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Second Sight Medical Products (EYES)

Filed: 13 May 22, 5:10pm

As filed with the Securities and Exchange Commission on May 13, 2022

Registration No. 333-          

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

SECOND SIGHT MEDICAL PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

California

3845

02-0692322

(State or other jurisdiction of
incorporation or organization)

(Primary Standard Industrial
Classification Code Number)

(I.R.S. Employer
Identification Number)

Second Sight Medical Products, Inc.

13170 Telfair Ave

Sylmar, California

91342

(818) 833-5000

(Address including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Scott Dunbar

Acting Chief Executive Officer

Second Sight Medical Products, Inc.

13170 Telfair Ave

Sylmar, California 91342

(818) 833-5000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

William N. Haddad, Esq.

Philip T. von Mehren, Esq.

Kirill Y. Nikonov, Esq.

Venable LLP

1270 Avenue of the Americas, 24 Floor

New York, NY 10020

(212) 503-9812

Adam Mendelsohn

Chairman and Chief Executive Officer

Nano Precision Medical, Inc.

5858 Horton Street #280

Emeryville, CA 94608

(415) 506-8462

Andrew D. Hudders, Esq.

Golenbock Eiseman Assor Bell & Peskoe LLP

711 Third Avenue

New York, NY 10017

(212) 907-7349

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions under the Merger Agreement described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13(e)-4(i) (Cross-Border Issuer Tender Offer)

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this proxy statement/prospectus is not complete and may be changed. Second Sight may not sell its securities pursuant to the proposed transactions until the Registration Statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Table of Contents

Subject to completion, dated May 13, 2022

PROPOSED MERGER

YOUR VOTE IS VERY IMPORTANT

To the Shareholders of Second Sight Medical Products, Inc.:

Second Sight Medical Products, Inc. (“Second Sight”) and Nano Precision Medical, Inc. (“NPM”) have entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), pursuant to which a wholly-owned subsidiary of Second Sight will merge with and into NPM, with NPM surviving as a wholly-owned subsidiary of Second Sight (the “Merger”). The merger will result in a company focused on the development of innovative drug and device medical implants that treat chronic diseases with high unmet medical need.

At the effective time of the merger, the following securities of each NPM securityholder will be converted into the right to receive, or acquire through replacement options and warrants, a portion of 134,349,464 shares of Second Sight’s common stock (the “Merger Shares”). The NPM stock option holders may exercise their options in accordance with their terms. The NPM warrant holders have the right to exercise their securities at a net exercise per share rate of $21.90 prior to the merger. If the NPM stock options and NPM warrants are not exercised then (i) each NPM stock option that is outstanding will be cancelled and Second Sight will assume and/or issue in exchange a Second Sight replacement stock option, under its effective equity incentive plan(s), and (ii) each NPM warrant will adjust according to its terms to represent the right to acquire Second Sight common stock. To the extent that by their terms NPM warrants do not continue to represent the right to acquire securities of Second Sight on comparable terms to those of NPM warrants, then the parties of the Merger Agreement will negotiate in good faith and use commercially reasonable efforts to mutually agree as promptly as practicable to such amendments to the Merger Agreement as are necessary to reflect an assumption, exchange or similar accommodation for such NPM warrants, provided that such assumption, exchange or similar accommodation shall be reasonably satisfactory to each party to the Merger Agreement. The NPM common stockholders as of immediately prior to the closing, including those that have net exercised their NPM stock options and NPM warrants will receive their Pro Rata Portion (as defined in the Merger Agreement) of the Merger Shares, based on the number of shares of NPM outstanding immediately prior to the closing.

Second Sight’s shareholders will continue to own and hold their existing shares of Second Sight’s common stock, adjusted for the reverse stock split if implemented before the merger .

Immediately after the merger, current shareholders, warrant holders, and option holders of NPM will own, or hold rights to acquire, approximately 77.32% of the common stock of Second Sight, which for these purposes is defined as the outstanding common stock of Second Sight (including the shares of common stock issued in the merger), plus the number of shares of Second Sight common stock issuable on conversion of options and warrants of Second Sight that were in the in-the-money as of the date of the Merger Agreement, plus the number of shares that would issue from a net exercise of all options and warrants of NPM based on a $21.90 NPM share price (the “Base Amount Common Stock of Second Sight”), with Second Sight’s current shareholders, option holders and warrant holders owning, or holding rights to acquire, approximately 22.68% of the Base Amount Common Stock of Second Sight.

Shares of Second Sight’s common stock are currently listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “EYES.” Prior to the consummation of the merger, Second Sight will file an initial listing application with Nasdaq pursuant to Nasdaq’s “reverse merger” rules. After completion of the merger, Second Sight will be renamed to “Vivani Medical, Inc.” and expects to trade on Nasdaq under the symbol “[TBD].” On May 12, 2022, the last trading day before the date of this proxy statement/prospectus, the closing sale price of Second Sight’s common stock on Nasdaq was $1.42 per share.

Second Sight is holding an annual meeting of shareholders in order to obtain the shareholder approvals necessary to complete the merger and related matters. At the Second Sight annual meeting, which will be held virtually at [XX] a.m., Pacific time, on [XX], 2022 at [XX], unless postponed or adjourned to a later date, Second Sight will ask its shareholders, among other things:

1.to approve the Merger Agreement and thereby approve the transactions contemplated thereby, including the merger, the issuance of the Merger Shares, and the change of control resulting from the merger;
2.to approve an amendment to the Second Sight Restated Articles of Incorporation, as amended, to effect a reverse stock split of Second Sight’s common stock, within a range, as determined by Second Sight’s board of directors, of one new share for every 2 to 5 (or any number in between) shares outstanding (the “Second Sight Reverse Stock Split”);
3.to approve an amendment to the Second Sight Restated Articles of Incorporation, as amended, to effect the change of name of Second Sight to “Vivani Medical, Inc.;”
4.to elect the six directors from the nominees named in the accompanying proxy statement to hold office for the ensuing year and until their successors are duly elected and qualified;
5.to approve the Second Sight 2022 Omnibus Plan (the “Second Sight 2022 Plan”);
6.to ratify the selection by the audit committee of the board of directors the appointment of BPM LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022;
7.to consider and vote upon an adjournment of the Second Sight annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the foregoing proposals; and
8.to transact such other business as may properly come before the Second Sight annual meeting or any adjournment or postponement thereof.

In addition, following the effectiveness of the registration statement on Form S-4 (the “Registration Statement”), of which this proxy statement/prospectus is a part, and pursuant to the conditions of the Merger Agreement, NPM will ask its shareholders to approve by written consent a proposal to adopt and approve the Merger Agreement and the transactions contemplated thereby, including the merger.

At a meeting of a special committee of the board of directors of Second Sight (the “Special Committee”), established because of the conflict of interests of certain members of the board of directors of Second Sight as more particularly described in Related Party Transactions Of Directors And Executive Officers Of The Combined Company, the Special Committee unanimously adopted resolutions concluding and finding the transactions contemplated by the Merger Agreement (and SAFE agreement entered as a corollary thereof) to be advisable and fair to, and in the best interests of Second Sight and its shareholders and recommended the full board of directors of Second Sight to authorize the execution of the Merger Agreement and proposing that the transactions contemplated by the Merger be brought to the shareholders of Second Sight for their approval.

After careful consideration, each of Second Sight’s board of directors (following the recommendation of the Special Committee) and NPM’s board of directors has (i) determined that the transactions contemplated by the Merger Agreement are fair to, advisable, and in the best interests of Second Sight or NPM, as applicable, and their respective shareholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated therein and (iii) determined to recommend, upon the terms and subject to the conditions set forth in the Merger Agreement, that its shareholders vote to adopt or approve, as applicable, the Merger Agreement and, therefore, approve the transactions contemplated therein. Second Sight’s board of directors recommends that Second Sight’s shareholders vote “FOR” the proposals described in the accompanying proxy statement/prospectus.

More information about Second Sight, NPM, and the proposed transaction is contained in this proxy statement/prospectus. Second Sight and NPM urge you to read the accompanying proxy statement/prospectus carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “RISK FACTORS” BEGINNING ON PAGE 22.

Second Sight and NPM are excited about the opportunities the merger brings to both Second Sight’s and NPM’s shareholders and thank you for your consideration and continued support.

If you have any questions or need assistance voting your shares, please call Second Sight’s proxy solicitor, Morrow Sodali LLC, which we refer to as Morrow, toll-free at (800) 662-5200, or via e-mail EYES@info.morrowsodali.com.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The accompanying proxy statement/prospectus is dated [XX], 2022, and is first being mailed to Second Sight’s shareholders on or about [XX], 2022.

SECOND SIGHT MEDICAL PRODUCTS, INC.

13170 Telfair Ave

Sylmar, California 91342

(818) 833-5000

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON

Dear Shareholders of Second Sight:

On behalf of the board of directors of Second Sight Medical Products, Inc., a California corporation (“Second Sight”), we are pleased to deliver this proxy statement/prospectus for the proposed merger between Second Sight and Nano Precision Medical, Inc., a California corporation (“NPM”), pursuant to which NPM Acquisition Corp., a California corporation and a wholly-owned subsidiary of Second Sight (“Merger Sub”), will merge with and into NPM, with NPM surviving as a wholly-owned subsidiary of Second Sight. The annual meeting of shareholders of Second Sight will be held virtually at [XX] on [XX] [XX], 2022 at [XX] a.m., Pacific time unless postponed or adjourned to a later date for the following purposes:

1.to approve the Merger Agreement and thereby approve the transactions contemplated thereby, including the merger, the issuance of the Merger Shares, and the change of control resulting from the merger;
2.to approve an amendment to the Second Sight Restated Articles of Incorporation, as amended, to effect a reverse stock split of Second Sight’s common stock, within a range, as determined by Second Sight’s board of directors, of one new share for every 2 to 5 (or any number in between) shares outstanding (the “Second Sight Reverse Stock Split”);
3.to approve an amendment to the Second Sight Restated Articles of Incorporation, as amended, to effect the change of name of Second Sight to “Vivani Medical, Inc.”;
4.to elect the six directors from the nominees named in the accompanying proxy statement to hold office for the ensuing year and until their successors are duly elected and qualified;
5.to approve the Second Sight 2022 Omnibus Plan (the “Second Sight 2022 Plan”);
6.to ratify the selection by the audit committee of the board of directors the appointment of BPM LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022;
7.to consider and vote upon an adjournment of the Second Sight annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the foregoing proposals; and
8.to transact such other business as may properly come before the Second Sight annual meeting or any adjournment or postponement thereof.

Second Sight’s board of directors has fixed [XX] [XX], 2022, as the record date for the determination of shareholders entitled to notice of, and to vote at, the Second Sight annual meeting and any adjournment or postponement thereof. Only holders of record of shares of Second Sight’s common stock at the close of business on the record date are entitled to notice of, and to vote at, the Second Sight annual meeting. At the close of business on the record date, Second Sight had [XX] shares of common stock outstanding and entitled to vote.

