic weight management in obese or overweight patients with one or more risk factors and further development of the balance of the company’s miniature, ultra long-acting drug implant portfolio. In parallel, Vivani’s management team remains committed to identifying and exploring strategic options that will enable further development of its pioneering neurostimulation systems from legacy company Second Sight aimed at helping patients recover critical body functions.

In December 2022, we contributed our neurostimulation assets from legacy company Second Sight and certain liabilities to Cortigent, Inc. (“Cortigent”), a wholly owned subsidiary of Vivani to advance the Company’s pioneering neurostimulation technology. Cortigent has 5,000,000 shares of common stock outstanding, all owned by Vivani. In March 2023, Vivani announced the filing of a Registration Statement on Form S-1 with the U.S. Securities and Exchange Commission (“SEC”) for a proposed initial public offering of Cortigent. In March 2025, Vivani announced a change in strategy to discontinue efforts to pursue a proposed initial public offering and shift focus to file a Form 10 with the SEC to support the spin-off of Cortigent into a fully independent, publicly traded company. The strategic goal of this transaction is to create two focused companies dedicated to driving current and future value in their respective therapeutic areas of expertise.

On July 6, 2023, Vivani changed its state of incorporation from the State of California to the State of Delaware by means of a plan of conversion, effective July 5, 2023. The reincorporation, including the principal terms of the plan of conversion, was submitted to a vote of, and approved by, Vivani’s stockholders at its 2023 Annual Meeting of Stockholders held on June 15, 2023. As part of this change of incorporation the Company established a par value of $0.0001 per share and all periods have been retroactively adjusted to reflect this change. If the spinoff is successful, the loan payable from Cortigent to Vivani would be forgiven.

An Investigational New Drug ("IND") application for NPM-119 (GLP-1 implant) was submitted to the FDA on July 14, 2023, to support the initiation of a first-in-human study of an exenatide implant in patients with type 2 diabetes. On August 18, 2023, FDA provided written notification that the study was on full clinical hold, primarily due to insufficient Chemistry, Manufacturing, and Controls (“CMC”) information to assess the risk to human subjects. After providing additional information to sufficiently address the FDA's requests, the FDA lifted the clinical hold on NPM-119 on June 13, 2024 allowing for the proposed study to proceed. The primary objective of this first-in-human clinical study was to evaluate the safety, tolerability and pharmacokinetics of NPM-119 in type 2 diabetes patients. The initial study design also incorporated Bydureon BCise® (exenatide injection) for comparison purposes.

On August 25, 2023, the Company and Cortigent entered into an Amendment 1 (the “Amendment”) to the Transition Funding, Support and Services Agreement dated March 19, 2023 (the “TFSSA”). Pursuant to the TFSSA, Vivani has agreed to advance funds and provide or cause to be provided to Cortigent the services and funding intended to 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, at the discretion of Vivani or after the closing of an initial public offering of Cortigent. If an initial public offering of Cortigent closes, Cortigent has agreed to repay $1,500,000 to Vivani and enter into a five-year promissory note at 5% interest for $2,000,000 in favor of Vivani. Consequently, Vivani will forgive any remaining amounts due by Cortigent. Efforts to support a successful initial public offering of Cortigent ceased in March 2025 and efforts are now focused on a potential spinoff with the filing of a Form 10 registration statement. The TFSSA terminated effective December 31, 2024.

In the fourth quarter of 2023, Vivani Medical Australia Pty Ltd., a wholly owned subsidiary in Australia, was established to support studies of our product candidates.

On February 28, 2024, Vivani announced positive preclinical weight loss data with its exenatide implant that was comparable to semaglutide, the active ingredient in Ozempic and Wegovy, and a strategic shift to prioritize the Company's obesity portfolio. In a study of high-fat diet-induced obese mice, the exenatide implant generated weight loss of approximately 20% compared to a sham implant control after a 28-day treatment duration, comparable to the extent of weight loss observed in mice treated with semaglutide injections in the same study. In addition, the Company also disclosed that semaglutide is the active pharmaceutical ingredient in NPM-139, another miniature, ultra long-acting, subdermal GLP-1 implant in development for chronic weight management further demonstrating our prioritization on obesity. NPM-139 also has the added potential benefit of once-yearly administration.

On March 1, 2024, the Company entered into a securities purchase agreement (“Securities Purchase Agreement”) with an institutional investor to purchase 3,947,368 shares of common stock, par value $0.0001 per share (the “Common Stock”) and warrants to purchase up to an aggregate of 3,947,368 shares of common stock at a purchase price of $3.80 per share and accompanying warrant in a registered direct offering (the “Offering”). The warrants have an exercise price of $3.80 per share, are exercisable immediately upon issuance, and will expire three years following the date of issuance.

On April 22, 2024, the Company entered into an Open Market Sale Agreement SM (the “Sales Agreement”) with Jefferies LLC (“Jefferies”), under which the Company may offer and sell, from time to time at its sole discretion, shares of the common stock, having an aggregate offering price of up to $75.0 million through Jefferies as its sales agent. Also on April 22, 2024, the Company filed a Registration Statement on Form S-3, which was declared effective on May 3, 2024, including a sales agreement prospectus relating to the offering of up to $75.0 million shares of its common stock in accordance with the Sales Agreement.

On May 28, 2024, Vivani announced the publication of positive weight loss data supporting the potential veterinary use of OKV-119, the company's miniature, long-acting GLP-1 implant under development with partner Okava for the treatment of pre-diabetes, diabetes and obesity in companion felines. The device is intended to be conveniently inserted under the skin during routine veterinary visits and is being designed to deliver six months of GLP-1 therapy with a single administration.

As stated previously, on June 13, 2024, Vivani announced that the FDA cleared the IND and lifted the clinical hold for NPM-119, the Company's miniature, six-month GLP-1 implant under development for the treatment of patients with type 2 diabetes.

On July 11, 2024, the Company provided an update of the clinical development plans for NPM-115, the clinical program associated with the miniature, long-acting GLP-1 (high-dose exenatide) implant for chronic weight management in obese and overweight individuals. The Company redesigned the first-in-human study, LIBERATE-1, initially intended to explore the safety, tolerability and pharmacokinetics of its exenatide implant in patients with type 2 diabetes, to evaluate the implant in obese and overweight patients.

On September 4, 2024, Vivani announced positive preclinical liver fat results with its miniature, ultra long-acting GLP-1 implant currently under development for chronic weight management in obese and overweight individuals and type 2 diabetes. The Company's GLP-1 (exenatide) implant produced sham-implant adjusted liver fat reduction of 82% in an obese mouse model from a single administration with expected twice-yearly dosing. These liver fat data are consistent with published results from similar investigations with semaglutide, the active pharmaceutical ingredient in Ozempic and Wegovy.

On September 26, 2024, the Company reported receiving regulatory approval to initiate its first-in-human clinical trial with a miniature, ultra long-acting GLP-1 (exenatide) implant in obese and overweight individuals in Australia. This clinical trial, known as LIBERATE-1™ , is part of the NPM-115 program and will investigate the safety, tolerability and full pharmacokinetic profile of an exenatide implant. The trial also represents the first clinical application of the Company’s proprietary NanoPortal drug implant technology. LIBERATE-1™ was redesigned to enroll participants who will be titrated on weekly semaglutide injections for 8 weeks (0.25 mg/week for 4 weeks followed by 0.5 mg/week for 4 weeks) before being randomized to receive a single administration of Vivani’s exenatide implant (n=8), weekly exenatide injections (n=8), or weekly 1 mg semaglutide injections (n=8) for a 9-week treatment duration. Changes in weight will be measured.

On November 8, 2024, the Company entered into a private sale transaction with one of its independent directors whereby the Company sold an aggregate of 3,968,253 shares of the Company’s common stock to the director at a price of $1.26 per share, which was the lower of the closing price of the Company’s common stock on the Nasdaq or the 5-day average closing price of the Company’s common stock on the Nasdaq, each immediately prior to the closing date, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the date of the private sale transaction. The gross proceeds from this private sale transaction were $5.0 million.

On December 19, 2024, Vivani announced that screening and enrollment of LIBERATE-1™, the first-in-human clinical trial with its NPM-115 program GLP-1 implant in obese and overweight patients, was initiated at two study centers in Australia. Study results are anticipated to be reported in mid-2025. On March 13, 2025, Vivani announced the successful administration of its first GLP-1 (exenatide) implant in the LIBERATE-1 clinical trial. The Company also announced full enrollment in the LIBERATE-1 study, which was achieved in just four weeks after enrollment of the first subject, signaling early potential interest for this miniature, six-month, subdermal GLP-1 implant and reaffirming previous estimates that top-line LIBERATE-1 results should be available in mid-2025.

