A Second Sight Buyout Strategy

Second Sight Medical Products Inc. plans to combine with Pixium Vision SA, a French company, to pursue their common quest to develop bionic vision systems.The Sylmar company is working on its next-generation vision prosthetic, called the Orion system, which is complementary to a retinal-based system being made by Pixium.According to Acting Chief Executive Matthew Pfeffer, both companies have been aware of each other for many years and have had interactions in the past. The transaction will secure the future of both companies by reducing overhead costs and creating synergies, he said.

“We have a large IP portfolio in this space. They have one as well. And we often found ourselves in conflict and wasting a lot of money arguing over patents,” Pfeffer said in an interview with the Business Journal. “Bringing the portfolios together will make everybody stronger and more efficient.”What is different now is that Second Sight switched focus from its earlier Argus retinal product to Orion and so the two companies are “not competitors like we once were,” Pfeffer said.

Orion utilizes an implant connected to the visual cortex in the brain and a camera mounted on a pair of eyeglasses to provide limited sight to blind patients.

Pixium’s system, called Prima, consists of an implant connected to the retina, the light-sensitive lining on the back of the eyeball. Prima also has a camera and pocket processor.The companies’ complementary technologies have the potential to treat many forms of blindness including degenerative retinal diseases as well as glaucoma, optic nerve disease and trauma. On the marketing side, the combined company will target ophthalmologists, surgeons and neuroscientists, Pixium said in a release.

The combination of the companies will result in Second Sight taking the assets of Pixium in exchange for new Second Sight shares, Pfeffer said.

The expectation is that the San Fernando Valley company will change its name to Pixium after the deal closes. Shares of Second Sight will trade under the new name on the Nasdaq.

“As part of the transaction we are creating a subsidiary company – a name has not been finalized for that yet – that will pursue the Orion product,” Pfeffer said, adding that he will likely be chief executive of the new subsidiary.Lloyd Diamond, chief executive of Pixium, said the company has financing in place through the end of 2021 to handle development of the Prima system and the launch of the Primavera study.

“This transaction, including closing of the proposed financing, should provide us with sufficient resources to extend our cash runway beyond 2022, covering results from Primavera,” Diamond said in a statement.

The French National Security Agency of Medicines and Health Products gave approval at the end of November for Pixium to perform a study of its Prima retinal implant in 38 patients who have age-related macular degeneration, or AMD.

Additionally, the deal comes after the Pixium board evaluated numerous attractive financing proposals, Diamond added.

“(It) concluded that the business combination with Second Sight is an ideal opportunity for two very complementary businesses to further develop our promising treatments in areas where there is a significant unmet medical need and comes with the full strategic alignment of both boards of directors,” he said.

Diamond will be the chief executive of the combined company.

José-Alain Sahel, founder of Pixium and currently chair of the Department of Ophthalmology at the University of Pittsburgh School of Medicine, said in a statement that 285 million people suffer some form of visual impairment of which about 40 million are completely blind.  “There are many causes for blindness and the combination of Pixium Vision and Second Sight has the potential to bring novel treatments to patients, for whom today, there are no clinical treatment options,” Sahel said.

Al Mann legacySecond Sight was founded in 1998 by the late serial entrepreneur Alfred Mann and four partners, including one who suffered from retinitis pigmentosa, the cause of blindness the company addressed with the original Argus prosthetic.

Clinical trials of the Argus I began in 2002 with six subjects. That experience led to the development of the Argus II, which received regulatory approval in Europe in 2011 and in the U.S. from the FDA in 2013 and marked the first commercial implants for the blind in this country. Within three years, there had been 100 implants worldwide of the Argus II.Second Sight began phasing out the Argus II by the end of 2019. The company will continue to provide service to the patients using the system as long as the product is viable.Instead, the company has focused attention on the Orion system.

Whereas the Pixium product addresses AMD, “for other forms of blindness, Orion is the product, and we think that is where the potential is,” Pfeffer said.The Orion product relies a lot on the technology from Argus II. The only difference is that the information collected gets sent to a different part of the body – the brain as opposed to the retina of the eye.

As with Argus, it starts with taking a video image from a miniature camera that is embedded into a pair of sunglasses. The image goes into a processing unit that is worn on a belt or around the neck on a lanyard. That translates into set of signals that is sent to an array of electrodes, which are on the occipital lobe of the brain.“The electrodes stimulate the brain in such a way that the brain interprets each of the electrodes as a dot of light,” Pfeffer explained. “I think of them as being akin to pixels. So, you have pixels firing and you can see the dots of light moving around. So, you can see motion, you can see relatively crude images.”At this point in its development, a person wearing the device cannot read but can see objects on a table or a person walking toward them, Pfeffer said.

“It is relatively rudimentary vision, but it’s vision. For somebody who didn’t have any, it is pretty remarkable,” he added.The Orion is currently an experimental investigational device. There are six human subjects who were implanted with the system more than a year ago. The five male patients and one female patient are overseen by doctors at UCLA and Baylor College of Medicine in Houston.The next step with Orion is to increase the number of electrodes which has some challenges which the company is working to resolve, Pfeffer said. He added that if you had enough electrodes in a fine enough mesh, you could eventually see something like a TV image.“We are not quite the ‘Six Million Dollar Man’ vision restoration level quite yet, but maybe someday,” Pfeffer said, referring to the 1970s television series starring Lee Majors.

Stay in ValleyThe company now called Second Sight plans to stay in the Valley. In fact, it just resigned a lease to stay in its Sylmar space for another two and a half years, Pfeffer said.

“We expect to renew at that point,” he added.

A year ago, with the start of the coronavirus pandemic, Second Sight announced it would wind down its operations and lay off many of its employees. It could not get financing to continue and the company needed to stop spending money, said Pfeffer, who was named acting chief executive about the same time.

To help stay in business, Second Sight sold 7.5 million shares of its common stock at $1 a share in early May. The company planned on using the net proceeds – after deducting underwriting discounts, commissions and other expenses – for working capital and general corporate purposes.

Today, Second Sight has about 15 employees. “We were able to rehire some of the people we had to let go,” Pfeffer said.