Your vote is important.

Assuming that a quorum is present at the annual meeting, the affirmative vote of a majority of the issued and outstanding shares of Second Sight common stock entitled to vote is required to approve Proposals Nos. 1, 2, and 3. Director nominees in Proposal No. 4 are elected by a plurality of the votes cast by the holders of shares entitled to vote in the election at the annual meeting. The affirmative vote of holders of a majority of the shares represented and voting at the annual meeting (which shares voting affirmatively also constitute at least a majority of the required quorum) is needed to approve Proposals Nos. 5 and 6. For the purpose of Proposal No. 7: (i) if a quorum is present at the annual meeting, the affirmative vote of holders of a majority of the shares represented and voting at the annual meeting (which shares voting affirmatively also constitute at least

a majority of the required quorum) is needed to approve Proposal No. 7 and (ii) if a quorum is not present, at the annual meeting, a majority of the shares present and voting in person or by proxy, even if less than a majority of a quorum, would be sufficient to approve Proposal No. 7.

Each of Proposals Nos. 1, 3, and 5 are conditions to the Merger and the Merger cannot be consummated without the approval of each of Proposals Nos. 1, 3, and 5, subject to the right of NPM to waive the approval of Proposals Nos. 3 and 5 as conditions to the Merger. If Proposal No. 5 is approved by the shareholders, but the Merger is not completed or the shareholders do not approve Proposal Nos. 1 or 3, the Second Sight 2022 Omnibus Plan will, nevertheless, become effective.

By Order of Second Sight’s Board of Directors,

[XX], Secretary

[XX], 2022

SECOND SIGHT’S BOARD OF DIRECTORS, BASED ON THE OPINION OF THE SPECIAL COMMITTEE, HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS ADVISABLE TO, AND IN THE BEST INTERESTS OF, SECOND SIGHT AND ITS SHAREHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. SECOND SIGHT’S BOARD OF DIRECTORS RECOMMENDS THAT SECOND SIGHT’S SHAREHOLDERS VOTE “FOR” EACH SUCH PROPOSAL.

TABLE OF CONTENTS

Page

QUESTIONS AND ANSWERS ABOUT THE MERGER

1

PROSPECTUS SUMMARY

10

The Companies

10

The Merger

10

Reasons for the Merger

11

Opinion of the Second Sight Financial Advisor

12

Material U.S. Federal Income Tax Consequences of the Merger

12

Material U.S. Federal Income Tax Consequences of the Second Sight Reverse Stock Split

12

Overview of the Merger Agreement; Merger Consideration

12

Treatment of NPM’s Stock Options and Warrants

13

Conditions to the Completion of the Merger

13

No Solicitation

13

Termination of the Merger Agreement

14

Termination Fee

14

Lock-up Agreements

14

SAFE Agreement to advance $8 Million

14

Management Following the Merger

15

Interests of Certain Directors, Officers and Affiliates of Second Sight and NPM

15

Risk Factors

15

Regulatory Approvals

17

Nasdaq Stock Market Listing

17

Anticipated Accounting Treatment

17

Appraisal Rights

18

Comparison of Shareholder Rights

18

SUMMARY HISTORICAL AND UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

19

Summary Historical Financial Data of Second Sight

19

Selected Historical Financial Data of NPM

19

Selected Unaudited Pro Forma Condensed Combined Financial Data of Second Sight and NPM

20

Comparative Historical and Unaudited Pro Forma Per Share Data

21

RISK FACTORS

22

Risks Related to the Merger

22

Risks Related to the Proposed Stock Split

26

Risks Related to Dependence on Second Sight’s Commercial Products

26

Risks Related to Second Sight’s Common Stock

29

Risks Related to Second Sight’s Operations

30

Risks Related to Intellectual Property and Other Legal Matters

32

Risks Relating to Second Sight’s Financial Results and Need for Financing

35

Risks Related to Second Sight’s Business and Industry

37

Risks Related to the Securities Market, and Ownership of Second Sight’s Common Stock

43

Risks Related to NPM

49

Risks Related to NPM’s Financial Liquidity and Capitalization

49

Risks Related to NPM’s Product Development and Commercialization

54

Risks Related to Regulatory Approval and Other Legal and Compliance Matters

61

Risks Relating to NPM’s Intellectual Property

67

Risks Related to NPM’s Reliance on Third Parties

72

NPM’s General Risk Factors

75

Risks Related to the Combined company

76

FORWARD-LOOKING STATEMENTS

79

THE ANNUAL MEETING OF SECOND SIGHT’S SHAREHOLDERS

80

Date, Time, and Place

80

Purpose of the Second Sight Annual meeting

80

Recommendation of the Second Sights Board of Directors

80

Record Date and Voting Power

81

Voting and Revocation of Proxies

81

i

Page

Required Vote

82

Solicitation of Proxies

83

Other Matters

84

THE MERGER

85

Background of the Merger

85

Second Sight Reasons for the Merger

91

NPM Reasons for the Merger

92

Opinion of the Second Sight Financial Advisor

93

Interests of the Second Sight Directors and Executive Officers in the Merger The Special Committee

98

Interests of the NPM Directors and Executive Officers in the Merger

99

NPM Stock Options and Warrants

101

Form of the Merger

102

Merger Consideration

102

Effective Time of the Merger

103

Regulatory Approvals

104

Tax Treatment of the Merger

104

Tax Withholding

104

Material U.S. Federal Income Tax Consequences of the Merger

104

Nasdaq Capital Market Listing

107

Anticipated Accounting Treatment

108

Appraisal Rights

108

DESCRIPTION OF SECOND SIGHT’S SECURITIES REGISTERED UNDER SECTION 12 OF EXCHANGE ACT

111

Common Stock

111

Preferred Stock

111

Warrants

112

Dividend Policy

112

California Anti-Takeover Law

113

Transfer Agent

113

THE MERGER AGREEMENT

114

General

114

Merger Consideration

114

Treatment of NPM’s Stock Options and Warrants

116

Directors and Officers of Second Sight Following the Merger

116

Restated Articles of Incorporation, as Amended and Amendment to the Restated Articles of Incorporation, as Amended, of Second Sight

116

Conditions to the Completion of the Merger

116

Representations and Warranties

119

Non-Solicitation

121

Approval of Shareholders

126

Board Recommendations

127

Conduct of Business Pending the Merger

127

Negative Covenants

128

Other Covenants

131

Termination

132

Termination Fee

133

Amendment

134

Transaction Expenses

134

Miscellaneous

134

SAFE Agreement to advance $8 Million

135

AGREEMENTS RELATED TO THE MERGER

135

SAFE Agreement to Advance $8 Million

137

Lock-up Agreements

134

SECOND SIGHT EXECUTIVE COMPENSATION

136

Summary Compensation Table

136

Narrative Disclosure to Summary Compensation Table

137

SECOND SIGHT DIRECTOR COMPENSATION

138

ii

Page

MATTERS BEING SUBMITTED TO A VOTE OF SECOND SIGHT’S SHAREHOLDERS

139

Proposal No. 1: Approval of the Merger and the Issuance of Common Stock in the Merger

139

Proposal No. 2: Approval of an Amendments to the Restated Articles of Incorporation, as Amended, of Second Sight Effecting the Second Sight Reverse Stock Split

140

Proposal No. 3: Approval of an Amendment to the Restated Articles of Incorporation, as Amended, of Second Sight Effecting the Second Sight Name Change

147

Proposal No. 4: Election of Directors

148

Proposal No. 5: Approval of the Second Sight 2022 Incentive Award Plan

157

Proposal No. 6: Ratification of Appointment of Independent Registered Public Accounting Firm

163

Proposal No.7: Approval of Possible Adjournment of the Second Sight Annual Meeting

165

SECOND SIGHT BUSINESS

166

Overview

166

Product and Clinical Development Plans

166

Second Sight’s Technology

168

Second Sight’s Markets

169

Second Sight’s Strategy

170

Global Reimbursement

170

Market Development Plans

171

COVID-19 Pandemic

171

Second Sight’s Competition

172

Second Sight’s Research Development and Quality Assurance

174

Employees

174

Properties

174

NPM BUSINESS

175

Company Overview

175

Technology Overview

175

Product Candidates

175

Business Strategy

176

Corporate Information

177

Market and Commercial Opportunity

177

Strategic Agreements

179

Governmental Regulation

179

Chemistry, Manufacturing, and Controls

191

Intellectual Property

191

Competition

192

Employees

193

Properties

194

Legal Proceedings

194

SECOND SIGHT MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

195

Business Overview

195

Capital Funding

198

COVID-19 Pandemic

200

Recently Adopted Accounting Standards

200

Critical Accounting Policies and Estimates

200

Results of Operations

201

Comparison of the Years Ended December 31, 2021 and 2020

201

Liquidity and Capital Resources

202

Off-Balance Sheet Arrangements

203

SECOND SIGHT LEGAL PROCEEDINGS

204

SECOND SIGHT MARKET PRICE, DIVIDENDS AND RELATED MATTERS

205

SECOND SIGHT CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

206

NANO PRECISION MEDICAL, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

207

Business Overview

207

iii

Page

Proposed Merger with Second Sight

208

Capital Funding

208

Impact of COVID-19 Pandemic

209

Components of Results of Operations

209

Results of Operations

210

Liquidity, Capital Resources and Going Concern

211

Off-Balance Sheet Arrangements

212

Critical Accounting Policies and Estimates

212

MANAGEMENT FOLLOWING THE MERGER

213

Executive Officers and Directors of the Combined Organization Following the Merger

213

Executive Officers

213

Non-Employee Directors

214

Family Relationships

216

Composition of the Board of Directors

216

Independence of the Board of Directors

216

Board Leadership Structure

216

Role of Board in Risk Oversight

216

Committees of the Combined Company’s Board of Directors

217

Audit Committee

217

Compensation Committee

217

Nominating and Corporate Governance Committee

218

Policy with Regard to Security Holder Recommendations

219

Director Qualifications and Diversity

219

Corporate Governance Guidelines

219

Code of Business Conduct and Ethics

219

Transactions with Related Persons

219

NANO EXECUTIVE COMPENSATION

220

Summary Compensation Table

220

Narrative Disclosure to Summary Compensation Table

220

Outstanding Equity Awards at Fiscal Year-End

221

NANO DIRECTOR COMPENSATION

223

RELATED PARTY TRANSACTIONS OF DIRECTORS AND EXECUTIVE OFFICERS OF SECOND SIGHT

224

Agreement and Plan of Merger with Nano Precision Medical, Inc.

