Viveve Medical, Inc. (VIVE) is a pioneering medical technology company dedicated to developing innovative solutions for women's intimate health. With a strong focus on research and development, Viveve has carved out a unique niche in the industry, leveraging its proprietary Cryogen-cooled Monopolar Radiofrequency (CMRF) technology to address a range of women's health concerns.
Company Background
Founded in 2006 and headquartered in Englewood, Colorado, Viveve has a rich history of innovation and a steadfast commitment to improving the quality of life for women. The company's flagship product, the Viveve System, utilizes CMRF technology to deliver a non-invasive treatment for vaginal laxity, stress urinary incontinence (SUI), and other intimate health issues. This revolutionary approach has garnered attention from healthcare professionals and patients alike, as it offers a viable alternative to more invasive surgical procedures.
Historical Milestones
The first generation Viveve System, consisting of a generator, handpiece, and disposable treatment tip, was designed and manufactured by Stellartech Research Corporation starting in 2006. The company received its first regulatory clearance for the Viveve System in 2012 and began commercializing the product internationally. In 2017, Viveve entered into a Term Loan Agreement with affiliates of CRG LP, receiving $20 million in funding at closing and access to an additional $10 million. The same year, the company entered into an exclusive Distributorship Agreement with InControl Medical, LLC (ICM), investing $2.5 million in the Wisconsin-based company focused on women's health products.
In 2019, Viveve amended its 2017 Loan Agreement with CRG, converting approximately $28.98 million of the outstanding principal amount under the term loan plus accrued interest, prepayment premium, and back-end fee into 31,300 shares of newly authorized Series B convertible preferred stock and warrants to purchase up to 989,380 shares of common stock. The following year, Viveve's wholly-owned subsidiary, Viveve, Inc., received a $1.34 million Paycheck Protection Program (PPP) loan, which was later fully forgiven in 2021. Also in 2020, the company initiated a recurring revenue rental model for the sale of Viveve Systems in the U.S. market.
Challenges and Setbacks
Despite these developments, Viveve has faced significant challenges. The company's VIVEVE II clinical trial did not meet its primary endpoint in 2020, and in 2022, Viveve recognized an impairment loss of $455,000 on its investment in ICM due to ICM's distressed financial condition. Throughout its history, Viveve has relied on the sales of its securities, bank term loans, and loans from related parties to fund its operations, as the revenue earned to date has not been sufficient to support the company's activities.
Financials
Viveve's financial performance has been marked by both challenges and opportunities. In the fiscal year 2021, the company reported revenue of $6.43 million, a modest increase from the previous year's $5.48 million. However, the company's net income during this period was a loss of $22.03 million, reflecting the ongoing investments in research, development, and regulatory approval processes. The operating cash flow for 2021 was negative $12.88 million, while the free cash flow stood at negative $13.33 million.
In the third quarter of 2022, Viveve reported revenue of $1.68 million, a 4% increase compared to $1.62 million in the same period of 2021. This increase was primarily due to higher sales volume of treatment tips sold globally, partially offset by a decrease in Viveve Systems sold during the period. The net income for Q3 2022 was a loss of $4.98 million.
Gross profit for the three months ended September 30, 2022, was $546,000, or 32% of revenue, compared to $114,000, or 7% of revenue, for the same period in 2021. The increase in gross profit was primarily due to lower inventory-related costs during the period as well as higher average selling prices of treatment tips sold globally.
Research and development expenses for Q3 2022 were $1.80 million, a decrease of 33% from $2.69 million in the same period of 2021. The decrease was primarily due to reduced clinical study costs, partially offset by higher personnel costs and increased engineering and development work related to the company's next-generation products.
Selling, general and administrative expenses for Q3 2022 were $3.41 million, an increase of 17% from $2.91 million in the same period of 2021. The increase was primarily due to higher personnel costs and higher professional fees related to the company's strategic planning in anticipation of the completion of its PURSUIT clinical trial and potential commercialization of the Viveve System for the treatment of stress urinary incontinence.
Innovation and Strategic Growth
Despite these financial headwinds, Viveve has maintained a strong focus on innovation and strategic growth. The company's research and development efforts have yielded promising results, with the completion of the pivotal PURSUIT clinical trial for the treatment of SUI in women. The PURSUIT trial, which enrolled 415 subjects, is a critical milestone for Viveve as it seeks regulatory approval for this indication in the United States.
In addition to the PURSUIT trial, Viveve has also expanded its global footprint, with its Viveve System currently marketed and sold in 48 countries worldwide. The company's international distribution network has played a crucial role in driving sales, with international markets contributing a significant portion of the company's revenue.
Liquidity
Viveve's liquidity and solvency position have been an area of focus for investors. As of September 30, 2022, the company reported cash and cash equivalents of $5.91 million, with a working capital deficit of $1.23 million. The company's debt-to-equity ratio stood at 0.36, indicating a manageable level of leverage. Viveve's current ratio was 4.91, and its quick ratio was 4.58, suggesting a strong ability to meet short-term obligations.
The company previously entered into a $30 million credit facility with CRG LP, of which $5.63 million was outstanding as of September 30, 2022. This facility has a maturity date of March 31, 2023. Viveve has acknowledged the need for additional funding to fully execute its strategic plan, and it is actively exploring various financing options, including equity and debt offerings.
Competitive Landscape
The competitive landscape in the women's intimate health market is evolving, with Viveve facing competition from both established players and emerging startups. The company's ability to maintain its technological edge, secure regulatory approvals, and effectively market its products will be crucial in determining its long-term success.
Future Outlook
Viveve's future growth will also be influenced by various external factors, such as the impact of the COVID-19 pandemic, changes in healthcare policies and reimbursement trends, and the overall macroeconomic environment. The company's management team has demonstrated a willingness to adapt to these challenges, and it remains committed to delivering innovative solutions that meet the growing demand for women's intimate health treatments.
Business Overview
Viveve designs, develops, manufactures, and markets a platform medical technology called Cryogen-cooled Monopolar Radiofrequency (CMRF). The Viveve System, which utilizes this CMRF technology, is marketed for various indications depending on the country-specific clearance or approval, including general surgical procedures, treatment of vaginal laxity, stress urinary incontinence, and improvement of sexual function.
As of September 30, 2022, Viveve has a global installed base of 915 Viveve Systems and has sold approximately 69,500 single-use treatment tips worldwide. The company's revenue is primarily generated from the sale of the Viveve System, single-use treatment tips, and ancillary consumables.
Geographic Performance
Viveve sells its products primarily in North America, Asia Pacific, and Europe/Middle East markets. While the company does not disclose detailed geographic revenue breakdowns, its international presence plays a significant role in its overall revenue generation.
Conclusion
In conclusion, Viveve Medical, Inc. (VIVE) is a company with a strong legacy of innovation and a clear vision for the future of women's intimate health. While it has faced financial challenges, the company's focus on research and development, global expansion, and strategic execution position it for potential long-term success. The completion of the PURSUIT clinical trial and the potential commercialization of the Viveve System for stress urinary incontinence treatment represent significant milestones for the company. Investors and stakeholders will closely monitor Viveve's ability to navigate the competitive landscape, secure regulatory approvals, and capitalize on the growing demand for its unique treatment solutions. The company's financial performance, particularly its ability to increase revenue and improve profitability, will be crucial factors in its future success.