Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
NVIV > SEC Filings for NVIV > Form 10-Q on 9-May-2013All Recent SEC Filings

Show all filings for INVIVO THERAPEUTICS HOLDINGS CORP. | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for INVIVO THERAPEUTICS HOLDINGS CORP.


9-May-2013

Quarterly Report


Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management's discussion and analysis should be read in conjunction with the unaudited consolidated financial statements included in this report and with the Company's historical consolidated financial statements and the related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012 (the "2012 Annual Report"). The management's discussion and analysis contains forward-looking statements within the meaning of the safe harbor provisions under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1034, as amended. These statements include statements made regarding our commercialization strategy, future operations, capital requirements and other statements on our strategy, financial position, plans, and market trends. In some cases, you can idenfity forward-looking statements by terms such as "believe," "plan," "intend," "anticipate," "target," "estimate," "expect" and the like. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this quarterly report, including factors such as the Company's ability to execute its strategy, regulatory approval of the Company's products, market acceptance of the Company's products, and other factors detailed under "Risk Factors" in Item 1A of the Company's 2012 Annual Report. The Company's actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this quarterly report.

The discussion and analysis of the Company's financial condition and results of operations are based on the Company's financial statements, which the Company has prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, the Company evaluates such estimates and judgments, including those described in greater detail below. The Company bases its estimates on historical experience and on various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Overview

The Company is developing and commercializing biopolymer scaffolding devices for the treatment of spinal cord injuries, peripheral nerve injuries and other neurotrauma conditions. For spinal cord injuries, the biopolymer devices are designed to protect the damaged spinal cord from further secondary injury and promote neuroplasticity, a process where functional recovery can occur through the rerouting of signaling pathways to the spared healthy tissue.

Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets and raising capital. Accordingly, the Company is considered to be in the development stage.

Recent Developments

In April 2013, the United States Food and Drug Administration ("FDA) approved the Company's Investigational Device Exemption to begin a human clinical trial with its biopolymer scaffolding to treat five patients with acute SCI. Also in April 2013, the FDA approved the Company's request for Humanitarian Use Device ("HUD" )status for this product. HUD designation covers devices that treat rare diseases and conditions. The Company expects to file with the FDA for marketing approval under a Humanitarian Device Exemption, pending the results of the human clinical study.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

On an ongoing basis, we evaluate our estimates and judgments for all assets and liabilities, including those related to stock-based compensation expense and the fair value determined for stock purchase warrants classified as derivative liabilities. We base our estimates and judgments on historical experience, current economic and industry conditions and on various other factors that are believed to be reasonable under the circumstances. This forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no changes in our critical accounting policies and estimates from our 2012 Annual Report.


Table of Contents

We believe that full consideration has been given to all relevant circumstances that we may be subject to, and the consolidated financial statements accurately reflect our best estimate of the results of operations, financial position and cash flows for the periods presented.

Results of Operations

Comparison of the three months ended March 31, 2013 and 2012

Research and Development Expenses

Research and development expenses consist primarily of payments to contract research and development companies and payroll. Research and development expenses increased by approximately $272,000 to approximately $1,213,000 for the three months ended March 31, 2013 from approximately $941,000 for the three months ended March 31, 2012. The increase in expenses is primarily attributable to increased research and development activity and the resulting increases as follows: compensation cost of $363,000 due to both additional staffing and pay raises; an increase in preclinical costs of $382,000; an increase in stock compensation expense of $215,000; and an increase in rent and facility costs of $211,000. These cost increases were offset by $1,100,000 of proceeds from a settlement of a business interruption claim that was recorded as a reduction of Research and Development expenses for the three months ended March 31, 2013.

General and Administrative Expenses

General and administrative expenses consist primarily of payroll, rent and professional services. General and administrative expenses increased by approximately $145,000 to approximately $1,665,000 for the three months ended March 31, 2013 from approximately $1,520,000 for the three months ended March 31, 2012. The increase in expenses is primarily attributable to an increase in compensation costs of $261,000 due to additional staffing and pay raises and an increase of rent and facility costs of $106,000, offset by a decrease in travel and meeting conference costs of $140,000 and a decrease in investor relations costs of $124,000.

Interest Expense

Interest expense increased by $24,000 to approximately $29,000 for the three months ended March 31, 2013 from $5,000 for the three months ended March 31, 2012. The increase in interest expense is mainly due to an increase in borrowing under the loan payable.

Derivatives Gain (Loss)

Derivatives loss increased by approximately $16,062,000 to a loss of approximately $10,449,000 for the three months ended March 31, 2013 from a gain of approximately $5,613,000 for the three months ended March 31, 2012. The increase in this non-cash loss during the three months ended March 31, 2013 reflects the increase in the fair value of derivative warrant liability due primarily to the increase in the fair value of the underlying Common Stock.

Liquidity and Capital Resources

Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets and raising capital. Accordingly, the Company is considered to be in the development stage.

Since inception, the Company has experienced negative cash flows from operations. The Company has financed its operations primarily through the sale of equity-related securities. At March 31, 2013, the deficit accumulated during the development stage was approximately $56,480,000.

At March 31, 2013, we had total current assets of approximately $11,109,000 and current liabilities of approximately $26,377,000 resulting in a working capital deficit of approximately $15,268,000. At March 31, 2013, the Company had total assets of approximately $13,843,000 and total liabilities of approximately $28,177,000, resulting in a stockholders' deficit of approximately $14,334,000.

Net cash used by operating activities for the three months ended March 31, 2013 was approximately $2,669,000. The operating loss used approximately $2,877,000, decreases in accounts payable and accrued expenses used approximately $381,000, non-cash stock share based compensation provided approximately $432,000 and depreciation and amortization provided approximately $166,000. Significant commitments that will require the use of cash in operating activities in future periods include obligations under operating leases. Gross committed lease obligations amount to approximately $6,941,000. Total commitments due for the remainder of fiscal 2013 under operating leases are approximately $883,000.


Table of Contents

Net cash used by investing activities for the three months ended March 31, 2013 totaled approximately $410,000 for purchases of capital equipment.

Net cash provided by financing activities was approximately $555,000 for the three months ended March 31, 2013, due to $341,000 from the exercise of stock options and warrants and $214,000 from loans and capital leases, net of repayments.

At March 31, 2013, the Company had cash of approximately $10,301,000, which the Company expects to be sufficient to meet its operating and capital requirements into the first quarter of 2014. However, the Company will need to raise substantial additional capital in the future to complete clinical trials, obtain marketing approvals and commercialize its products, potentially through debt or equity financings. The sale of debt or equity securities may cause dilution to existing stockholders. Furthermore, there can be no assurance that we will be able to raise such funds if and when they are required. Failure to obtain future funding when needed or on acceptable terms would materially adversely affect our results of operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, including unrecorded derivative instruments that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We have certain warrants and options outstanding but we do not expect to receive sufficient proceeds from the exercise of these instruments unless and until the trading price of our Common Stock is significantly greater than the applicable exercise prices of the options and warrants and mainly following any necessary registering of underlying securities.

  Add NVIV to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for NVIV - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial      Sign Up Now


Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.