224

SAFE

224

Related Parties in Connection with the Merger and SAFE

224

Special Committee

225

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

226

COMPARISON OF RIGHTS OF HOLDERS OF SECOND SIGHT STOCK AND NANO STOCK

234

Current NPM Rights Versus Second Sight Rights Post-Merger

234

PRINCIPAL SHAREHOLDERS OF SECOND SIGHT

236

PRINCIPAL SHAREHOLDERS OF NANO

238

PRINCIPAL SHAREHOLDERS OF COMBINED COMPANY

240

LEGAL MATTERS

243

EXPERTS

244

Second Sight

244

NPM

244

WHERE YOU CAN FIND MORE INFORMATION

245

TRADEMARK NOTICE

246

OTHER MATTERS

247

Delinquent Section 16(a) Reports

247

Shareholder Proposals

247

Communication with Second Sight Board of Directors

247

SECOND SIGHT MEDICAL PRODUCTS, INC. INDEX TO FINANCIAL STATEMENTS

F-A-1

NANO PRECISION MEDICAL, INC.INDEX TO FINANCIAL STATEMENTS

F-B-2

ANNEX A – AGREEMENT AND PLAN OF MERGER AMONG SECOND SIGHT MEDICAL PRODUCTS, INC. AND NANO PRECISION MEDICAL, INC.

A-1

iv

QUESTIONS AND ANSWERS ABOUT THE MERGER

Except where specifically noted, the following information and all other information contained in this proxy statement/prospectus does not give effect to the proposed reverse stock split within a range, as determined by the board of directors of Second Sight Medical Products, Inc. (“Second Sight”), of one new share for every 2 to 5 (or any number in between) shares outstanding, as described in Proposal No. 2 in this proxy statement/prospectus (the “Second Sight Reverse Stock Split”).

The following section provides answers to frequently asked questions about the Second Sight annual meeting and the merger. This section, however, provides only summary information. For a more complete response to these questions and for additional information, please refer to the cross-referenced sections.

Q:

Why am I receiving these materials?

A:

The board of directors of Second Sight is providing these proxy materials to you in connection with the solicitation of proxies for use at the annual meeting of Second Sight to be held on [XX] at [XX]:[XX]. Due to the public health risk of the COVID-19 pandemic and to support the health and well-being of Second Sight shareholders and other meeting participants, the 2022 annual meeting of Second Sight will be held in a virtual-only format. Second Sight believes that hosting a virtual meeting will allow for greater shareholder attendance and participation from any location around the world. The virtual-only approach also lowers costs and aligns with our broader sustainability goals. You will not be able to attend the 2022 Annual Meeting in person. If Second Sight experiences technical difficulties during the meeting (e.g., a temporary or prolonged power outage), it will determine whether the meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the meeting will need to be reconvened on a later day (if the technical difficulty is more prolonged).

Q:

What is the purpose of the Second Sight annual meeting?

A:

At the Second Sight annual meeting, the shareholders of Second Sight will consider and vote on the following matters:

1.to approve the Merger Agreement and thereby approve the transactions contemplated thereby, including the merger, the issuance of the Merger Shares, and the change of control resulting from the merger;
2.to approve an amendment to the Second Sight Restated Articles of Incorporation, as amended, to effect a reverse stock split of Second Sight’s common stock, within a range, as determined by Second Sight’s board of directors (the “Second Sight Board”), of one new share for every 2 to 5 (or any number in between) shares outstanding (the “Second Sight Reverse Stock Split”);
3.to approve an amendment to the Second Sight Restated Articles of Incorporation, as amended, to effect the change of name of Second Sight to “Vivani Medical, Inc.”;
4.to elect the six directors from the nominees named in the accompanying proxy statement to hold office for the ensuing year and until their successors are duly elected and qualified;
5.to approve the Second Sight 2022 Omnibus Plan (the “Second Sight 2022 Plan”);
6.to ratify the selection by the audit committee of the board of directors the appointment of BPM LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022;
7.to consider and vote upon an adjournment of the Second Sight annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the foregoing proposals; and
8.to transact such other business as may properly come before the Second Sight annual meeting or any adjournment or postponement thereof.

1

Q:

What is the merger?

A:

Second Sight Medical Products, Inc. (“Second Sight” or the “Company”) and Nano Precision Medical, Inc. (“NPM”) have entered into an Agreement and Plan of Merger and Reorganization, dated as of February 4, 2022 (the “Merger Agreement”). The Merger Agreement contains the terms and conditions of the proposed business combination of Second Sight and NPM. Under the Merger Agreement, NPM Acquisition Corp., a wholly owned subsidiary of Second Sight (“Merger Sub”), will merge with and into NPM, with NPM surviving as a wholly owned subsidiary of Second Sight. This transaction is referred to as the “Merger.” At the effective time of the merger (the “Effective Time”), the following securities of each NPM securityholder will be converted into the right to receive the Pro Rata Portion of the Merger Shares, subject to the adjustment to account for the Second Sight Reverse Stock Split, provided, however, that no fractional shares of the Company will be issued as a result of the Merger: (x) the aggregate number of issued and outstanding shares of NPM common stock prior to the Effective Time; (y) the aggregate number of shares of NPM common stock issuable upon the exercise of all NPM stock options outstanding as of immediately prior to the Effective Time; and (z) the aggregate number of shares of NPM common stock issuable upon exercise of NPM warrants outstanding as of immediately prior to the effective time that are converted into the right to acquire securities of Second Sight in accordance with their terms and subject to the assumptions under the Merger Agreement, provided that each NPM stock option that is outstanding shall be cancelled and Second Sight will assume and/or issue in exchange a Second Sight’s replacement stock option, under its then effective Equity incentive plan(s). It is anticipated that outstanding NPM warrants will have been “net” exercised prior to the closing in exchange for shares of NPM common stock in accordance with their terms and shall no longer be outstanding and shall automatically be cancelled, extinguished, and retired and shall cease to exist, provided, however, that in the event that any such NPM warrants are not so exercised, to the extent that by their terms they do not continue to represent the right to acquire securities of the Company on comparable terms to those of NPM warrants, then the parties of the Merger Agreement shall negotiate in good faith and use commercially reasonable efforts to mutually agree as promptly as practicable to such amendments the Merger Agreement as are necessary to reflect an assumption, exchange or similar accommodation for such NPM warrants, provided that such assumption, exchange or similar accommodation shall be reasonably satisfactory to each party of the Merger Agreement. As a result of the merger, current holders of NPM’s common stock and options and warrants to purchase NPM’s common stock are expected to own, or hold rights to acquire, in the aggregate 134,349,464 shares of Second Sight common stock, representing approximately 77.32% of the of the common stock of Second Sight, which for these purposes is defined as the outstanding common stock of Second Sight (including the shares of common stock issued in the merger), plus the number of shares of Second Sight common stock issuable on conversion of options and warrants of Second Sight that were in the in-the-money as of the date of the Merger Agreement, plus the number of shares that would issue from a net exercise of all options and warrants of NPM based on a $21.90 NPM share price (the “Base Amount Common Stock of Second Sight”), with Second Sight’s current shareholders, option holders and warrant holders owning, or holding rights to acquire, approximately 22.68% of the Base Amount Common Stock of Second Sight, and Second Sight’s current shareholders, option holders and warrant holders are expected to own, or hold rights to acquire, in the aggregate approximately 22.68% of the Base Amount Common Stock of Second Sight, in each case, following the Effective Time of the merger. After the completion of the merger, Second Sight will change its corporate name from “Second Sight Medical Products, Inc.” to “Vivani Medical, Inc.” (or to such other name as Second Sight and NPM may agree) as contemplated by the Merger Agreement (the “Second Sight Name Change”).

Q:

What will happen to Second Sight if, for any reason, the merger does not close?

A:

If, for any reason, the merger does not close, the Second Sight Board may elect to, among other things, attempt to complete another strategic transaction like the merger, attempt to sell or otherwise dispose of the various assets of Second Sight, resume its research and development activities and continue to operate the business of Second Sight or pursue alternative strategical routes, as determined by the Second Sight Board.

Q:

Why are the two companies proposing to merge?

A:

NPM and Second Sight believe that the merger will result in a combined company focused on developing innovative drug and medical device implants that treat chronic diseases with high unmet medical needs. For a discussion of Second Sight’s and NPM’s reasons for the merger, please see the section entitled “The Merger—Second Sight Reasons for the Merger” and “The Merger—NPM Reasons for the Merger” in this proxy statement/prospectus.

2

Q:

Why am I receiving this proxy statement/prospectus?

A:

You are receiving this proxy statement/prospectus because you have been identified as a shareholder of Second Sight as of the applicable record date. If you are a shareholder of Second Sight, you are entitled to vote at Second Sight’s annual shareholder meeting (referred to herein as the “Second Sight annual meeting”) to (i) approve the proposals typical for the Second Sight annual meetings including the proposal to elect the six directors from the named nominees and (ii) approve the Merger Agreement and the transactions contemplated thereby, including the merger and the issuance of shares of Second Sight’s common stock pursuant to the Merger Agreement. This document serves as:

a proxy statement of Second Sight used to solicit proxies for the Second Sight annual meeting; and
a prospectus of Second Sight used to offer shares of Second Sight common stock in exchange for shares of NPM’s common stock in the merger and issuable as a replacement of NPM’s warrants and options, as applicable.

Q:

What is required to consummate the merger?

A:

To consummate the merger, Second Sight’s shareholders must approve the merger, the issuance of Second Sight common stock pursuant to the Merger Agreement, the amendment to the Restated Articles of Incorporation, as amended, to effect the change of name of Second Sight, the Second Sight 2022 Omnibus Plan, the adoption and approval of each other proposal that either the SEC or Nasdaq indicates is necessary in its comments to the Registration Statement or in correspondence related thereto, the adoption and approval of each other proposal reasonably agreed to by Second Sight and NPM as necessary or appropriate in connection with the consummation and NPM’s shareholders must adopt the Merger Agreement, and thereby, approve the merger and the other transactions contemplated therein. Each of Proposals Nos. 1, 3, and 5 are conditions to the Merger and the Merger cannot be consummated without the approval of each of Proposals Nos. 1, 3, and 5, subject to the right of NPM to waive the approval of Proposals Nos. 3 and 5 as conditions to the Merger.

In addition to the requirement of obtaining the shareholder approvals described above, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived. One of these conditions is that Second Sight is required to have net cash of at least $64 million, less the amount of any advance made by Second Sight to NPM for working capital, at the closing of the merger. For example, if the merger is scheduled to close on August 1, 2022 and Second Sight net cash falls below $64 million, NPM could decide not to consummate the transaction and the Merger Agreement could be terminated. As of the date of this proxy statement/prospectus, Second Sight expects its net cash to be above the net cash required by the Merger Agreement at closing. For a more complete description of the closing conditions under the Merger Agreement, we urge you to read the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” in this proxy statement/prospectus.

Q:

What will NPM’s shareholders, warrant holders and option holders receive in the merger?

A:

As a result of the merger, NPM’s shareholders, warrant holders and option holders will become entitled to receive shares, or rights to acquire shares, of Second Sight’s common stock equal to, in the aggregate, approximately 77.32% of the Base Amount Common Stock of Second Sight.

For a more complete description of what NPM’s shareholders, warrant holders and option holders will receive in the merger, please see the section entitled “The Merger Agreement—Merger Consideration and Exchange Ratio” in this proxy statement/prospectus.