On March 26, 2025, the Company entered into a private sale transaction with an entity affiliated with one of its independent directors whereby the Company shall sell an aggregate of 7,366,071 shares of the Company’s common stock to the entity, in one or more closings as provided in the purchase agreement, at a price of $1.12 per share, which was the closing price of the Company’s common stock on the Nasdaq, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the common stock that occur after the date of the private sale transaction. The gross proceeds from this private sale transaction will be approximately $8.25 million.

Our Proprietary NanoPortal Implant Technology

Vivani’s implant technology, which we refer to as NanoPortal, utilizes a space-efficient design that allows a miniaturized implant to provide many months of therapeutic delivery of potent molecules. The technology has no moving parts, which is intended to minimize fluctuating drug delivery over the duration of the implant and is also tunable. Vivani has primarily been developing implant candidates around peptide therapeutics, but the technology has potential application across a wide range of molecular types. The key innovative component of the technology is a biocompatible titanium-oxide nano-porous membrane which consists of millions of precisely sized nanotubes whose inner diameters represent the only path for drug molecules to exit the reservoir once the implant is fully assembled.

We believe the key to the technology’s ability to achieve near constant release of drug without moving parts is the ability to precisely tune the inner diameter of the nanotubes to the same size range as individual drug molecules. If the inner diameter of the nanotubes is smaller than the size of a given drug molecule, there would be no release at all. If the inner diameter of the nanotubes is much larger than the size of a given drug molecule, the rate at which the drug leaves the reservoir would follow traditional physics and would decrease over time as the drug concentration decreases. However, when the opening is close enough in size to the drug molecules, the drug release is constrained and can result in a variety of desirable delivery profiles, including near constant release. Vivani’s NanoPortal technology has demonstrated near constant release in an animal model for six months.

For drug molecules with adequate potency and stability, NanoPortal can allow minimization of the implant size while extending implant duration. A custom delivery profile can also be achieved by adjusting the number of accessible nanotubes, engineering changes to the implant, and/or changes in formulation parameters. With the design flexibility afforded by the NanoPortal technology, Vivani plans to develop a portfolio of drug implant candidates aimed at addressing chronic diseases with high unmet medical need.

Vivani’s NanoPortal technology has demonstrated near constantin vitrorelease for two dose configurations (see left portion of the chart below).In vitro testing was performed at 37°C on implant devices stored in a buffer solution adjusted to a physiological pH of 7.4. For a high-dose configuration, the observed near-constant release was demonstrated over the 12-week measurement period, after which the drug began to be depleted. For a low-dose configuration, the observed near-constant release lasted for 24 weeks. In addition, the near-constantin vitrorelease observed has been shown to translate into sustained exposure levelsin vivoover a 6-month duration in an animal model (depicted in the chart below entitled "6-month NPM-119 Prototype (N=6)"). Finally, NanoPortal has demonstrated minimalin vitro fluctuations during 2.5-hour interval sampling periods which demonstrates a very smooth release profile (see right portion of the chart below entitled "Near-Constant and Minimally-Fluctuating Release" for individual device release rates). For clarity, the Day 98-100 period was selected to ensure the 2.5 hour variability results were representative of steady-state conditions.

Vivani believes its proprietary NanoPortal implant technology haspotential to revolutionize the treatment of chronic diseases by addressing two important limitations of oral and injectable therapies, namely, poor real-world medication adherence, and, in the case of GLP-1 therapy, the potential to improve gastrointestinal tolerability. We believe Vivani’s NanoPortal technology, which is specifically designed and tested to deliver regular and controlled exenatide release, may overcome these challenges. Our NanoPortal implant technology has no moving parts that could otherwise contribute to variations in drug release rates. NanoPortalhas demonstrated the ability to release exenatide with minimal fluctuations in vitro as evidenced by the 2.5-hour release rates shown in the NanoPortal Implant Technology section above. Since the half-life of exenatidein humans is 2.4-4 hours, steady release from one 2.5-hour interval to the next is expected to be associated with minimal device-related exposure fluctuations, potentially minimizing the opportunity for gastrointestinal events.

To address medication adherence, the Company’s NanoPortal implants are designed to provide steady dosing from a single miniature, subdermal device for six months or longer. Current GLP-1 products are associated with only 50-60% real-world medication adherence. Non-adherent patients do not receive the full potential benefits of existing treatments. For example, medication non-adherence for patients with type 2 diabetes is associated with approximately $5,500 per non-adherent patient in avoidable healthcare costs associated with unnecessary acute care and hospitalization visits. The NanoPortal technology can enable ultra long-acting dosing, up to 6 months or longer, which can directly address the medication adherence challenge.

A well-documented side effect of the GLP-1 class is poor gastrointestinal (“GI”) tolerability. GI intolerance can present as nausea, vomiting, and/or diarrhea which can lead to volume loss, acute kidney injury (“AKI”) and potentially major cardiovascular adverse events. GI-related issues are the most commonly reported side effect for all drugs in the GLP-1 class. In responding to a marketing application filed for Intarcia's ITCA 650 exenatide implant candidate, with a proposed indication for use as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus (“T2DM”), the FDA stated in a July 29, 2022 letter that they believe marked increases in the dose of a GLP-1 are responsible for increased risk of GI intolerance and combined with the dailyin vitrovariability exhibited by ITCA 650 resulted in the FDA summarizing their findings as follows: “the clinical data in the three pivotal clinical trials for ITCA 650–including the high rates of nausea, vomiting, and diarrhea, the high rates of discontinuations due to these adverse gastrointestinal reactions, and most notably, the increased risk of AKI comprise safety signals whose root cause can reasonably be concluded to be irregular and uncontrolled exenatide release” and “The data provided to validate the limits of the in vitro dose delivery specifications did not support the safe and effective use of the device constituent of ITCA 650.”

We believe Vivani’s NanoPortal technology, which is specifically designed and tested to deliver regular and controlled exenatide release, may overcome these challenges. Our NanoPortal implant technology has no moving parts that could otherwise contribute to variations in drug release rates. NanoPortal has demonstrated the ability to release exenatide with minimal fluctuationsin vitro as evidenced by the 2.5-hour release rates shown in the NanoPortal Implant Technology section above. Since the half-life of exenatide in humans is 2.4-4 hours, steady release from one 2.5-hour interval to the next is expected to be associated with minimal device-related exposure fluctuations, potentially minimizing the opportunity for gastrointestinal events.

Evidence to support non-fluctuating drug release afforded by Vivani’s NanoPortal technology compared to the drug release profile of the ITCA 650 osmotic pump technology is provided in the schematic below. Although head-to-head testing was not conducted, the left panel shows, thein vitro daily release profiles for the 4 ITCA 650 devices with the highest day-to-day variability of the 12 total devices tested. The ITCA 650 device data was presented by FDA atthe September 28, 2023. FDA Open Public Hearing to review the approvability of Intarcia Therapeutic’s ITCA 650 (exenatide implant). The right panel shows thein vitro daily release profiles for the 4 NanoPortal devices with the highest day-to-day variability of the 17 total devices tested by Vivani.

****Preliminary market research regarding the potential adoption and market penetration of Vivani's emerging drug implant candidates has been encouraging. For example, during FDA’s Open Public Hearing on September 28, 2023 to review Intarcia's ITCA 650 (exenatide implant), the independent firm dQ&A Market Research reported results from a patient preference study testing a product profile reflective of both ITCA 650 and NPM-119 (e.g. miniature, six-month, subdermal, GLP-1 implant). Of the 324 patients currently on GLP-1 therapy, 56% indicated either “Definitely” or “Likely” when asked about the likelihood of getting and using a GLP-1 implant if it was approved by FDA, recommended by their healthcare provider, and covered by insurance.

For example, results from a small, third-party market research study funded by Vivani indicate that the majority of physicians would be highly likely to recommend a product with the NPM-119 target product profile to their type 2 diabetes patients. In this market research study, primary care physicians (n=10) provided an average rating of 8.3 out of 10 in terms of likelihood of recommending a product with NPM-119’s target product profile. Although additional market research will be conducted as Vivani's drug implant candidates progress in development, these early signals regarding product adoption indicate significant market opportunity and a highly differentiated, convenient, alternative GLP-1 treatment option for patients, healthcare providers, and payers.

Our Emerging Portfolio

Although Vivani’s proprietary NanoPortal implant technology may potentially be broadly applied across a wide range of therapeutic molecules and disease areas, our initial focus is on peptide therapeutics for the treatment of patients with metabolic disease. The pipeline table below depicts our current portfolio of four distinct pre-clinical stage programs targeting type 2 diabetes (in humans and companion cats), and obesity/chronic weight management

Below is a summary description of each pipeline program:

NPM-115: This high-dose exenatide implant candidate is in clinical stage development for the treatment of chronic weight management in patients with obesity or overweight. Obesity is a global epidemic with over 1 billion adults and children currently living with obesity globally. The global prevalence of obesity has more than tripled since 1975. Today, less than 5% of these people are medically treated. Obesity affects both the individual and society at large. Obesity is associated with over 200 health complications and is associated with an increasing proportion of healthcare costs.

