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Saturday, Feb 24, 2024

In the Blink of an Eye, Second Sight Closes Shop

Second Sight Medical Products Inc., an ambitious visual prosthetics company launched by late billionaire inventor Alfred Mann and four partners nearly 22 years ago, has started to wind down operations amid the coronavirus pandemic. The Sylmar company cited “unprecedented economic shock caused by COVID-19” and an “inability to secure additional financing” as its reasons for starting the closure process in a statement. The Business Journal did not hear back from the company for further comment. Second Sight first announced plans to cease operations on March 30, laying off 84 of its 108 employees and quickly shifting to a new acting chief executive: Matthew Pfeffer. More staff cuts are planned but haven’t been announced as of press time. An advisor will be brought in to help the company to start shutting down operations, the company said in its statement. Shares of Second Sight (EYES) dropped nearly 51 percent on the day of the announcement and closed at $1.86 on April 22; at the beginning of the year, shares traded on the Nasdaq at $5.90. When the company made its debut on the Nasdaq more than five years ago, trading opened at $17 after pricing 3.5 million shares at $9 a share, closing at $19.91. Legacy of Mann “It’s kind of sad because here’s the case of a company that has done an enormous job in improving our understanding of vision, particularly of restored vision for people who are blinded by retinitis pigmentosa,” said Ahmed Enany, chief executive of the Southern California Biomedical Council. “It’s sad also because it’s one of Al Mann’s companies. Al never had a company that went out of business. All his companies continue to exist or got acquired by other companies, like Medtronic Diabetes in Northridge that used to be MiniMed.” The Argus II, Second Sight’s medical implant that stimulates the optic nerve, was approved by the FDA in 2012 — but only for those suffering blindness as a result of retinitis pigmentosa, a rare genetic disorder that breaks down the cells in the retina. One of the company’s founders, Sam Williams, suffered from the disorder. Second Sight’s second product, still in development, is the Orion Visual Prosthesis System. It bypasses the eyes and optic nerve and can potentially treat other causes of blindness. A critical move in the company’s history, Enany said, was to pursue research and development of the Orion, rather than pursue the comparatively small market for FDA-approved Argus II. “It’s a deep-brain implant and it’s another invasive device, and it’s going to take a little bit of time to do the clinical studies and get FDA approval,” said Enany of the Orion. “Since they suspended the Argus, Second Sight became an R&D company. Like any other R&D company, you have to think about how you’re going to raise money, particularly because it’s a publicly traded company.” “We will continue to support those patients for as long as they need it,” Patrick Ryan, chief operating officer at Second Sight, said in a previous interview with the Business Journal about the phasing out of Argus II. “We will significantly grow our opportunity and the patients who previously would have received an Argus device will also benefit from the Orion device.” Restructuring assets Pfeffer replaced Gregg Williams, who was appointed interim chief executive just several weeks prior when longtime leader Will McGuire announced his departure from the company. Pfeffer held the chief executive position at another Al Mann company, MannKind Corp. in Westlake Village, from January 2016 to May 2017. Second Sight received a noncompliance letter from Nasdaq as a result of Pfeffer being appointed acting chief executive, according to a filing dated April 21 from the Securities and Exchange Commission. Nasdaq listing rules require a company’s independent director and audit committee be separate; Pfeffer has served as chair of the Second Sight’s audit committee since June 2015. “These restructuring guys are going to come in and figure out what to do with the remaining assets and figure out strategic options for what is left of Second Sight,” said Enany. With a “treasure trove” of intellectual property, as Enany put it, it’s possible that some assets will be purchased by larger medical device companies, or the entire company could get acquired. The company will need to think about infrastructure too, including its headquarters at 12744 San Fernando Road. “The eye, and the back of the eye in particular, is a very delicate organ and the ability to put a device there and that it produces a function, it is a miracle,” added Enany. “The kind of knowledge the company collected over time to be able to create this device, somebody better take it over and continue the journey, or it should go to another Al Mann organization. … If Al were alive, he would have put his own money into it to sustain it until the company makes a turnaround and corrects its course.” Enany also suggested that remaining investors inject more cash to sustain the company, or delist Second Sight and turn it into a private company again.

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