3

Q:

Who are the director nominees of Second Sight?

A:

The Second Sight Board has unanimously nominated six (6) directors all of whom are presently members of Second Sight Board: Gregg Williams, Dean Baker, Alexandra Larson, Jonathan Will McGuire, Aaron Mendelsohn, and Matthew Pfeffer.

Name, Current Position and Occupation

    

Year First
Became
Director

    

Age

    

Independent

    

Audit 
Committee

    

Compensation 
Committee

    

Nominating
and Governance 
Committee

Gregg Williams,
Chairman of the Board

2009

63

Yes

*

Dean Baker,
Director

2021

79

Yes

Chairman

Alexandra Larson,
Director

2021

42

Yes

Jonathan Will McGuire,
Director

2015

59

No

Aaron Mendelsohn,
Director

1998

71

Yes

Chairman

Matthew Pfeffer,
Director

2015

65

Yes

*

Chairman

*Audit Committee Financial Expert

Q:

Who will be the directors of Second Sight following the merger?

A:

Following the merger, the Second Sight Board will consist of a total of five directors. Pursuant to the terms of the Merger Agreement, it is anticipated that following the closing of the merger, the Second Sight Board will be constituted as follows:

Name

    

Age

    

Current affiliation with the Parties of the Merger

Gregg Williams

63

Second Sight: Chairman, Director / NPM: Director

Dean Baker

79

Second Sight: Director / NPM: Director

Alexandra Larson

42

Second Sight: Director

Adam Mendelsohn

40

NPM: Chief Executive Officer, Chairman, Director

Aaron Mendelsohn

71

Second Sight: Director / NPM: Director

Q:

As a shareholder of Second Sight, how does the Second Sight Board recommend that I vote?

A:

After careful consideration, the Second Sight Board, based on the opinion of the Special Committee regarding Proposals 1, 3 and 5, recommends that Second Sight shareholders vote:

FOR” Proposal No. 1 to approve the Merger Agreement and thereby approve the transactions contemplated thereby, including the merger, the issuance of the Merger Shares and the change of control resulting from the merger;
FOR” Proposal No. 2 to approve the amendment to the Restated Articles of Incorporation, as amended, of Second Sight to effect the Second Sight Reverse Stock Split;
FOR” Proposal No. 3 to approve an amendment to the Second Sight Restated Articles of Incorporation, as amended, to effect the change of name of Second Sight to “Vivani Medical, Inc.”;
FOR” each of the six nominees named in Proposal No. 4 of the accompanying proxy statement to hold office for the ensuing year and until their successors are duly elected and qualified;

4

FOR” Proposal No. 5 to approve the Second Sight 2022 Plan;
FOR” Proposal No. 6 to ratify the selection by the audit committee of the board of directors the appointment of BPM LLP as Second Sight’s independent registered public accounting firm for the fiscal year ending December 31, 2022; and
FOR” Proposal No. 7 to consider and vote upon an adjournment of the Second Sight annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the foregoing proposals.

Q:

What risks should I consider in deciding whether to vote in favor of the merger?

A:

You should carefully review the section of this proxy statement/prospectus entitled “Risk Factors,” which sets forth certain risks and uncertainties related to the merger, risks and uncertainties to which the combined company’s business will be subject and risks and uncertainties to which each of Second Sight and NPM, as an independent company, is subject.

Q:

When do you expect the merger to be consummated?

A:

We anticipate that the merger will occur in [XX] 2022, soon after the Second Sight annual meeting to be held on [XX], 2022, but we cannot predict the exact timing. For more information, please see the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” in this proxy statement/prospectus.

Q:

What do I need to do now?

A:

Second Sight urges you to read this proxy statement/prospectus carefully, including its annexes, and to consider each of the proposals submitted to the Second Sight annual meeting and how the merger affects you. If you are a shareholder of Second Sight as of the Record Date, you may provide your proxy instructions in one of two different ways. First, you can mail your signed proxy card in the enclosed return envelope. You may also provide your proxy instructions via phone or via the Internet by following the instructions on your proxy card or voting instruction form. Please provide your proxy instructions only once, unless you are revoking a previously delivered proxy instruction, and as soon as possible so that your shares can be voted at the Second Sight annual meeting.

Q:

What happens if I do not return a proxy card or otherwise provide proxy instructions, as applicable?

A:

For shares held in “street name,” if you do not provide voting instructions to your broker, this will result in a “broker non-vote” for the non-routine proposals, which in some instances, may have the same effect as a vote against such proposals. Failure to return your proxy card or otherwise provide proxy instructions and the resulting “broker non-vote” will have the same effect as an “AGAINST” vote on Proposals Nos. 1 and 3. It will have no effect on other proposals. Please see the answer to “Q: If my Second Sight shares are held in “street name” by my broker, will my broker vote my shares for me?” below for further discussion regarding broker discretion to vote on the proposals and “broker non-votes.” Please carefully review the table below.

#

    

Proposal

    

Vote Required

    

Effect of Abstentions

    

Routine or non-routine
Broker Non-Votes

1

Approval of merger

Affirmative vote of a majority of the issued and outstanding shares of Second Sight common stock entitled to vote

Same effect as an “Against” vote

The matter is not routine. Will have the same effect as an “Against” vote.

2

Reverse Stock Split

Affirmative vote of a majority of the issued and outstanding shares of Second Sight common stock entitled to vote

Same effect as an “Against” vote

The matter is routine. Broker non-votes are not expected.

5

#

    

Proposal

    

Vote Required

    

Effect of Abstentions

    

Routine or non-routine
Broker Non-Votes

3

Name Change

Affirmative vote of a majority of the issued and outstanding shares of Second Sight common stock entitled to vote

Same effect as an “Against” vote

The matter is not routine. Will have the same effect as an “Against” vote.

4

Election of Directors

Plurality of votes cast

No effect

The matter is not routine. No effect

5

Approval of Second Sight 2022 Plan

Affirmative vote of a majority of the shares of Second Sight common stock represented and voting at the annual meeting if the quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum)

No effect, unless there are insufficient votes in favor of the proposal, such that the affirmative votes constitute less than a majority of the required quorum. In such cases, abstentions will have the same effect as a vote against such proposals.

The matter is not routine. No effect

6

Ratification of Auditor

Affirmative vote of a majority of the shares of Second Sight common stock represented and voting at the annual meeting if the quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum)

Will have no effect, unless there are insufficient votes in favor of the proposal, such that the affirmative votes constitute less than a majority of the required quorum. In such cases, abstentions will have the same effect as a vote against such proposals.

The matter is routine. Broker’s non-votes are not expected.

6

#

    

Proposal

    

Vote Required

    

Effect of Abstentions

    

Routine or non-routine
Broker Non-Votes

7

Adjournment

Two scenarios:

(i)   if a quorum is present at the annual meeting, the affirmative vote of holders of a majority of the shares represented and voting at the annual meeting (which shares voting affirmatively also constitute at least a majority of the required quorum) is needed to approve Proposal 7

(ii)  if a quorum is not present at the annual meeting, a majority of the shares present and voting in person or by proxy, even if less than a majority of a quorum, would be sufficient to approve Proposal 7

No effect

The matter is routine. Broker non-votes are not expected.

Q:

May I vote at the annual meeting of shareholders of Second Sight?

A:

Yes. Although the format of virtual annual meeting allows only virtual participation, if you were a shareholder of record as of the close of business on the record date, you may participate in the virtual annual meeting and vote your shares during the Second Sight annual meeting instead of voting in advance by Internet or telephone or returning your signed proxy card (if you request a paper copy). However, we urge you to vote in advance even if you are planning to participate in the annual meeting.

Q:

Why did I receive a notice in the mail regarding the Internet availability of proxy materials?

A:

Instead of mailing printed copies to each of our shareholders, we have elected to provide access to our proxy materials over the Internet under the SEC’s “notice and access” rules. These rules allow us to make our shareholders aware of the annual meeting and the availability of our proxy materials by sending the notice of internet availability of proxy materials or the notice, which provides instructions for how to access the full set of proxy materials through the internet or make a request to have printed proxy materials delivered by mail. Accordingly, on or about [XX], we will mail the Notice to each of our shareholders. The notice contains instructions on how to access our proxy materials, including our Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, each of which is available at [xx]. The notice also provides instructions on how to vote your shares through the Internet, by telephone, by mail or virtually at the Second Sight annual meeting.

Q:

What is the purpose of complying with the SEC’s “notice and access” rules?

A:

We believe compliance with the SEC’s “notice and access” rules allows us to provide our shareholders with the materials they need to make informed decisions, while lowering the costs of printing and delivering those materials and reducing the environmental impact of our annual meeting. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials electronically unless you elect otherwise.

Q:

When and where is the annual meeting of Second Sight shareholders?

A:

The Second Sight annual meeting will be held virtually at [XX] a.m., Pacific time, on [XX], 2022.

7

Second Sight shareholders may participate in the Annual Meeting by visiting the following website: [XX]. Second Sight shareholders will need the 16-digit control number. If your nominee did not provide Second Sight shareholders with a 16-digit control number in the voting instructions form, the shareholder may be able to log onto the website of the nominee prior to the start of the annual meeting, which will automatically populate your 16-digit control number in the virtual annual meeting interface. Shareholders who have obtained a 16-digit control number as described above may vote or submit questions while participating in the live webcast of the annual meeting. However, even if you plan to attend the annual meeting virtually, we recommend that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the annual meeting via live webcast.

Q:

How do I vote and what are the voting deadlines?

A:

Shareholders of record can vote by proxy or by attending the annual meeting virtually by visiting the following website: [XX], where votes can be submitted via live webcast. If you vote by proxy, you can vote by Internet, telephone or by mail as described below.

You may vote via the Internet or by telephone. To vote via the Internet or by telephone, follow the instructions provided in the proxy card that accompanies this proxy statement. If you vote via the Internet or by telephone, you do not need to return a proxy card by mail. Internet and telephone voting are available 24 hours a day. Votes submitted through the Internet or by telephone must be received by [XX] on [XX]. Alternatively, you may request a printed proxy card by following the instructions provided in the notice.
You may vote via the Internet or by telephone. If you would like to vote by mail, you need to complete, date and sign the proxy card that accompanies this proxy statement and promptly mail it in the enclosed postage-paid envelope so that it is received no later than [XX], 2022. You do not need to put a stamp on the enclosed envelope if you mail it from within the United States. The persons named on the proxy card will vote the shares you own in accordance with your instructions on the proxy card you mail. If you return the proxy card, but do not give any instructions on a particular matter to be voted on at the annual meeting, the persons named on the proxy card will vote the shares you own in accordance with the recommendations of Second Sight Board.
You may vote at the Annual Meeting. If you choose to vote at the annual meeting virtually, you will need the 16-digit control number included on your notice or on your proxy card. If you are the beneficial owner of your shares, your 16-digit control number may be included in the voting instructions form that accompanied your proxy materials. If your nominee did not provide you with a 16-digit control number in the voting instructions form that accompanied your proxy materials, you may be able to log onto the website of your nominee prior to the start of the annual meeting, on which you will need to select the stockholder communications mailbox link through to the annual meeting, which will automatically populate your 16-digit control number in the virtual annual meeting interface. The method you use to vote will not limit your right to vote at the virtual annual meeting. all shares that have been properly voted and not revoked will be voted at the annual meeting.