Leveraging the ultra long-acting six-month dosing regimen, the Company will also be exploring the potential for NPM-115 to provide maintenance therapy for patients who have previously lost weight on other injectable or oral GLP-1 therapies, including dual or triple incretin products. This differentiated treatment approach could provide patients, caregivers and healthcare professionals the convenience of a miniature, twice-yearly, subdermal GLP-1 implant that is administered during a routine office visit.

Vivani received regulatory approval and has subsequently initiated its first-in-human clinical trial for the NPM-115 program in obese and overweight individuals in Australia. This clinical trial, known as LIBERATE-1™, will investigate the safety, tolerability and full pharmacokinetic profile of an exenatide implant leveraging the Company’s proprietary NanoPortal drug implant technology. LIBERATE-1 is designed to enroll participants who will be titrated on weekly semaglutide injections for 8 weeks (0.25 mg/week for 4 weeks followed by 0.5 mg/week for 4 weeks) before being randomized to receive a single administration of Vivani’s exenatide implant (n=8), weekly exenatide injections (n=8), or weekly 1 mg semaglutide injections (n=8) for a 9-week treatment duration. Although not the primary objective of LIBERATE-1, changes in weight will also be measured. The trial was initiated at the end of 2024 with data projected to be available in mid-2025.

Vivani believes that higher doses of exenatide, compared to those exenatide doses currently approved to treat type 2 diabetes, can achieve similar weight loss effects as other GLP-1 products. This belief is based on the fact that semaglutide injection was originally approved at doses up to 1.0mg/week to treat type 2 diabetes (Ozempic) while semaglutide injections for chronic weight management (Wegovy) required higher doses up to 2.4mg /week to maximize weight loss effects of the treatment.

In both the treatment of obesity and type 2 diabetes, GLP-1 products have challenges associated with medication adherence and persistence which can lead to sub-optimal patient outcomes. As shown in the graph below, results from a large, retrospective cohort study published in the research journal Obesity show improved medication persistence with the newer GLP-1 weight loss products compared to previous products. That said, the one-year persistence of patients taking semaglutide was still only 40%. This highlights the potential for further improvement for the 60% of individuals who were no longer taking semaglutide after one year. The potential benefits for a long-term implant like NPM-115 are apparent when considering that body weight begins to increase shortly after GLP-1 therapy is discontinued.

Preliminary weight loss data of NPM-115 in preclinical models is encouraging. In a study in high fat diet-induced obese mice, NPM-115 generated weight loss of approximately 20% compared to a sham implant control after a 28-day treatment duration, comparable to weight loss observed in mice treated with semaglutide in the same study. The supratherapeutic doses provided for both NPM-115 (single administration delivering exenatide at ~530 nmol/kg/day), and semaglutide (weekly injections of ~2,700 nmol/kg/week) were selected to maximize the weight-loss potential of both exenatide and semaglutide.

Emerging data on the durability of effect on weight in animals with an exenatide implant provides confidence that this treatment modality has the potential as a treatment for chronic weight management and potentially, the maintenance of weight loss after obese or overweight individuals have already lost sufficient weight on other GLP-1 monotherapy. The dose configuration of the exenatide implant test article in the ongoing LIBERATE-1 study is expected to be supportive of both the NPM-115 and NPM-119 programs. Additional information supporting the NPM-119 program is provided below.

NPM-139: Semaglutide based products are the largest selling GLP-1 products on the U.S. market today with combined 2024 sales of over $25 billion. NPM-139 (semaglutide implant) is a highly differentiated, GLP-1 product candidate specifically designed to improve medication adherence and, potentially, patient tolerability to their medicine. NPM-139 is in feasibility stage testing and has recently generated encouraging preclinical weight loss data consistent with weight loss reported with semaglutide injections in similar preclinical models (see figure below).

In this ongoing study in healthy rats, a single administration of thesemaglutide implant NPM-139 resulted in body weights that were nearly 20% lower than a sham implant control group throughout a 91-day treatment period. Like NPM-119 and NPM-115, NPM-139 has demonstrated smooth, non-fluctuatingin vivo release; this was confirmed by pharmacokinetic data from this study which demonstrated continuous and steady semaglutide exposure throughout the study period. NPM-139 has previously demonstrated therapeutic semaglutide exposure levels in pharmacokinetic data over a six-month duration in healthy rats.In vitrochemical and physical stability measurements for durations exceeding one year indicate the potential for once-yearly administration of NPM-139. Together, these data demonstrate the versatility of the NanoPortal technology beyond NPM-115 (exenatide implant) and provide significant encouragement for continued development of each program.

NPM-119: This exenatide implant candidate is a miniature, six-month, subdermal GLP-1 implant under development for the treatment of type 2 diabetes. According to the CDC, more than 37 million Americans have diabetes and 90-95% have type 2 diabetes. The total number of people living worldwide with diabetes today is 537 million and is projected to rise to 643 million by 2030 and 783 million by 2045. Of the 537 million people with diabetes today, only 15% have good glycemic control. According to the American Diabetes Association (“ADA”), the total cost of diabetes in the U.S. was $413 billion in 2022, including $307 billion for direct medical costs and $106 billion for reduced productivity in premature mortality. In 2024, global sales of GLP-1 receptor agonists products (all indications) were over $50 billion and are projected to reach over $250B per year by 2034. Because the current drug adherence rate for type 2 diabetes is only 40-60% for oral and injectable GLP-1 products, Vivani believes there is significant unmet need for a GLP-1 implant that could address non-adherence.

NPM-119 was initially intended to support a first-in-human study in patients with type 2 diabetes and has an open IND with a clinical trial that was cleared to proceed by the FDA. This clinical study was temporarily postponed so that Vivani could prioritize the NPM-115 program in development for chronic weight management in obese and overweight individuals. Theexenatide implant used in the NPM-115 program is the same configuration intended for use in the initial NPM-119 study. As a result, study results from the initial exenatide implant study, LIBERATE-1, are expected to be supportive for both the NPM-115 and NPM-119 programs. Exenatide is a GLP-1 receptor agonist (GLP-1 RA or GLP-1) and was originally approved as the twice-daily subdermal injection, Byetta® (exenatide) injection, in 2005 by the FDA as adjunctive therapy to improve glycemic control in patients with type 2 diabetes mellitus who are taking metformin, a sulfonylurea, or a combination ofmetformin and a sulfonylurea but have not achieved adequate glycemic control. In 2005, Byetta was the first GLP-1 product approved for use in the U.S. marketplace. Bydureon BCise (exenatide extended-release) injection is a once-weekly administration and was approved for use in the U.S. in 2017.

In July 2023, we submitted an IND to support the initiation of clinical studies with NPM-119. The proposed first-in-human study, called LIBERATE-1, was initially designed as a 12-week, randomized, clinical study to investigate the safety, tolerability, and full pharmacokinetic profile of NPM-119 in patients with type 2 diabetes. In August 2023, FDA provided written notification that the LIBERATE-1 study was on full clinical hold due primarily to insufficient CMC information. In June 2024, FDA lifted the clinical hold on the NPM-119 study and provided clearance to proceed with the originally designed LIBERATE-1 trials in patients with type 2 diabetes.

In parallel, Vivani decided to redesign the LIBERATE-1 study to support the NPM-115 program which resulted in changing the study population from type 2 diabetes patients to individuals with obesity and overweight. The main objectives of the goals of LIBERATE-1, namely, to study thesafety, tolerability, and full pharmacokinetic profile of the exenatide implant, did not change. In addition to changing the LIBERATE-1 study population, the Company decided to conduct this newly designed LIBERATE-1 trial in Australia. On September 26, 2024, Vivani announced the receipt of regulatory approval to initiate the first-in-human, LIBERATE-1 clinical trial with a GLP-1 implant in obese and overweight individuals in Australia. Since clinical studies conducted in Australia comply with the International Conference on Harmonization guidelines and data generated in Australia may be acceptable to the FDA and other regulatory authorities, Vivani plans to use relevant clinical data generated in Australia to support regulatory submissions in other geographies including the United States.

Vivani has also made progress towards preparing for future clinical development of NPM-119. In September 2023, Vivani relocated into a new facility designed to provide suitable capacity for manufacturing of clinical materials for registration studies as well as commercial-scale supply. Based on preliminary discussions with the FDA, Vivani intends to explore the potential use of the 505(b)(2) pathway and believes that a single pivotal trial evaluating a 6-month NPM-119 configuration that is representative of the proposed commercial configuration may be sufficient to support registration in the United States. That said, as NPM-119 development proceeds, we intend to further engage with regulatory authorities on the timing, duration, endpoints, number of enrolled patients and other aspects of trial design for future clinical trials of NPM-119.

