InVivo Therapeutics reports net income of $3,150,000 for first quarter 2012

May 15 2012

InVivo Therapeutics Holdings Corp. (OTCBB:NVIV), a developer of groundbreaking technologies for the treatment of spinal cord injuries (SCI), today reported the financial results for the three months ended March 31, 2012 and provided a business update.    

InVivo has pioneered a new treatment that uses a biocompatible polymer-based scaffold to provide structural support to a damaged spinal cord in order to spare tissue from scarring while improving recovery and prognosis after a traumatic spinal cord injury. Today there is no effective treatment for the spinal cord for paralysis caused by SCIs, and the market potential is estimated to be over $10 billion.

"We are off to a strong start for 2012 and the first quarter was marked by significant achievements and milestones for InVivo," said Frank Reynolds, InVivo's Chief Executive Officer. "We are creating a new paradigm for the treatment of neurological injuries and are at an inflection point in our growth. By the end of 2012, we expect to have several product applications under review by the FDA. Our biopolymer scaffolding device for the treatment of acute SCIs is poised to enter human clinical trials during the second half of 2012. We expect to submit hydrogel-based applications to the FDA for the treatments of SCI and chronic pain from peripheral nerve injuries later this year. During the first quarter of 2012, we strengthened our balance sheet by closing an oversubscribed $20mm⁺ public offering led by globally recognized health care investment institutions. In addition, we added key leadership to our management team to drive product development and commercialization."

Recent Corporate Highlights

Biopolymer Scaffolding Scheduled to Enter Clinical Studies for SCI in 2012: InVivo expects to commence a pilot human clinical trial during the second half of 2012, pending approval of an Investigational Device Exemption (IDE) application by the FDA. Following a meeting with the FDA held in April, the Company is expecting the product to be regulated under the Humanitarian Use Device/Humanitarian Device Exemption (HUD/HDE) pathway that should accelerate commercialization. The pilot study will be an open label study and is designed to evaluate the safety and efficacy in SCI patients following treatment with the biopolymer scaffolding. This study follows promising pre-clinical studies completed in non-human primates. InVivo is the first to successfully demonstrate functional improvement in non-human primates that were paralyzed after a spinal cord injury model.

Submissions to be Filed with the FDA for Injectable Hydrogel to Treat Peripheral Nerve Injuries and SCI: InVivo is conducting a preclinical study with Geisinger Health System to evaluate the Company's injectable biocompatible hydrogel for the treatment of pain caused by peripheral nerve compression. Approximately 3.2 million pain injections are performed annually to treat back, neck and leg pain caused by peripheral nerve injuries. InVivo's hydrogel is designed to time-release anti-inflammatory drugs for extended pain relief. The product addresses an estimated $15 billion market for peripheral nerve injuries. InVivo expects to file FDA applications during 2012 for the use of the injectable hydrogel to treat peripheral nerve injuries and SCI.

Raised $20mm⁺ of Equity Capital: In February 2012, InVivo completed a $20mm⁺ public offering led by a select group of institutional investors. Net proceeds to InVivo were approximately $18.1mm. InVivo also has the potential to receive an additional $18.6mm of capital from the exercise of previously issued outstanding warrants.

Key Additions to the Management Team: InVivo recently announced the appointments of Jack Harvey, formerly of Pervasis, as Senior Director of Manufacturing, Brian Hess, formerly of Stryker, as Director of Product Development, and Celina Chang, formerly of Pervasis, as Senior Scientist. Under the leadership of new Chief Science Officer, Edward Wirth, MD, PhD, InVivo has established a foundation for the further advancement of chronic spinal cord injury technologies.

New Global Headquarters: InVivo has signed a multi-year lease for a 21,000 square foot facility at One Kendall Square in Cambridge, Massachusetts. The new state-of-the-art facility will bring all of the Company's operations under one roof and will house corporate offices, a vivarium, laboratory space and a cGMP clean room for manufacturing.

Financial Results

For the three months ended March 31, 2012, the Company reported net income of $3,150,000 or $.05 per diluted share, compared to a net loss of $1,278,000, or $.02 per diluted share, for the three months ended March 31, 2011. Included in results for the three months ended March 31, 2012 and 2011 were non-cash derivative gains of $5,613,000, and $121,000, respectively, reflecting decreases in the fair value of the derivative warrant liability. Exclusive of the non-cash derivative gain, the pro forma net loss for the three months ended March 31, 2012 was $2,463,000, or $.04 per diluted share, compared to a pro forma net loss of $1,399,000, or $.03 per diluted share for 2011.

Total operating expenses for the three months ended March 31, 2012 were $2,461,000 compared with $1,401,000 for the three months ended March 31, 2011. The Company's cash balance increased to $19.6mm at March 31, 2012 from $4.4mm at December 31, 2011. In February 2012, InVivo completed a $20mm⁺ public offering and issued 9,523,810 shares of common stock at a price to the public at $2.10 per share. Net proceeds to InVivo were approximately $18.1mm.