Q:

What are the material U.S. federal income tax consequences of the merger to U.S. Holders of NPM common stock?

A:

It is the intent of Second Sight that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Subject to the tax opinion representations and assumptions, in the opinion of Venable LLP, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Accordingly, a U.S. holder of NPM’s common stock will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of shares of NPM common stock for shares of Second Sight common stock in the merger. If any of the tax opinion representations and assumptions is incorrect, incomplete or inaccurate or is violated, the accuracy of the opinions described above may be affected and the U.S. federal income tax consequences of the merger could differ from those described in this proxy statement/prospectus.

Please review the information in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” for a more complete description of the material U.S. federal income tax consequences of the merger to U.S. Holders of NPM common stock. The tax consequences to you of the merger will depend on your particular facts and circumstances. Please consult your tax advisors as to the specific tax consequences to you of the merger.

8

Q:

What are the material U.S. federal income tax consequences of the Second Sight Reverse Stock Split to Second Sight U.S. Holders?

A:

Second Sight U.S. Holder generally should not recognize gain or loss upon the Second Sight Reverse Stock Split, except to the extent a Second Sight U.S. Holder receives cash in lieu of a fractional share of Second Sight common stock. Please review the information in the section entitled “Proposal No. 2: Approval of an Amendment to the Restated Articles of Incorporation, as amended, of Second Sight Effecting the Second Sight Reverse Stock Split—Material U.S. Federal Income Tax Consequences of the Second Sight Reverse Stock Split” for a more complete description of the material U.S. federal income tax consequences of the Second Sight Reverse Stock Split to Second Sight U.S. Holders. The tax consequences to you related to the Second Sight Reverse Stock Split will depend on your particular facts and circumstances. Please consult your tax advisors as to the specific tax consequences to you.

Q:

If my Second Sight shares are held in “street name” by my broker, will my broker vote my shares for me?

A:

If you are a beneficial owner of shares held in “street name” and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares does not have the authority to vote on the matter with respect to those shares. This is generally referred to as a “broker non-vote”. Second Sight believes that only Proposals Nos. 2, 6, and 7 constitute routine matters. The “routine” treatment of these proposals does not affect the seriousness with which we treat it. Second Sight does not believe that any of the other proposals involve matters that will be considered routine under the relevant securities exchange rules. Second Sight encourages you to provide voting instructions to the organization that holds your shares by carefully following the instructions provided by such organization.

Q:

May I change my vote after I have submitted a proxy or provided proxy instructions?

A:

Second Sight’s shareholders of record, may change their vote at any time before their proxy is voted at the Second Sight annual meeting in one of the following ways:

(i)by entering a new vote via the internet or telephone;
(ii)by signing and returning a new proxy card with a later date;
(iii)by delivering a written revocation to Second Sight secretary at the address listed in this proxy statement/prospectus; or
(iv)by attending the Second Sight annual meeting and voting via live webcast.

Q:

Who is paying for this proxy solicitation?

A:

The board of directors is soliciting proxies for use at the annual meeting. Second Sight will bear the entire cost of the proxy solicitation, including the preparation, assembly, printing, mailing, and distribution of the proxy materials. Copies of solicitation materials will also be made available upon request to brokers and other nominees to forward to the beneficial owners of the shares held of record by the brokers or other nominees. Second Sight will reimburse brokers or other nominees for reasonable expenses that they incur in sending these proxy materials to beneficial owners.

This solicitation of proxies may be supplemented by solicitation by telephone, electronic communication, or other means by our directors, officers, employees, or agents. No additional compensation will be paid to these individuals for any such services, although Second Sight may reimburse such individuals for their reasonable out-of-pocket expenses in connection with such solicitation.

Second Sight has engaged Morrow Sodali LLC to assist in the solicitation of proxies and provide related advice and informational support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $[XX] in total.

Q:

Who can help answer my questions?

A:

If you are a shareholder of Second Sight and would like additional copies, without charge, of this proxy statement/prospectus or if you have questions about the annual meeting or the merger, including the procedures for voting your shares, you should contact: If you have any questions or need assistance with voting your shares, please call Morrow Sodali LLC, toll-free at (800) 662-5200, or contact them via e-mail at EYES@info.morrowsodali.com or in writing to 333 Ludlow Street, 5th Floor, South Tower, Stamford, CT 06902.

9

PROSPECTUS SUMMARY

This summary highlights selected information from this proxy statement/prospectus and may not contain all of the information that is important to you. To better understand the merger, the proposals being considered at the Second Sight annual meeting and NPM’s shareholder actions that are the subject of the written consent, you should read this entire proxy statement/prospectus carefully, including the Merger Agreement attached as Annex A, the opinion of ThinkEquity LLC attached as Annex B and the other annexes to which you are referred herein. For more information, please see the section entitled “Where You Can Find More Information” in this proxy statement/prospectus.

The Companies

Second Sight Medical Products, Inc.

13170 Telfair Ave

Sylmar, California 91342

Tel: (818) 833-5000

Second Sight has developed, manufactured, and marketed implantable visual prosthetics that are intended to deliver useful artificial vision to blind individuals. A recognized global leader in neuromodulation devices for blindness, Second Sight is committed to developing new technologies to treat the broadest population of sight-impaired individuals.

Nano Precision Medical, Inc.

5858 Horton Street #280

Emeryville, California 94608

Tel: (415) 506-8462

NPM is a near-clinical stage biopharmaceutical company focused on addressing a leading reason for poor outcomes in chronic diseases and drug non-adherence, with miniaturized long-term subdermal implants that are expected to guarantee adherence for the life of the implant and thereby enable existing drugs to achieve their true potential.

NPM Acquisition Corp.

Merger Sub is a wholly owned subsidiary of Second Sight and was formed solely for the purposes of carrying out the merger.

The Merger (see page 85)

If the merger is completed, Merger Sub will merge with and into NPM, with NPM surviving as a wholly owned subsidiary of Second Sight.

At the Effective Time of the merger, current holders of NPM’s common stock and options and warrants to purchase NPM’s common stock are expected to own, or hold rights to acquire, in the aggregate 134,349,464 shares of Second Sight common stock, representing approximately 77.32% of the common stock of Second Sight, which for these purposes is defined as the outstanding common stock of Second Sight (including the shares of common stock issued in the merger), plus the number of shares of Second Sight common stock issuable on conversion of options and warrants of Second Sight that were in-the-money as of the date of the Merger Agreement, plus the number of shares that would issue from a net exercise of all options and warrants of NPM based on a $21.90 NPM share price, also referred to as the “Base Amount Common Stock of Second Sight”, with Second Sight current shareholders, option holders and warrant holders owning, or holding rights to acquire, approximately 22.68% of the Base Amount Common Stock of Second Sight. Each option to purchase shares of NPM’s common stock outstanding and unexercised immediately prior to the effective time, will be cancelled and Second Sight will assume and/or issue in exchange a Second Sight replacement stock option, under its then effective equity incentive plan(s). It is anticipated that outstanding NPM warrants will have been “net” exercised prior to the closing in exchange for shares of NPM common stock in accordance with their terms and will no longer be outstanding and will automatically be cancelled, extinguished, retired, and will cease to exist. In the event that any such NPM warrants are not so exercised, to the extent that by their terms they do not continue to represent the right to acquire securities of Second Sight on comparable terms to those of NPM warrants, then the parties of the Merger Agreement will negotiate in good faith and use commercially reasonable efforts to mutually agree as promptly as practicable to such amendments to the Merger Agreement as are

10

necessary to reflect an assumption, exchange, or similar accommodation for such NPM warrants, provided that such assumption, exchange, or similar accommodation shall be reasonably satisfactory to each party of the Merger Agreement.

Please see the section entitled “The Merger Agreement” in this proxy statement/prospectus.

The closing of the merger will occur no later than the second business day after the last of the conditions to the merger has been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver of each such conditions), or at such other time as Second Sight and NPM agree in writing. Second Sight and NPM anticipate that the consummation of the merger will occur in the quarter of the fiscal year. However, because the merger is subject to a number of conditions, neither Second Sight nor NPM can predict exactly when the closing will occur or if it will occur at all. After completion of the merger, Second Sight will be renamed Vivani Medical, Inc.

Reasons for the Merger (see page 91)

Following the merger, the combined organization will be a company focused on developing innovative drug and medical device implants that treat chronic diseases with high unmet medical need. Second Sight and NPM believe that the combined organization will have the following potential advantages:

Cash Resources. Second Sight and NPM believe the combined company’s cash and cash equivalents at the closing of the merger will be sufficient to enable NPM to advance its lead asset NPM-119 (exenatide implant) into clinical development and to fund the combined company into 2024.

Value to Shareholders. Second Sight and NPM believe the proposed merger may enable certain shareholders of Second Sight and NPM to increase the value of their current shareholding.

Each of Sight Sight’s and NPM’s respective board of directors also considered other reasons for the merger, as described herein. For example, the Second Sight Board considered, among other things:

the experience of NPM’s management team;
the larger potential market for NPM’s product candidates;
Second Sight’s detailed knowledge of NPM’s business through common leadership; and
the expectation that the merger will be treated as a reorganization for U.S. federal income tax purposes.

In addition, NPM’s board of directors approved the merger based on a number of factors, including the following:

the potential increased access to sources of capital and a broader range of investors to support the development of its therapeutic candidates following consummation of the merger compared to if NPM continued to operate as a privately held company;
the potential to provide its current stockholders with greater liquidity by owning stock in a public company;
NPM’s board of directors’ belief that no alternatives to the merger were reasonably likely to create greater value for NPM’s stockholders after reviewing the various strategic options to enhance stockholder value that were considered by NPM’s board of directors; and
the fact that shares of Second Sight common stock issued to NPM’s shareholders will be registered on a Form S-4 registration statement and listed on the Nasdaq Capital Market and accordingly will become freely tradable for NPM’s shareholders who are not affiliates of NPM and who are not parties to lock-up agreements.

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Opinion of the Second Sight Financial Advisor (see page 93)

ThinkEquity LLC (“ThinkEquity”), the financial advisor of Second Sight, delivered to the Second Sight Board, a written opinion dated April 28, 2022, addressed to the Second Sight Board, to the effect that, as of such date and based on and subject to the various assumptions, factors, qualifications and limitations set forth in the opinion, the consideration paid by Second Sight in connection with the Merger is fair, from a financial point of view, to Second Sight. The full text of this written opinion, which sets forth, among other things, the procedures followed, assumptions made, qualifications, and limitations on the review undertaken and other matters considered by ThinkEquity in preparing its opinion, is attached as Annex B to this proxy statement/prospectus and is incorporated by reference in its entirety into this proxy statement/prospectus. Holders of Second Sight common stock are encouraged to read the opinion carefully in its entirety. The ThinkEquity opinion was prepared for the information of the Second Sight Board for its use in connection with its consideration of the consideration paid by Second Sight in connection with the Merger. Neither ThinkEquity’s written opinion, nor the summary of its opinion and the related analyses set forth in this proxy statement/prospectus are intended to be, and they do not constitute, a recommendation to any stockholder as to how such stockholder should act or vote with respect to any matter relating to the Merger or any other matter.