We have conducted a preclinical study to evaluate proof-of-concept activity of NPM-119. In that study, a six-month implantation of NPM-119 into rats was associated with steady exenatide concentration over the duration of the implant, as depicted in the figure below.

As depicted in the graph below, in a study in healthy rats, a single administration of the Company’s exenatide implant NPM-119, in development for the treatment of type 2 diabetes, resulted in body weights that were approximately 25% lower than a vehicle implant control after 15 weeks of treatment. NPM-119 delivered exenatide at a rate of approximately 320 nmol/kg/day and has demonstrated smooth, non-fluctuating release of exenatide in bothin vitro andin vivo studies. NPM-119 has previously demonstrated pharmacokinetic data exhibiting continuous and therapeutic exenatide exposure levels over a 6-month duration in healthy rats. Since NPM-115 is a higher-dose version of an otherwise similar product as NPM-119, the durability of the effect on weight demonstrated in this study is expected to translate to future studies utilizing NPM-115.

OKV-119: This exenatide implant is under development for cardiometabolic diseases in companion cats, including the treatment of obesity and diabetes. In 2017, there were over 90 million cats in the U.S. It is estimated that up to 40% of cats are clinically obese, and 1-4 million cats have diabetes. Americans spent $136.8 billion on their pets in 2022, an increase of 10.68% from 2021. Spending on pets is expected to triple over the next 10 years, with pet health representing the fastest-growing sub-segment of this market. Since cats and dogs can be difficult to medicate, we believe that a small subdermal implant administered by a veterinarian at a routine clinic visit can be a welcome option for many pet owners, particularly those administrating daily insulin injections.

The program is partnered with Okava who is responsible for all clinical development and regulatory activities of OKV-119 and, if approved, ultimate commercialization of this product. In 2022, OKV-119 advanced out of the feasibility stage after having produced data demonstrating adequate exenatide exposure and sustained weight loss in cats over a 12-week study. Vivani does not anticipate any significant focus or investment in this program beyond the support of implant development and manufacturing activities.

Beyond our current pipeline, Vivani intends to apply its extensive experience and proprietary implant technology to develop a pipeline of drug implant candidates that have the potential to address chronic diseases with high unmet medical needs across multiple therapeutic categories and disease areas. For example, Vivani is also following the evaluation of the GLP-1 agonist semaglutide in the treatment of metabolic dysfunction-associated steatohepatitis (“MASH”) and Alzheimer’s disease. If one or more of these trials shows encouraging results, Vivani believes that a miniature long-term drug implant could have the potential to be an attractive alternative treatment option in these underserved patient populations.

Our Strategy

Vivani’s mission is to provide people with the freedom to live healthier by revolutionizing the current treatment of chronic disease. Vivani develops miniaturized, ultra long-acting drug implants using its proprietary NanoPortal implant technology to enable delivery of a broad range of medicines to treat chronic diseases. These products, designed to address poor medication adherence, are anticipated to significantly improve the health of otherwise non-adherent patients and to provide assurance to their family members and to the health care professionals who treat them that the medicine prescribed to them are taken as intended.

Vivani plans to initially test its implant technology and business model through the clinical and regulatory development of its lead programs, NPM-115 (high-dose exenatide implant) and NPM-139 (semaglutide implant). The active drugs, exenatide and semaglutide, are members of the GLP-1 receptor agonist class of drugs. Drug products, including drug substances within this relatively new drug class, have already been successfully developed and marketed for the treatment of both type 2 diabetes and obesity and GLP-1 products are the category leader in revenue for both the type 2 diabetes and obesity/chronic weight management drug treatment categories. In addition, GLP-1 receptor agonists have shown promising early clinical results in fatty liver disease or MASH, various addiction disorders, and other disease areas including Alzheimer’s disease. In 2024, Vivani has continued to execute its business strategy as evidenced by:

Competition

Our industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. We face competition and potential competition from a number of sources, including pharmaceutical and biotechnology companies, generic drug companies, drug delivery companies and academic and research institutions. Some of these companies are developing therapies that are directly competitive to our approach. We believe the key competitive factors that will affect the development and commercial success of our product candidates include ease of administration and convenience of dosing, therapeutic efficacy, safety and tolerability profiles and cost. Many of our potential competitors have substantially greater financial, technical, and human resources than we do, as well as more experience in the development of product candidates, obtaining FDA and other foreign regulatory approvals of products, and the commercialization of those products. Consequently, our competitors may develop similar products to address the indications targeted by our current product candidates or for other indications we may pursue in the future, and such competitors’ products may be more effective, better tolerated and less costly than our product candidates. Our competitors may also be more successful in manufacturing and marketing their products than we are. We will also face competition in recruiting and retaining qualified personnel and establishing clinical trial sites and patient enrollment in clinical trials.

The competition for Vivani will be dependent upon the individual product candidate in development. For Vivani’s lead programs, NPM-115, NPM-139 and NPM-119, the competition could be defined as any drug product/manufacturer approved for use in the treatment of patients with obesity or type 2 diabetes. However, we believe that our more direct competitors are restricted to other GLP-1 receptor agonist and combination products with a GLP-1 receptor agonist component approved or in development for those respective indications. In May 2022, Lilly’s Mounjaro® (tirzepatide) was approved as the first and only combination GIP and GLP-1 receptor agonist for the treatment of adults with type 2 diabetes and in November 2023, Lilly secured approval of a higher dose formulation of tirzepatide injection with the brand name Zepbound® for chronic weight management in adults with obesity or overweight with at least one weight-related condition. Manufacturers with approved GLP-1 receptor agonists or dual receptor agonists include Lilly, Novo Nordisk, AstraZeneca, and Sanofi.

The clinical adoption and commercial success of the GLP-1 class has been remarkable and already represents category leadership for obesity, weight management, sleep apnea in individuals with obesity, and type 2 diabetes medications from a revenue perspective. Vivani's product candidates, if approved, would compete in these large established markets. Obesity and overweight is a global epidemic. For example, over 1 billion adults and children currently live with obesity globally. The global prevalence of obesity has more than tripled since 1975. Today, less than 5% of these people are medically treated. Obesity affects both the individual and society at large. Obesity is associated with over 200 health complications and is associated with an increasing proportion of healthcare costs. According to the CDC, more than 37 million Americans have diabetes and 90-95% have type 2 diabetes. The total number of people living worldwide with diabetes today is 537 million and is projected to rise to 643 million by 2030 and 783 million by 2045. Of the 537 million people with diabetes today, only 15% have good glycemic control. According to the American Diabetes Association (“ADA”), the total cost of diagnosed diabetes in the U.S. was $327 billion in 2017, including $237 billion for direct medical costs and $90 billion for reduced productivity. In 2024, global sales of GLP-1 receptor agonists products (all indications) were over $50 billion and are projected to reach over $250 billion per year by 2034.

There are over 150 GLP-1 and dual and triple agonists and antagonists currently in clinical stage development for a wide variety of disorders including, but not limited to, obesity, chronic weight management, chronic sleep apnea associated with obesity, kidney disease, certain neurological disorders, and various addiction disorders. The listing below, while not comprehensive, provides a representative sampling of GLP-1 compounds in clinical-stage development for obesity, chronic weight management, and/or type 2 diabetes and are considered future potential competitors to Vivani's emerging portfolio of miniature, ultra long-acting GLP-1 drug implants.

NPM-115 and NPM-139

NPM-115 is a miniature, six-month, (high-dose) exenatide implant candidate in development for the treatment of chronic weight management in individuals with obesity or overweight. NPM-139 (semaglutide implant) candidate, the same GLP-1 active pharmaceutical ingredient as Ozempic and Wegovy, is also in development for the treatment of chronic weight management in obese and/or overweight patients. NPM-139 has the added potential benefit of once-yearly dosing.

A listing of products currently approved in the US for the treatment of obesity and/or chronic weight management are provided below:

A listing of GLP-1 monotherapy agonists, dual agonists and triple agonists in various stages of clinical development is provided in the preceding section. We believe NPM-115, our lead drug implant candidate for chronic weight management, has the potential to address two important aspects of the GLP-1 category which are associated with the above-mentioned products, namely, poor real-world medication adherence and potential undesirable gastrointestinal tolerability.

NPM-119

NPM-119 (exenatide implant) candidate is a GLP-1 receptor agonist in development for the treatment of type 2 diabetes. Competition in the GLP-1 class for this indication includes the following:

A listing of GLP-1 monotherapy agonists, dual agonists and triple agonists in various stages of clinical development is provided in the preceding section. We believe NPM-115, our lead drug implant candidate for chronic weight management, has the potential to address two important aspects of the GLP-1 category which are associated with the above-mentioned products, namely, poor real-world medication adherence and potential undesirable gastrointestinal tolerability.

Sales and Marketing

Vivani currently does not have a commercial infrastructure in any geography. As we progress our programs through development, we plan to build a commercial infrastructure in the United States or selected other territories to support the commercialization of each of our product candidates when we believe a regulatory approval in a particular territory is likely. We intend to conduct market research in connection with designing our commercialization strategy for each of our product candidates. We may seek licensing or other strategic collaborations with, for example, global pharmaceutical company partners, to support our commercialization efforts. We will consider a range of options including building a commercial capability internally, leveraging third-party biopharmaceutical commercialization organizations, other strategic partners, distributors and/or contract sales forces to expand the commercial availability of our product candidates when appropriate.

Our Corporate Information

Vivani (as Second Sight Medical Products) was incorporated on December 17, 2009 under the laws of the State of California. Its operations began in 2010. After the successful merger of Second Sight Medical Products and NanoPrecision Medical on August 30, 2022, the combined company was renamed Vivani Medical, Inc. Prior to the merger, NanoPrecision Medical was a private company.

On July 6, 2023, Vivani changed its state of incorporation from the State of California to the State of Delaware by means of a plan of conversion, effective July 5, 2023.

Vivani’s corporate office is located at 1350 South Loop Road, Alameda, CA 94502; its telephone number is (415) 506-8462; and its website is located at www.vivani.com.

Chemistry, Manufacturing, and Controls

Vivani has developed production processes and quality systems to support the manufacture of clinical materials for its emerging portfolio of miniature, ultra long-acting GLP-1 drug implants. For example, Vivani recently initiated LIBERATE-1, a Phase 1 study of an exenatide implant in individuals who have obesity or overweight at two clinical study sites in Australia to support the NPM-115 program.

Vivani has established in-house research, development, and manufacturing capabilities in its corporate headquarters in Alameda, California, U.S. Vivani has also engaged with contract manufacturers and analytical laboratories for selected processes when appropriate. In general, Vivani purchases the drug substance from a third-party manufacturer. Vivani intends to conduct all assembly processes in which the drug substance is present, including the associated in-process testing, when producing materials for Phase 1 and Phase 2 clinical trials. Vivani anticipates that all assembly processes in which the drug substance is present, including the associated in-process testing, will be performed either in-house or by contract manufacturers when producing materials for any registration trial or commercial use. Several device components and all raw materials are purchased from outside vendors according to established specifications. The device assembly processes, including the associated in-process testing, and final product testing are anticipated to be performed by Vivani in Alameda, California. The custom applicator, which is intended to facilitate subdermal placement of the implant in patients, has been designed and will be manufactured by a contract manufacturer. Several device components and the drug substance are purchased from outside vendors according to established specifications.

As our portfolio of drug implant candidates advances, Vivani may also engage additional contract analytical and manufacturing organizations as needed. Currently, Vivani is not a party to any long-term, commercial manufacturing agreements.

Intellectual Property

As of December 31, 2024, Vivani held or controlled 16 issued U.S. patents, 10 pending U.S. patent applications, and 7 patents in various jurisdictions outside the United States. Additionally, Vivani is pursuing 24 corresponding patent applications that are pending in various foreign jurisdictions, and 4 international patent applications. Further advancement of Vivani’s intellectual property portfolio will require the filing of patent applications related to its proprietary manufacturing process and product candidates. Vivani has patents extending into China, Hong Kong, India, Japan, Republic of Korea, and the United States of America, as well as trade secrets protecting Vivani’s intellectual property. Vivani’s patent prosecution strategy includes exploration of opportunities to expand its patent life and use cases in order to broaden its existing patent portfolio.

Below is a further description of certain of Vivani’s key issued patents, including the category of protection, expiration date, number of related patents issued in foreign jurisdictions and the product candidates to which each patent relates. Vivani currently holds or controls:

Wherever possible, Vivani seeks to protect its inventions by filing U.S. patents as well as foreign counterpart applications in select other countries. Because patent applications in the U.S. are maintained in secrecy for at least eighteen months after the applications are filed, and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, Vivani cannot be certain that it was the first to make the inventions covered by each of its issued or pending patent applications, or that Vivani was the first to file for protection of inventions set forth in such patent applications. Vivani’s planned, or potential products may be covered by third-party patents or other intellectual property rights, in which case continued development and marketing of its products would require a license. Required licenses may not be available to Vivani on commercially acceptable terms, if at all. If Vivani does not obtain these licenses, it could encounter delays in product introductions while it attempts to design around the patents, or Vivani could find that the development, manufacture, or sale of products requiring such licenses are not possible.

In addition to patent protection, Vivani also relies on know-how, trade secrets, and the careful monitoring of proprietary information, all of which can be difficult to protect. Vivani seeks to protect some of its proprietary technology and processes by entering into confidentiality agreements with its employees, consultants, and contractors. These agreements may be breached, Vivani may not have adequate remedies for any breach and its trade secrets may otherwise become known or be independently discovered by competitors. To the extent that Vivani’s employees or its consultants or contractors use intellectual property owned by others in their work for Vivani, disputes may also arise as to the rights in related or resulting know-how and inventions.

Government Regulation

Regulatory authorities in the U.S. at the federal, state, and local level and in other countries extensively regulate, among other things, the research and clinical development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing, pricing, and export and import of drugs, medical devices and combinations of drugs and devices (combination products) such as those we are developing. Generally, before a new drug or drug-device combination product can be marketed, considerable data demonstrating its quality, safety, and efficacy must be obtained, organized into a format specific to each regulatory authority, submitted for review, and approved by the relevant regulatory authority.

In the U.S., the FDA regulates drugs, devices and combination products under the Federal Food, Drug, and Cosmetic Act (“FDCA”), and its implementing regulations. These products are also subject to other federal, state and local statutes and regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to administrative or judicial sanctions. These sanctions could include, among other actions, the FDA’s, or another regulatory authority’s, refusal to approve pending applications, withdrawal of an approval, a clinical hold, untitled or warning letters, product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution, injunctions, fines, debarment, refusals of government contracts, restitution, disgorgement, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.

U.S. Drug Development

Our product candidates are subject to regulation as combination products, which means that they are composed of both a drug product and device product. If marketed individually, each component would be subject to different regulatory pathways and reviewed by different centers within the FDA. A combination product, however, is assigned to a center that will have primary jurisdiction over its regulation based on a determination of the combination product’s primary mode of action, which is the single mode of action that provides the most important therapeutic action. In the case of our product candidates, the primary mode of action is attributable to the drug component of the product, which means that the FDA’s Center for Drug Evaluation and Research has primary jurisdiction over the premarket development, review and approval of our product candidates. Accordingly, we plan to investigate our products through the IND framework and seek approval through the NDA pathway. The process required by the FDA before a drug may be marketed in the U.S. generally involves the following:

Once a pharmaceutical product candidate is identified for development, it enters the preclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity, formulation and stability, as well as animal studies. A sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, to the FDA as part of the IND. An IND is an exemption from the FDCA that allows an unapproved product to be shipped in interstate commerce for use in an investigational clinical trial and a request for FDA authorization to administer such investigational product to humans. The sponsor must also include a protocol detailing, among other things, the objectives of the initial clinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated if the initial clinical trial lends itself to an efficacy evaluation. Some preclinical testing may continue after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions related to a proposed clinical trial and places the trial on a clinical hold within that 30-day period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Clinical holds also may be imposed by the FDA at any time before or during clinical trials due to safety concerns or non-compliance and may be imposed on all drug products within a certain class of drugs. The FDA also can impose partial clinical holds, for example, prohibiting the initiation of clinical trials of a certain duration or for a certain dose.

All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with GCP regulations. These regulations include the requirement that all research subjects provide informed consent in writing before their participation in any clinical trial. Further, an IRB must review and approve the plan for any clinical trial before it commences at any institution, and the IRB must conduct continuing review and reapprove the study at least annually. An IRB considers, among other things, whether the risks to individuals participating in the clinical trial are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the information regarding the clinical trial and the consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed.

Each new clinical protocol and any amendments to the protocol must be submitted for FDA review, and to the IRBs for approval. Protocols detail, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety.

Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase 4 trials. Companies also are required to register certain clinical trials and post the results of those clinical trials on a government-sponsored database, such as ClinicalTrials.gov in the United States, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.