Material U.S. Federal Income Tax Consequences of the Merger (see page 104)

Subject to the tax opinion representations and assumptions (as defined on page 106), in the opinions of Venable LLP, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Accordingly, a U.S. Holder (as defined on page 106) of NPM common stock will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of shares of NPM common stock for shares of Second Sight common stock in the merger. If any of the tax opinion representations and assumptions is incorrect, incomplete or inaccurate or is violated, the accuracy of the opinions described above may be affected and the tax consequences of the merger could differ from those described in this proxy statement/prospectus.

Please review the information in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” for a more complete description of the material U.S. federal income tax consequences of the merger to U.S. Holders of NPM common stock. The tax consequences to you of the merger will depend on your particular facts and circumstances. Please consult your tax advisors as to the specific tax consequences to you of the merger.

Material U.S. Federal Income Tax Consequences of the Second Sight Reverse Stock Split (see page 144)

A Second Sight U.S. Holder generally should not recognize gain or loss upon the Second Sight Reverse Stock Split, except to the extent a Second Sight U.S. Holder receives cash in lieu of a fractional share of Second Sight common stock. Please review the information in the section entitled “Proposal No. 2: Approval of an Amendment to the Restated Articles of Incorporation, as Amended, of Second Sight Effecting the Second Sight Reverse Stock Split —Material U.S. Federal Income Tax Consequences of the Second Sight Reverse Stock Split” for a more complete description of the material U.S. federal income tax consequences of the Second Sight Reverse Stock Split to Second Sight U.S. Holders.

The tax consequences to you of the Second Sight Reverse Stock Split will depend on your particular facts and circumstances. Please consult your tax advisors as to the specific tax consequences to you.

Overview of the Merger Agreement; Merger Consideration(see page 114)

At the Effective Time, the following securities of each NPM security holder will be converted into the right to receive the Pro Rata Portion of the Merger Shares:

the aggregate number of issued and outstanding shares of NPM common stock prior to the effective time;
the aggregate number shares of NPM common stock issuable upon the exercise of all NPM stock options outstanding as of immediately prior to the effective time, provided, however each NPM stock option that is outstanding will be cancelled and Second Sight will assume and/or issue in exchange a Second Sight replacement stock option, under its effective equity incentive plan(s); and

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the aggregate number of shares of NPM common stock issuable upon exercise of NPM warrants outstanding as of immediately prior to the effective time that are converted into the right to acquire securities of Second Sight in accordance with their terms and subject to the assumptions under the Merger Agreement.

Immediately after the Merger, current shareholders, warrant holders, and option holders of NPM will own, or hold rights to acquire, approximately 77.32% of the Base Amount Common Stock of Second Sight, with Second Sight’s current shareholders, option holders and warrant holders owning, or holding rights to acquire, approximately 22.68% of the Base Amount Common Stock of Second Sight.

The Merger Agreement does not include a price-based termination right, and there will be no adjustment to the total number of shares of Second Sight’s common stock that NPM’s shareholders will be entitled to receive for changes in the market price of Second Sight’s common stock after the date the Merger Agreement was signed. Accordingly, the market value of the shares of Second Sight’s common stock issued pursuant to the merger will depend on the market value of the shares of Second Sight’s common stock at the time the Merger closes and could vary significantly from the market value on the date of this proxy statement/prospectus.

Treatment of NPM’s Stock Options and Warrants (see page 116)

Pursuant to the Merger Agreement, at the Effective Time:

Each option to purchase shares of NPM’s common stock outstanding and unexercised immediately prior to the Effective Time, will be cancelled and Second Sight will assume and/or issue in exchange a Second Sight replacement stock option, under its then effective equity incentive plan(s).
It is anticipated that outstanding NPM warrants will have been “net” exercised prior to the closing in exchange for shares of NPM common stock in accordance with their terms and will no longer be outstanding and will automatically be cancelled, extinguished, and retired and will cease to exist. However, in the event that any such NPM warrants are not so exercised, to the extent that by their terms they do not continue to represent the right to acquire securities of Second Sight on comparable terms to those of NPM warrants, then the parties of the Merger Agreement will negotiate in good faith and use commercially reasonable efforts to mutually agree as promptly as practicable to such amendments to the Merger Agreement as are necessary to reflect an assumption, exchange, or similar accommodation for such NPM warrants, provided that such assumption, exchange, or similar accommodation shall be reasonably satisfactory to each party of the Merger Agreement.

Conditions to the Completion of the Merger (see page 116)

To consummate the Merger, Second Sight shareholders must approve: (a) the Merger Agreement and the transactions contemplated thereby, including the Merger and the issuance of shares of Second Sight common stock in the Merger: (b) an amendment to the Restated Articles of Incorporation, as amended, of Second Sight effecting the Second Sight name change: and (c) the Second Sight 2022 Incentive Aware Plan. Additionally, NPM’s shareholders must adopt the Merger Agreement thereby approving the Merger and the other transactions contemplated by the Merger Agreement.

Furthermore, Second Sight is required to have available cash of at least $64 million (less the amount of any advance made by Second Sight to NPM for working capital) at the closing of the Merger. Should Second Sight’s available cash fall below this threshold, NPM could decide not to consummate the transaction and the Merger Agreement could be terminated. As of the date of this proxy statement/prospectus, Second Sight expects its available cash to be above the available cash required by the Merger Agreement at closing. In addition to obtaining such shareholder approvals and appropriate regulatory approvals and Second Sight maintaining an adequate available cash balance, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived.

No Solicitation (see page 121)

Each of Second Sight and NPM agreed that, except as described below, from the date of the Merger Agreement until the earlier of the consummation of the Merger or the termination of the Merger Agreement in accordance with its terms, Second Sight, Merger Sub, and NPM will not, nor will either party authorize any of the directors, officers, employees, or shareholders holding greater than 5%

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shareholding interest, affiliates, investment bankers, financial advisors, attorneys, accountants, brokers, finders, or representatives retained by it to, directly, or indirectly:

initiate, solicit, seek, or knowingly encourage or support any inquiries, proposals, or offers that constitute or would reasonably be expected to lead to, a “Second Sight acquisition proposal” or a “NPM acquisition proposal” (as defined in the section entitled “The Merger Agreement—No Solicitation” below);
engage or participate in, or knowingly facilitate, any discussions or negotiations regarding, or furnish any nonpublic information to any person in connection with, any inquiries, proposals or offers that constitute, or would reasonably be expected to lead to, a Second Sight acquisition proposal or a NPM acquisition proposal;
enter into any letter of intent, agreement in principle or other similar type of agreement relating to a Second Sight acquisition proposal or NPM acquisition proposal, or enter into any agreement or agreement in principle requiring Second Sight or NPM to abandon, terminate, or fail to consummate the transactions contemplated by the Merger and the Merger Agreement; and
resolve, propose, or agree to do any of the foregoing (other than, solely in response to an unsolicited inquiry, to refer the inquiring person to the non-solicitation provisions of the Merger Agreement and to limit its conversation or other communication exclusively to such referral).

Termination of the Merger Agreement (see page 132)

Either NPM or Second Sight may terminate the Merger Agreement under certain circumstances, which would prevent the merger from being consummated.

Termination Fee (see page 133)

If the Merger Agreement is terminated under specified circumstances, Second Sight will be required to pay NPM a termination fee of $5 million or Second Sight and Merger Sub will be required to pay NPM liquidated damages of $1 million. If the Merger Agreement is terminated under certain circumstances, NPM will be required to pay Second Sight a termination fee of $5 million.

Lock-up Agreements (see page 135)

As a condition to the closing of the Merger, certain of NPM’s shareholders, directors, and executive officers will enter into lock-up agreements, pursuant to which such parties have agreed not to, except in limited circumstances, sell or transfer, or engage in swap or similar transactions with respect to, any Merger Shares or any securities convertible into or exercisable or exchangeable for Merger Shares, from the closing of the merger until 180 days from the closing date of the Merger. The lock-up agreements of Aaron Mendelsohn and Dean Baker will each exclude 30,000 shares of NPM common stock (or the equivalent amount of Merger Shares).

NPM’s shareholders who have committed to execute lock-up agreements as of [XX], 2022 owned in the aggregate approximately [XX]% of the outstanding shares of NPM’s common stock on an as if converted into common stock basis.

SAFE Agreement to advance $8 Million (see page 135)

On February 4, 2022, Second Sight and NPM entered into an agreement (“SAFE”) whereby Second Sight would provide to NPM, pending closing of the Merger, an investment advance of $8 million which, effective upon the termination date of the Merger Agreement without completion of the Merger, will result in NPM’s issuing to Second Sight that number of shares of NPM common stock which following that issuance will equal not less than 2.133% of the issued and outstanding shares of NPM common stock assuming exercise or conversion of all outstanding vested and unvested options, warrants, and convertible securities. In the event NPM completes an equity financing at a lower valuation, Second Sight may be eligible to receive additional shares of NPM common stock as set forth in the SAFE. If the Merger is completed, the SAFE will terminate.

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Management Following the Merger (see page 213)

Effective as of the closing of the Merger, the combined company’s executive officers are expected to include:

Name

    

Title

Adam Mendelsohn

Chief Executive Officer

Brigid A. Makes

Chief Financial Officer

Truc Le

Chief Operating Officer

Donald Dwyer

Chief Business Officer

Lisa Porter

Chief Medical Officer

Interests of Certain Directors, Officers and Affiliates of Second Sight and NPM (see pages 98 and 99)

In considering the recommendation of Second Sight Board with respect to the issuance of Second Sight common stock pursuant to the Merger Agreement and the other matters to be acted upon by Second Sight shareholders at the Second Sight annual meeting, Second Sight shareholders should be aware that certain members of Second Sight Board and executive officers of Second Sight have interests in the Merger that may be different from, or in addition to, interests they have as Second Sight shareholders. For example, three of Second Sight directors, Gregg Williams, Dean Baker, and Aaron Mendelsohn, are also directors of NPM. In addition, Gregg Williams, Dean Baker, and Aaron Mendelsohn have investments and financial interests in NPM. Also, NPM was founded by Adam Mendelsohn, the son of Aaron Mendelsohn. In addition, Gregg Williams, Dean Baker, Aaron Mendelsohn, and Alexandra Larson, four of Second Sight non-employee directors, are expected to continue as directors on Second Sight Board following the Merger. As a result of the aforementioned actual or potential conflicts of interests, a special committee of the Board, consisting of members having no affiliation with NPM, was created for the purpose of evaluating the proposed Merger and determining whether the Merger Agreement and the proposed Merger are in the best interests of Second Sight and its shareholders. The Special Committee consists of Will McGuire, Matthew Pfeffer, and Alexandra Larson.