Progress reports detailing the results of the clinical trials, among other information, must be submitted at least annually to the FDA, and written IND safety reports must be submitted on an expedited basis to the FDA and the investigators for serious and unexpected adverse events, findings from other studies that suggest a significant risk to humans exposed to the product, findings from animal or in vitro testing that suggest a significant risk to human subjects, and any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The FDA or the clinical trial sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the product has been associated with unexpected serious harm to patients. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether a trial may move forward at designated check points based on access to certain data from the study. The clinical trial sponsor may also suspend or terminate a clinical trial based on evolving business objectives and/or competitive climate.

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the product and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life. In addition, for certain combination products it may be necessary to conduct human factors studies prior to NDA submission to ascertain the usability of the product by patients in real-world settings.

NDA and FDA Review Process

The results of product development, preclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the drug, proposed labeling and other relevant information, are submitted to the FDA as part of an NDA for a new drug, requesting approval to market the product. An NDA for a new drug must contain proof of the drug’s safety and efficacy. The submission of an NDA is subject to the payment of a substantial application user fee, and the sponsor of an approved NDA is also subject to an annual program user fee, although waivers of some fees may be obtained under certain limited circumstances. For example, the agency will waive the application fee for the first human drug application that a small business or its affiliate submits for review.

The FDA reviews all NDAs submitted before it accepts them for filing and may request additional information rather than accepting an NDA for filing. The FDA typically makes a decision on accepting an NDA for filing within 60 days of receipt. The decision to accept the NDA for filing means that the FDA has made a threshold determination that the application is sufficiently complete to permit a substantive review. Under the goals and policies agreed to by the FDA under the Prescription Drug User Fee Act (PDUFA), the FDA’s goal to complete its substantive review of a standard NDA and respond to the applicant is ten months from the filing of the NDA. The FDA does not always meet its PDUFA goal dates, and the review process is often significantly extended by FDA requests for additional information or clarification and may go through multiple review cycles.

After the NDA submission is accepted for filing, the FDA reviews the NDA to determine, among other things, whether the proposed product is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMPs to assure and preserve the product’s identity, strength, quality and purity. During its review, the FDA will likely re-analyze the clinical trial data, which could result in extensive discussions between the FDA and us during the review process. The review and evaluation of an NDA by the FDA is extensive and time consuming and may take longer than originally planned to complete, and we may not receive a timely approval, if at all. The FDA may refer applications for novel drug products or drug products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

Before approving an NDA, the FDA will conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether they comply with cGMPs. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. In reviewing the NDA for a drug-device combination product, FDA reviewers in the drug center will consult with their counterparts in the device center to ensure that the device component of the combination product meets applicable requirements regarding safety, effectiveness, durability and performance. Under FDA regulations, combination products are subject to cGMP requirements applicable to both drugs and devices, including the Quality System Regulations (“QSRs”) applicable to medical devices. In addition, before approving an NDA, the FDA may inspect certain clinical trial sites and audit data from clinical trials to ensure compliance with GCP requirements. After the FDA evaluates the application, manufacturing process and manufacturing facilities, it may issue an approval letter or a complete response letter (“CRL”). An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. A CRL indicates that the review cycle of the application is complete, and the application will not be approved in its present form. A CRL usually describes all the specific deficiencies in the NDA identified by the FDA. The CRL may require additional clinical data and/or an additional pivotal Phase 3 clinical trial(s), and/or other significant and time-consuming requirements related to nonclinical studies or manufacturing. If a CRL is issued, the applicant may either resubmit the NDA, addressing all the deficiencies identified in the letter, or withdraw the application. Even if such data and information are submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. Data obtained from clinical trials are not always conclusive, and the FDA may interpret data differently than we interpret the same data.

There is no assurance that the FDA will ultimately approve a product for marketing in the United States, and we may encounter significant difficulties or costs during the review process. If a product receives marketing approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings, or precautions be included in the product labeling or may condition the approval of the NDA on other changes to the proposed labeling, development of adequate controls and specifications, or a commitment to conduct post-market testing or clinical trials and surveillance to monitor the effects of approved products. For example, the FDA may require Phase 4 clinical trials to further assess drug safety and effectiveness and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized. The FDA may also place other conditions on approvals including the requirement for a REMS to assure the safe use of the drug. If the FDA concludes a REMS is needed, the sponsor of the NDA must submit a proposed REMS; the FDA will not approve the NDA without an approved REMS, if required. A REMS could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries, and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products. Product approvals may be withdrawn for non-compliance with regulatory requirements or if problems occur following initial marketing.

505(b)(2) Approval Process

NDAs for most new drug products are based on at least two adequate and well-controlled clinical studies and must contain substantial evidence of the safety and effectiveness of the proposed new product for the proposed use. These applications are submitted under Section 505(b)(1) of the FDCA. The FDA is authorized, however, to approve an alternative type of NDA under Section 505(b)(2) of the FDCA. An application under 505(b)(2) provides an alternate regulatory pathway for the FDA to approve a new product and permits reliance for such approval on published literature or an FDA finding of safety and effectiveness for a previously approved similar drug product, or published literature. Specifically, Section 505(b)(2) permits the filing of an NDA where one or more of the investigations relied upon by the applicant for approval were not conducted by or for the applicant and for which the applicant has not obtained a right of reference.

Thus, Section 505(b)(2) authorizes the FDA to approve an NDA based on safety and effectiveness data that were not developed by the applicant. NDAs filed under Section 505(b)(2) may provide an alternative and potentially more expeditious pathway to FDA approval for new or improved formulations or new uses of previously approved products. If the 505(b)(2) applicant can establish that reliance on the FDA’s previous approval is scientifically appropriate, the applicant may eliminate the need to conduct certain preclinical or clinical studies of the new product. Typically, 505(b)(2) applicants must perform additional trials to support the change from the previously approved drug and to further demonstrate the new product’s safety and effectiveness. The FDA may then approve the new product candidate for all or some of the labeled indications for which the referenced product has been approved, as well as for any new indication sought by the 505(b)(2) applicant.

Pediatric Trials

Under the Pediatric Research Equity Act (“PREA”), an NDA or supplement to an NDA must contain data to assess the safety and efficacy of the product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDCA requires that a sponsor who is planning to submit a marketing application for a drug or biological product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial Pediatric Study Plan (“PSP”) within sixty days of an end-of-Phase 2 meeting or as may be agreed between the sponsor and FDA. The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information. The FDA and the sponsor must reach agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from nonclinical studies, early phase clinical trials, and/or other clinical development programs. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of data or full or partial waivers.

Post-Marketing Requirements

Any products for which we receive FDA approval are subject to continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse events, and providing updated safety and efficacy information. Moreover, each component of a combination product retains its regulatory status (as a drug or device, for example) and is subject to the requirements established by the FDA for that type of component. The FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market.

Prescription drug advertising is subject to federal, state and foreign regulations. In the United States, the FDA regulates prescription drug promotion and advertising, including direct-to-consumer advertising. Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use. In addition, a pharmaceutical company must comply with restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “off-label use”), limitations on industry-sponsored scientific and educational activities, and requirements for promotional activities involving the internet. Although physicians may prescribe legally available drugs for off-label uses, manufacturers and their agents may not market or promote such off-label uses or provide off-label information in the promotion of drug products that is not consistent with the approved labeling for those products. The FDA and other regulatory and enforcement authorities actively enforce laws and regulations prohibiting promotion of off-label uses and the promotion of products for which marketing approval has not been obtained. A company that is found to have improperly promoted off-label uses may be subject to corrective advertising in addition to significant liability, which may include civil and administrative remedies as well as criminal sanctions.

In the U.S., once a product is approved, its manufacture is subject to comprehensive and continuing regulation by the FDA. The FDA regulations require that combination products be manufactured in specific approved facilities and in accordance with cGMPs applicable to drugs and devices, including certain QSR requirements. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in accordance with cGMP regulations. cGMP regulations require, among other things, quality control and quality assurance as well organizational and procedural infrastructure, maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMPs and other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. NDA holders using contract manufacturers, laboratories or packagers are responsible for the selection and monitoring of qualified firms, and, in certain circumstances, qualified suppliers to these firms. These firms and, where applicable, their suppliers are subject to inspections by the FDA at any time, and the discovery of violative conditions, including failure to conform to cGMPs, could result in enforcement actions that interrupt the operation of any such facilities or the ability to distribute products manufactured, processed or tested by them. Discovery of problems with a product after approval may result in recalls or other restrictions on a product, manufacturer, or holder of an approved NDA, including withdrawal of the product from the market. Additionally, manufacturers and other parties involved in the drug supply chain for prescription drug products must comply with product tracking and tracing requirements and notify the FDA of counterfeit, diverted, stolen and intentionally adulterated products or products that are otherwise unfit for distribution in the U.S.