As of March 31, 2022, Second Sight’s directors and executive officers beneficially owned, in the aggregate approximately 35.3% of the outstanding shares of Second Sight common stock.

As of March 31, 2022, all of NPM’s directors and executive officers, together with their affiliates, owned approximately 73.3% of the outstanding shares of NPM common stock, on an as converted to common stock basis.

Risk Factors (see page 22)

Below is a summary of the principal risk factors related to the Merger, Second Sight, NPM, and the combined company. This summary does not address all of the risks. Additional discussion of the risks summarized herein, and other risks related to the businesses of Second Sight and NPM, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this proxy statement/prospectus before deciding how to vote.

Risks Related to the Proposed Merger

The Pro Rata Portion of the Merger Shares is not adjustable based on the market price of Second Sight common stock, so the merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.
If the merger does not close, Second Sight or NPM will incur substantial costs with no attendant benefit, may be required to pay a termination fee or expenses to the other party, and may experience other adverse effects on their respective businesses, financial results, and/or operations.
The merger consideration payable to NPM securityholders may not accurately reflect the fair market value of NPM common stock and may not be commensurate with the ownership dilution of either party.
The Merger Agreement restricts alternative business combinations and otherwise impacts the abilities of both Second Sight and NPM to effect competing proposals during the pendency of the Merger.
The market price of the combined company’s shares may decline as a result of the Merger.

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Some of the parties’ respective officers and directors have interests that are different from or in addition to those considered by other shareholders and which may influence them to support or approve the Merger.
There is no assurance that the efforts of Second Sight Board, and of the Special Committee of Second Sight Board, to evaluate the fairness and effects of the proposed Merger, given certain Second Sight directors’ material interests in NPM, were sufficient.
Second Sight and NPM may become involved in litigation in connection with the Merger.

Risks Related to the Reverse Stock Split

The reverse stock split may not achieve the intended effects.
The reverse stock split may not increase the combined company’s stock price over the long term and may lead to a decrease in the (i) liquidity of the common stock and (ii) overall market capitalization of the combined company.

Risks Related to the Combined Company

The combined company will need to raise additional capital and its shareholders may experience significant dilution and other concomitant effects of such capital raise.
Shareholders of the combined company may experience additional dilution because of future issuances of the combined company’s common stock pursuant to options, warrants, and its equity incentive plans.
The combined company’s executive officers, directors, and principal shareholders, if they choose to act together, will continue to control or significantly influence all matters submitted to shareholders for approval.

Risks Related to Second Sight

Second Sight currently has no commercial products or product revenue and may never become profitable.
Second Sight may face substantial competition in the future and may not be able to keep pace with the technological changes which may result from others discovering, developing, or commercializing products before or more successfully than Second Sight does.
Second Sight’s ongoing development efforts may never demonstrate the feasibility of Orion technology. Even if Orion is approved, Second Sight’s revenue will be dependent upon the pricing and reimbursement guidelines adopted in each country.
Second Sight has not been profitable to date and expects its operating losses to continue for the foreseeable future; Second Sight may never be profitable.
There may be future sales or other dilution of Second Sight’s equity, which may adversely affect the market price of its common stock.
Any failure or delay in completing clinical trials or studies for new product candidates or the next generation of Second Sight’s products and the expense of those trials could adversely affect its business.
Second Sight lost key management and staff personnel because of the Covid-19 pandemic. If Second Sight fails to recruit replacements, its ability to identify, develop, and commercialize product candidates will be impaired which could result in loss of markets or market share and could make Second Sight less competitive.
Second Sight may become involved in future lawsuits regarding intellectual property rights, which could be expensive, time consuming, and unsuccessful.

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Second Sight is increasingly dependent on sophisticated information technology systems, including systems from third parties, and if Second Sight fails to properly maintain the integrity of its data or if its products do not operate as intended, its business could be materially and adversely affected.
Second Sight will need additional capital to support its operations and growth. Capital may be difficult to obtain, restricting its operations, and resulting in additional dilution to its shareholders.
Second Sight’s product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

Risks Related to NPM

NPM is a preclinical-stage company, has a limited operating history, is not currently profitable, does not expect to become profitable in the near future, and may never become profitable.
NPM is dependent on the success of one or more current product candidates. NPM cannot be certain that any of them will receive regulatory approval, be commercialized, or be commercially successful.
NPM’s financial statements include an explanatory paragraph that expresses substantial doubt on NPM’s ability to continue as a going concern.
NPM is subject to a multitude of manufacturing risks, including reliance on third parties, any of which could substantially increase NPM’s costs and limit supply of its product candidates.
NPM may not be able to protect its proprietary or licensed technology in the marketplace.
Claims or lawsuits relating to infringement of intellectual property rights brought by or against NPM may adversely affect its business, financial condition, and results of operations.
NPM may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

These risks and other risks are discussed in greater detail under the section entitled “Risk Factors” in this proxy statement/prospectus. Second Sight and NPM both encourage you to read and consider all of these risks carefully.

Regulatory Approvals (see page 104)

In the United States, Second Sight must comply with applicable federal and state securities laws and the rules and regulations of Nasdaq in connection with the issuance of shares of Second Sight common stock and the filing of this proxy statement/prospectus with the SEC. As of the date hereof, the registration statement of which this proxy statement/prospectus is a part has not been declared effective by the SEC. Neither NPM nor Second Sight is aware of any filings, approvals, or clearances from any antitrust regulatory authorities in the United States or other countries required to consummate the merger. NPM and Second Sight have agreed to collaborate if such filings, approvals, or clearances are necessary.

Nasdaq Stock Market Listing (see page 107)

Prior to consummation of the Merger, Second Sight intends to file an initial listing application with Nasdaq pursuant to Nasdaq’s “reverse merger” rules. If such application is accepted, Second Sight anticipates that Second Sight common stock will be listed on the Nasdaq Capital Market following the closing of the Merger under the trading symbol “[XX].”

Anticipated Accounting Treatment (see page 108)

The merger will be treated as a reverse recapitalization in accordance with generally accepted accounting principles (“GAAP”). Under this method of accounting, Second Sight is expected to be treated as the “acquired” company for financial reporting purposes.

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Accordingly, the historical financial statements of NPM will represent a continuation of the financial position and results of operations of NPM, with the Merger being treated as the equivalent of NPM issuing stock for the net assets of Second Sight, accompanied by a recapitalization. The net assets acquired and liabilities assumed of Second Sight by NPM will be recorded at fair market value in accordance with ASC 805, Business Combinations, due to the change in control and operating activity (i.e., Second Sight does not qualify as a “shell” company) of Second Sight.

Operations prior to the Merger will be those of NPM in future reports of the combined company. The acquisition method of accounting is dependent upon certain valuations and other studies that have yet to commence or progress to a stage where there is sufficient information for a definitive measurement. A final determination of these estimated fair values, which cannot be made prior to the completion of the transaction, will be based on the actual net tangible and intangible assets of Second Sight that exist as of the date of completion of the transaction.

Appraisal Rights (see page 108)

Holders of Second Sight common stock are not entitled to appraisal rights in connection with the Merger. NPM’s shareholders are entitled to appraisal rights in connection with the Merger under California law. However, pursuant to the Merger Agreement, the absence of dissenting shares, as defined in the Merger Agreement, is a condition to closing, and the Merger will not be consummated in the event any of the NPM shareholders elects to demand the purchase of her shares by NPM for fair market value pursuant to Chapter 13 of the California Corporations Code. Therefore, the availability of appraisal rights for NPM shareholders is subject to an assumption that said merger condition is waived by NPM and Second Sight. For more information about such rights, see Chapter 13 of the California Corporations Code attached hereto as Annex C, and the section entitled “The Merger—Appraisal Rights” in this proxy statement/prospectus.

Comparison of Shareholder Rights (see page 234)

Both Second Sight and NPM are incorporated under the laws of the State of California and, accordingly, the rights of the shareholders of each are currently, and will continue to be, governed by the California Corporations Code and California General Corporate Law. If the Merger is completed, NPM’s shareholders will become shareholders of Second Sight, and their rights will be governed by the California Corporations Code, California General Corporate Law, Second Sight’s amended and restated bylaws and Second Sight’s Restated Articles of Incorporation, as amended, as amended by the amendments set forth in Annex D and an amendment to effect the Second Sight Name Change, assuming Proposals Nos. 1, 3 and 5 are approved. The rights of Second Sight shareholders contained in Second Sight Restated Articles of Incorporation, as amended, and Second Sight’s amended and restated bylaws differ from the rights of NPM’s shareholders under NPM’s amended and restated articles of incorporation and NPM’s bylaws, as more fully described under the section entitled “Comparison of Rights of Holders of Second Sight Stock and NPM Stock” in this proxy statement/prospectus.

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SUMMARY HISTORICAL AND UNAUDITED PRO FORMA

CONDENSED COMBINED FINANCIAL DATA

The following tables present summary historical financial data for Second Sight and NPM, summary unaudited pro forma condensed financial data for Second Sight and NPM after the transaction, and comparative historical and unaudited pro forma per share data for Second Sight and NPM.

Summary Historical Financial Data of Second Sight

The selected financial data as of December 31, 2021 and 2020 and for the years then ended, have been derived from the Second Sight audited financial statements prepared using accounting principles generally accepted in the United States (“GAAP”), which are included in this proxy statement/prospectus. The financial data should be read in conjunction with “Second Sight Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Second Sight’s financial statements and related notes appearing elsewhere in this proxy statement/prospectus. These historical results are not necessarily indicative of results to be expected in any future period.

Operations Data:

Year Ended December 31,

(in thousands, except share and per share data)

    

2021

    

2020

Cost of sales (recovery)

$

(130)

$

(500)

Research and development expenses, net of grants

2,370

4,836

General and administrative expenses

6,315

5,943

Other expenses

378

4,617

Interest Income

(12)

(16)

Net loss

$

(8,921)

$

(14,880)

Net loss per share

$

(0.27)

$

(0.72)

Weighted average common shares outstanding for basic and diluted loss per share

32,817,000

20,575,000

Balance Sheet Data:

As of December 31,

(in thousands)

    

2021

    

2020

Cash and cash equivalents

$

69,593

$

3,177

Total assets

70,879

4,460

Current liabilities

2,462

5,132

Total liabilities

2,514

5,132

Total stockholders’ equity(deficit)

68,365

(672)

Total liabilities and stockholders’ equity (deficit)

70,879

4,460

Summary Historical Financial Data of NPM

The summary financial data as of December 31, 2021 and 2020, and for the years then ended, have been derived from NPM’s audited financial statements prepared using GAAP, which are included elsewhere in this proxy statement/prospectus. These historical results are not necessarily indicative of results to be expected in any future period. The summary financial data should be read in conjunction with NPM’s financial statements and the related notes to those statements included elsewhere in this proxy statement/prospectus and “NPM Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

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Operations Data:

Years Ended December 31,

(in thousands, except share and per share data)

2021

2020

Research and development expenses

    

$

11,002

    

$

6,865

General and administrative expenses

2,321

2,378

Other income, (expense) net

550

(36)

Net loss

(12,773)

(9,279)

Net loss per share

(1.17)

(0.94)

Weighted average number of common

10,962,266

9,896,545

Consolidated Balance Sheet Data:

As of December 31

(in thousands)

2021

2020

Cash and cash equivalents

    

$

2,178

    

$

2,081

Total assets

5,453

5,217

Current liabilities

2,086

2,185

Total liabilities

2,988

3,267

Total stockholders’ equity

2,465

1,950

Total liabilities and stockholders’ equity

5,453

5,217

Summary Unaudited Pro Forma Condensed Combined Financial Data of Second Sight and NPM

The following information does not give effect to the proposed Second Sight Reverse Stock Split described in Second Sight’s Proposal No. 2.