The FDA also may require post-marketing testing, known as Phase 4 testing, a REMS to assure the safe use of the drug, or surveillance to monitor the effects of an approved product or place conditions on an approval that could restrict the distribution or use of the product. Discovery of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, untitled or warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and may require the implementation of other risk management measures. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development and impact approved products already on the market.

U.S. Marketing Exclusivity

Market exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications that rely on a previously approved NDA. The FDCA provides a five-year period of non-patent data exclusivity within the U.S. to the first applicant to obtain approval of an NDA for a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an abbreviated new drug application (“ANDA”) or 505(b)(2) NDA submitted by another company for another drug based on the same active moiety, regardless of whether the drug is intended for the same indication as the original innovative drug or for another indication, where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder.

The FDCA also provides three years of marketing exclusivity for an NDA, or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, such as for new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the modification for which the drug received approval on the basis of the new clinical investigations and does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for drugs containing the active ingredient for an unprotected indication or condition of use. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA; however, an applicant submitting a full NDA would be required to conduct, or obtain a right of reference to, all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

Pediatric exclusivity is another type of regulatory exclusivity available in the U.S. Pediatric exclusivity provides for an additional six months of exclusivity attached to another period of regulatory exclusivity or a patent if a sponsor conducts clinical trials in children that fairly respond to a written request issued by the FDA. The issuance of a written request does not require the sponsor to undertake the described clinical trials.

Healthcare Laws & Regulations

In the U.S., the research, manufacturing, distribution, sale and promotion of drug products and medical devices are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare & Medicaid Services (“CMS”), other divisions of the U.S. Department of Health and Human Services (e.g., the Office of Inspector General), the Drug Enforcement Administration, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency, state Attorneys General and other state and local government agencies. For example, sales, marketing, and scientific/educational grant programs must comply with the federal Anti-Kickback Statute, the federal False Claims Act, the privacy regulations promulgated under the Health Information Portability and Accountability Act of 1996 (“HIPAA”), and similar state laws. Pricing and rebate programs must also comply with the Medicaid Drug Rebate Program requirements of the Omnibus Budget Reconciliation Act of 1990, as amended, provisions of the Inflation Reduction Act of 2022, and the Veterans Health Care Act of 1992, as amended. The handling of any controlled substances must comply with the U.S. Controlled Substances Act and Controlled Substances Import and Export Act. Products must meet applicable child-resistant packaging requirements under the U.S. Poison Prevention Packaging Act. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws.

The Medicare Modernization Act (“MMA”) established the Medicare Part D program to provide a voluntary prescription drug benefit to Medicare beneficiaries. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities which will provide coverage of outpatient prescription drugs. Unlike Medicare Part A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs, though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs may increase demand for products for which Vivani may receive regulatory approval. However, any negotiated prices for Vivani’s products (if covered by a Part D prescription drug plan) will likely be lower than the prices Vivani might otherwise obtain. Moreover, while the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment under Medicare may result in a similar reduction in payments from non-government payors.

The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage, and security requirements intended to prevent the unauthorized sale of pharmaceutical products.

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product, or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of Vivani’s products. Historically, products launched in the European Union do not follow price structures of the U.S. and generally tend to be priced significantly lower than in the U.S.

In the U.S., once Vivani has products on the market, the company will be subject to complex laws and regulations pertaining to healthcare “fraud and abuse,” including, but not limited to, the federal Anti-Kickback Statute, the federal False Claims Act, and other state and federal laws and regulations. The federal Anti-Kickback Statute makes it illegal for any person, including a prescription drug manufacturer, or a party acting on its behalf, to knowingly and willfully solicit, receive, offer or pay any remuneration that is intended to induce the referral of business, including the purchase, order or prescription of a particular drug, or other good or service for which payment in whole or in part may be made under a federal healthcare program, such as Medicare or Medicaid. Violations of this law are punishable by up to five years in prison, criminal fines, administrative civil money penalties and exclusion from participation in federal healthcare programs. In addition, many states have adopted laws similar to the federal Anti-Kickback Statute. Some of these state prohibitions apply to the referral of patients for healthcare services reimbursed by any insurer, not just federal healthcare programs such as Medicare and Medicaid. Due to the breadth of these federal and state anti-kickback laws, the absence of guidance in the form of regulations or court decisions and the potential for additional legal or regulatory change in this area, it is possible that Vivani’s future sales and marketing practices or Vivani’s future relationships with medical professionals might be challenged under anti-kickback laws, which could harm Vivani.

The federal False Claims Act prohibits anyone from knowingly presenting, or causing to be presented, for payment to federal programs (including Medicare and Medicaid) claims for items or services, including drugs, that are false or fraudulent, claims for items or services not provided as claimed or claims for medically unnecessary items or services. Although Vivani would not submit claims directly to payors, manufacturers can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label. In addition, Vivani’s future activities relating to the reporting of wholesaler or estimated retail prices for Vivani’s products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state, and third-party reimbursement for Vivani’s products, and the sale and marketing of Vivani’s products, are subject to scrutiny under this law. For example, pharmaceutical companies have been found liable under the federal False Claims Act in connection with their off-label promotion of drugs. Penalties for a federal False Claims Act violation include three times the actual damages sustained by the government, plus mandatory civil penalties of between $13,946 and $27,894 for each separate false claim, the potential for exclusion from participation in federal healthcare programs and, although the federal False Claims Act is a civil statute, conduct those results in a federal False Claims Act violation may also implicate various federal criminal statutes. If the government were to allege that Vivani was, or convict Vivani of, violating these false claims laws, Vivani could be subject to a substantial fine. In addition, private individuals could bring actions under the federal False Claims Act and certain states have enacted laws modelled after the federal False Claims Act.

The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for, among other things, executing a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

The federal physician payment transparency requirements, sometimes referred to as the “Sunshine Act” under the ACA require certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid or the Children’s Health Insurance Program to report to HHS information related to payments and other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other licensed health care practitioners and teaching hospitals; as well as the ownership and investment interests of such physicians and their immediate family members.

Federal price reporting laws require manufacturers to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on approved products.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and its implementing regulations, also imposes obligations on certain covered entity healthcare providers, health plans, and healthcare clearinghouses as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information, as well as their covered subcontractors, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, there may be additional federal, state and non-U.S. laws which govern the privacy and security of health and other personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and may be broader in scope than their federal equivalents; some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures.

State laws governing the privacy and security of health information in certain circumstances may also apply, many of which differ from each other in significant ways and often are not pre-empted by HIPAA, thus complicating compliance efforts, and analogous foreign laws and regulations.

In addition, federal consumer protection and unfair competition laws broadly regulate marketplace activities and activities that potentially harm consumers.

Similar healthcare laws and regulations in the European Union and other non-U.S. jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of certain protected information, such as the General Data Protection Regulation, (“GDPR”), which imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the EU (including health data). There are also an increasing number of state laws that require manufacturers to make reports to states on pricing and marketing information. Many of these laws contain ambiguities as to what is required to comply with the laws. In addition, as discussed below, a similar federal requirement requires manufacturers to track and report to the federal government certain payments made to physicians and teaching hospitals in the previous calendar year. These laws may affect Vivani’s sales, marketing and other promotional activities by imposing administrative and compliance burdens on Vivani. In addition, given the lack of clarity with respect to these laws and their implementation, Vivani’s reporting actions could be subject to the penalty provisions of the pertinent state, and soon federal, authorities.

The failure to comply with regulatory requirements subjects companies to possible legal or regulatory action. Depending on the circumstances, failure to meet applicable regulatory requirements can result in criminal prosecution, fines or other penalties, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of product approvals or refusal to allow a company to enter into supply contracts, including government contracts.

Changes in regulations, statutes or the interpretation of existing regulations could impact Vivani’s business in the future by requiring, for example: (1) changes to Vivani’s manufacturing facility; (2) additions or modifications to product labeling; (3) the recall or discontinuation of Vivani’s products; or (4) additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of Vivani’s business.

Rest of the World Regulation

Outside of the United States, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. Additionally, the clinical trials must be conducted in accordance with GCP requirements and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Healthcare Reform & the Patient Protection and Affordable Care Act

Payors, whether domestic or foreign, or governmental or private, are developing increasingly sophisticated methods of controlling healthcare costs, and those methods are not always specifically adapted for new technologies such as gene therapy and therapies addressing rare diseases such as those we are developing. In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our products profitably.

In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, collectively the PPACA, was enacted, which includes measures that significantly change the way healthcare is financed by both governmental and private insurers. Among the provisions of the PPACA of greatest importance to the pharmaceutical industry are the following:

Since its enactment, there have also been executive, judicial, and Congressional challenges to certain aspects of the PPACA. In June 2021, the United States Supreme Court held that Texas and other challengers had no legal standing to challenge the PPACA, dismissing the case without specifically ruling on the constitutionality of the PPACA. Accordingly, the PPACA remains in effect in its current form. It is unclear how this Supreme Court decision, future litigation, or healthcare measures promulgated by the executive branch will impact our business, financial condition, and results of operations. Complying with any new legislation or changes in healthcare regulation could be time-intensive and expensive, resulting in material adverse effect on our business.

Other legislative changes have been proposed and adopted in the United States since the ACA was enacted. The Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. This includes aggregate reductions of Medicare payments to providers up to 2% per fiscal year. Subsequent legislation extended the 2% payment reduction which remains in effect through 2031. Under current legislation the actual reduction in Medicare payments will vary from 1% in 2022 to up to 4% in the final fiscal year of this sequester. Due to the Statutory Pay-As-You-Go Act of 2010, estimated budget deficit increases resulting from the American Rescue Plan Act of 2021, and subsequent legislation, Medicare payments to providers will be further reduced starting in 2025 absent further legislation. The U.S. American Taxpayer Relief Act of 2012 further reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. The American Rescue Plan Act of 2021 eliminated the statutory Medicaid drug rebate cap, previously set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, effective January 1, 2024.

Additionally, there has been increasing legislative and enforcement interest in the United States with respect to drug pricing practices. Specifically, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, and review the relationship between pricing and manufacturer patient programs. President Biden has issued multiple executive orders that have sought to reduce prescription drug costs. Although a number of these and other proposed measures may require authorization through additional legislation to become effective, and the Biden administration may reverse or otherwise change these measures, both the Biden administration and Congress have indicated that they will continue to seek new legislative measures to control drug costs.

The Inflation Reduction Act of 2022, or IRA includes several provisions that may impact our business to varying degrees, including provisions that reduce the out-of-pocket cap for Medicare Part D beneficiaries to $2,000 starting in 2025 (thereby effectively eliminating the so-called “donut hole”); impose new manufacturer financial liability on certain drugs under Medicare Part D; allow the U.S. government to negotiate Medicare Part B and Part D price caps for certain high-cost drugs and biologics without generic or biosimilar competition; require companies to pay rebates to Medicare for certain drug prices that increase faster than inflation, and delay the rebate rule that would limit the fees that pharmacy benefit managers can charge. The effects of the IRA on our business and the healthcare industry in general is not yet known.

Further, healthcare reform measures have been subject to several executive orders of the Biden Administration, including orders that address pharmaceutical pricing. At the state level, a number of states are considering or have recently enacted state drug price transparency and reporting laws that could substantially increase our compliance burdens and expose us to greater liability under such state laws if and when we begin commercialization after obtaining regulatory approval for any of our product candidates.

Corporate Social Responsibility

Environmental Responsibility

Vivani aims to reduce medical waste through development and commercialization of its NanoPortal implant technology

Today, GLP-1 receptor agonist medications are predominantly administered via single-use injectable pens, which, in the aggregate, present substantial environmental challenges. The component parts of these injectable pens include their plastic, metal, and residual medication. Classified as "sharps" waste due to their built-in needles, improper disposal of these pens can lead to special environmental and health risks.

The sheer scale of GLP-1 injector pen disposal in the U.S. and globally compounds those risks. By 2030, the number of patients treated with GLP-1 drugs in the United States could reach 30 million, potentially resulting in approximately 1 billion single-use autoinjectors being discarded annually. This volume of waste is estimated to equate to 35,000 tons or 50,000 cubic meters of material—enough disposed injector pens to circle the globe 3.5 times.

Vivani Medical’s development of the NanoPortal implant technology offers a potential sustainable alternative to traditional injectable therapies. Our miniature biopharmaceutical implants are designed to deliver steady doses of medication over extended periods, potentially up to six months or longer. This approach has the potential to reduce the frequency of injector pen-dependent medical interventions while reducing the volume of medical waste generated. By eliminating or minimizing the need for single and multiple-use injection devices, our implant technology addresses the environmental and health challenges associated with disposable pens, contributing to a reduction in the overall environmental footprint of treatments for type 2 diabetes, obesity, chronic weight management, and potentially other treatments for chronic conditions.

Adherence to California Sustainability Standards

Vivani Medical maintains its headquarters and operations in California, a state recognized for its leadership in environmental stewardship. Our Alameda, California facility complies with the California Green Building Standards Code (CALGreen) and incorporates energy-efficient designs. Vivani also supports state-level climate change goals by implementing energy-saving practices and encouraging sustainable commuting options for employees.****

Employee Commuting Pollution Mitigation

To further minimize environmental impact, Vivani provides flexible work arrangements, including remote work, which reduces vehicle emissions and Bay Area traffic congestion. The company also offers public transit benefits and on-site charging stations for employees with electric vehicles.******

Social Responsibility****

Human Capital Management****

Compensation and Benefits

Vivani deeply values its employees and their contributions. Our total compensation and benefits package is regularly evaluated to remain competitive. Employees receive:

• Exceptional healthcare coverage with low employee contributions.

• Flexible paid time off for work-life balance.

• Annual equity grants, providing ownership in the company based on performance.

• Competitive salaries and 401(k) including a company match that are regularly benchmarked.

Vivani also promotes employee engagement through regular town halls, and internal communications to align team members with the company’s vision and goals.

Recruitment and Retention

Vivani believes that we have been successful in attracting and retaining qualified personnel with the appropriate background and experience to support our business and its growth. We monitor recruiting efforts on hiring new employees and information on the retention of business-critical hires. We also track voluntary and involuntary turnover rates which have been historically low.

Diversity and Inclusion

Vivani embraces diversity as a critical asset for innovation and growth. Today, women comprise 50% of our workforce and management roles. Vivani actively fosters an inclusive culture where diverse perspectives drive creativity and excellence.

Governance

Ethics and Compliance****

Vivani maintains a robust compliance framework, adhering to the California Transparency in Supply Chains Act and ensuring ethical business practices. Vivani also maintains a Code of Conduct for its employees and all those associated with the Company.

Cybersecurity and Privacy

Vivani actively monitors cybersecurity threats, implements advanced email and network security technologies, and mandates annual employee training to ensure best practices. These efforts align with California Consumer Privacy Act (“CCPA”) requirements, safeguarding stakeholder data and privacy.

Supplier Oversight and Quality Assurance

Vivani enforces high standards for supplier qualification and quality management. By requiring rigorous compliance with Good Manufacturing Practices (GMP) and related quality measures, the company ensures product safety and reliability throughout the development lifecycle.

A Business Strategy Anchored to Environmental Sustainability, Social Responsibility, and Transparent and Ethical Governance

Vivani integrates sustainability and governance practices into its overarching business strategy. The company’s mission to provide innovative and accessible healthcare solutions aligns closely with its commitment to environmental stewardship, social responsibility, and ethical governance. By prioritizing these principles, Vivani aims to deliver long-term value to patients, stakeholders, and society.****

Vivani Medical is proud to integrate environmental, social, and governance considerations into its operations. By prioritizing sustainability, fostering a healthy work environment, and adhering to the highest ethical standards, we aim to deliver long-term value to our stakeholders while advancing healthcare innovation.

Properties

Our principal offices and facilities are located at 1350 South Loop Road, Alameda, CA 94502 and 27200 Tourney Road, Suite 315, Valencia, CA 91355 and are both leased.

In November 2022, Vivani signed a long-term lease at 1350 South Loop Road, Alameda, CA 94502 to accommodate office space, R&D, analytical labs and a GMP manufacturing suite to support our research and development activities for our Biopharm Division. Vivani moved into the new facility in September 2023.

On February 1, 2023, Cortigent, our Neurostimulation Division entered into a lease agreement, effective March 1, 2023, to sublease office space at 27200 Tourney Road, Suite 315, Valencia, CA 91355 to be utilized as its headquarters. The sublease expires on April 30, 2025. We also entered into a lease for storage space in the same facility that expires on March 31, 2025. We are not renewing the current office lease. However we are entering into another lease in the same building for a smaller space. We are renewing the lease of the storage unit. These new and renewal leases will be short-term leases with immaterial monthly costs.

Employees

As of December 31, 2024, we had 36 employees in our Biopharm Division and 6 employees in Cortigent. Of these persons, all are employed in the United States. We believe that the continued success of our business will depend, in part, on our ability to attract and retain qualified personnel, and we are committed to developing our people and providing them with opportunities to contribute to our growth and success. None of these employees is covered by a collective bargaining agreement, and we believe our relationship with our employees is good to excellent.

Available Information

Our website address is www.vivani.com. We make available free of charge through a link provided at our website our Forms 10-K, 10-Q and 8-K as well as any amendments thereto. These reports are available as soon as reasonably practicable after they are filed with the Securities and Exchange Commission.