The following summary unaudited pro forma condensed combined financial data was prepared using the acquisition method of accounting under GAAP. For accounting purposes, NPM is considered to be acquiring Second Sight in the merger. The Second Sight and NPM unaudited pro forma combined balance sheet data assume that the merger took place on December 31, 2021, and combines the Second Sight and NPM historical balance sheets at December 31, 2021. The Second Sight and NPM unaudited pro forma condensed combined statements of operations data assume that the merger took place as of January 1, 2021 and combines the historical results of Second Sight and NPM for the year ended.

The summary unaudited pro forma condensed combined financial data are presented for illustrative purposes only and are not necessarily indicative of the combined financial position or results of operations of future periods or the results that actually would have been realized had the entities been a single entity during these periods. The summary unaudited pro forma condensed combined financial data as of and for the year ended December 31, 2021 are derived from the unaudited pro forma condensed combined financial information and should be read in conjunction with that information. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” in this proxy statement/prospectus.

The unaudited pro forma condensed combined financial information assumes that, at the Effective Time, each share of NPM’s common stock will be converted into the right to receive shares of Second Sight common stock such that, immediately following the Effective Time, Second Sight’s current shareholders, option holders, and warrant holders are expected to own, or hold rights to acquire, approximately 22.68% of the Base Amount Common Stock of Second Sight, and NPM’s current shareholders, option holders and warrant holders are expected to own, or hold rights to acquire, approximately 77.32% of the Base Amount Common Stock of Second Sight.

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Operations Data

    

Year Ended

December 31, 2021

(in thousands, except share and per share data)

(unaudited)

Cost of sales (recovery)

$

(130)

Research and development expenses, net of grants

13,350

General and administrative expenses

9,880

Other expenses

343

Net loss from operations

(23,443)

Net loss from operations per share

(0.16)

Weighted average shares outstanding – basic and diluted

150,321,455

Balance Sheet Data

in thousands

Cash and cash equivalents

    

$

70,509

Total assets

75,070

Current liabilities

4,548

Total liabilities

5,502

Total stockholders’ equity

69,568

Total liabilities and stockholders’ equity

75,070

Comparative Historical and Unaudited Pro Forma Per Share Data

The information below reflects the historical net operating loss for the year ended December 31, 2021 and book value per share using shares outstanding as of December 31, 2021 of Second Sight common stock outstanding and the historical net operating loss for the year ended December 31, 2021 and book value per share outstanding as of December 31, 2021 of NPM common stock in comparison with the unaudited pro forma net operating loss for the year ended December 31, 2021 and book value per share outstanding as of December 31, 2021, after giving effect to the proposed merger of Second Sight with NPM on a pro forma basis. The unaudited pro forma net loss from operations and book value per share does not give effect to the Second Sight Reverse Stock Split.

You should read the tables below in conjunction with the audited financial statements of Second Sight and NPM included in this proxy statement/prospectus and the related notes and the unaudited pro forma condensed combined financial information and notes related to such financial statements included elsewhere in this proxy statement/prospectus.

(unaudited)

Second Sight Historical Per Share Data

Net loss per share, basic and diluted

$

(0.27)

Book value per share as of December 31, 2021

$

1.73

NPM Historical Per Share Data

Net loss per share, basic and diluted

$

(1.17)

Book value per share as of December 31, 2021

$

0.20

Combined company Per Share Data

Net operating loss per share, basic and diluted

$

(0.16)

Book value per share as of December 31, 2021

$

0.40

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RISK FACTORS

The combined company will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. You should read and consider the risks associated with each of the businesses of Second Sight and NPM. For Second Sight, these risks can be found in its most recent Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which risk factors are incorporated herein by reference. You should also read and consider the other information in this proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus. In addition to the other information contained in this proxy statement/prospectus, you should carefully consider the material risks described below before deciding how to vote your shares of stock. Please see the section entitled “Where You Can Find More Information” beginning on page 245 of this proxy statement/prospectus.

Risks Related to the Merger

The Pro Rata Portion of the Merger Shares is not adjustable based on the market price of Second Sight common stock, so the Merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.

The Merger Agreement has set the exchange ratio formula for the NPM common stock, and the exchange ratio is based on the fully-converted outstanding common stock of NPM and the fully-converted outstanding common stock of Second Sight, after taking into account each company’s outstanding options and warrants, irrespective of the exercise prices of such options and warrants, and Second Sight’s and NPM’s net cash balances, in each case immediately prior to the closing of the merger as described under the heading “The Merger—Merger Consideration.” Any changes in the market price of Second Sight common stock before the completion of the merger will not affect the number of shares of Second Sight common stock issuable to NPM’s shareholders pursuant to the Merger Agreement. Therefore, if before the completion of the merger the market price of Second Sight common stock declines from the market price on the date of the Merger Agreement, then NPM’s shareholders could receive merger consideration with substantially lower value than the value of such Merger consideration on the date of the Merger Agreement. Similarly, if before the completion of the merger the market price of Second Sight common stock increases from the market price of Second Sight common stock on the date of the Merger Agreement, then NPM’s shareholders could receive merger consideration with substantially greater value than the value of such merger consideration on the date of the Merger Agreement. The Merger Agreement does not include a price-based termination right. Because the exchange ratio does not adjust as a result of changes in the market price of Second Sight common stock, for each one percentage point change in the market price of Second Sight common stock, there is a corresponding one percentage point rise or decline, respectively, in the value of the total merger consideration payable to NPM’s shareholders pursuant to the Merger Agreement.

Failure to complete the Merger may result in Second Sight or NPM paying a termination fee or expenses to the other party and could significantly harm the market price of Second Sight common stock and negatively affect the future business and operations of each company.

If the Merger is not completed and the Merger Agreement is terminated under certain circumstances, Second Sight may be required to pay NPM a termination fee of $5,000,000 or $1,000,000. If the Merger is not completed and the Merger Agreement is terminated under certain circumstances, NPM may be required to pay Second Sight a termination fee of $5,000,000. Even if a termination fee is not payable or transaction expenses are not reimbursable in connection with a termination of the Merger Agreement, each of Second Sight and NPM will have incurred significant fees and expenses, such as legal and accounting fees, which must be paid whether or not the Merger is completed. Further, if the Merger is not completed, it could significantly harm the market price of Second Sight common stock.

In addition, if the Merger Agreement is terminated and the Board of Second Sight or NPM determines to seek another business combination, there can be no assurance that either Second Sight or NPM will be able to find a partner and close an alternative transaction on terms that are as favorable or more favorable than the terms set forth in the Merger Agreement.

The Merger may be completed even though certain events occur prior to the closing that materially and adversely affect Second Sight or NPM.

The Merger Agreement provides that either Second Sight or NPM can refuse to complete the Merger if there is a material adverse change affecting the other party between February 4, 2022, the date of the Merger Agreement, and the closing of the Merger.

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However, certain types of changes do not permit either party to refuse to complete the Merger, even if such change could be said to have a material adverse effect on Second Sight or NPM, including:

general economic, political conditions or the securities markets in general (whether as a result of acts of terrorism, war (whether or not declared), armed conflicts or otherwise) to the extent they do not disproportionately affect Second Sight or NPM, as applicable;
general changes in or affecting the industries in which Second Sight or NPM operate, to the extent they do not disproportionately affect Second Sight, Merger Sub, or NPM, as applicable;
any effect resulting from the announcement or pendency of the Merger or any related transactions;
any effect resulting from the taking of specific actions, by either Second Sight or NPM required to comply with the terms of the Merger Agreement;
any failure, in and of itself, to achieve any budgets, projections, forecasts, estimates, plans or predictions, or the loss of any business;
any natural disaster natural disasters, pandemics, epidemics, disease outbreaks (including the Covid-19 virus) or other health crises or public health events, weather conditions, explosions or fires, or other force majeure events or acts of God; and
any changes in GAAP or other accounting requirements or principles (or the interpretation thereof) or changes in laws issued or made by any governmental authority, to the extent they do not disproportionately affect Second Sight, Merger Sub, or NPM, as applicable

If adverse changes occur and Second Sight and NPM still complete the Merger, the market price of the combined company’s common stock may suffer. This in turn may reduce the value of the Merger to the shareholders of Second Sight, NPM, or both.

Certain of Second Sight’s directors have material interests in NPM. There is no assurance that the efforts of Second Sight Board, and of the special committee of Second Sight Board, to evaluate the fairness and effects of the proposed Merger were sufficient.

Three of Second Sight’s directors, Gregg Williams, Dean Baker, and Aaron Mendelsohn are also directors of NPM, and Gregg Williams and Aaron Mendelsohn have substantial investments and financial interests in NPM. Additionally, NPM was founded by Adam Mendelsohn, the son of Aaron Mendelsohn, a member of the Second Sight Board. As a result, a special committee of the Board, consisting of members having no affiliation with NPM, was created for the purpose of evaluating the proposed Merger and determining whether the Merger Agreement and the proposed Merger are in the best interests of Second Sight. Following multiple consultations with financial and legal advisers, the special committee issued its recommendation for the Board to approve the proposed Merger on the terms of the Merger Agreement and the concurrently entered SAFE agreement. Notwithstanding the foregoing, there can be no assurance that the efforts of the special committee in connection with the proposed Merger were sufficient, nor can there be an assurance that the special committee was aware of and considered all the relevant facts and circumstances surrounding the proposed Merger. The opinion of the special committee was based on then-available information, as of the date of each such opinion and does not reflect any subsequent events. Therefore, there can be no assurance that the terms of the proposed Merger are fair and in the best interest of Second Sight despite the opinion of the special committee.

The market price of the common stock of the combined company following the Merger may decline as a result of the Merger.

The market price of combined company’s common stock may decline as a result of the Merger for a number of reasons including if:

investors react negatively to the prospects of the combined company’s product candidates, business, and financial condition following the Merger;
the effect of the Merger on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts; or

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the combined company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts.

Second Sight and NPM shareholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.

If the combined company is unable to realize the strategic and financial benefits currently anticipated from the merger, Second Sight’s and NPM’s shareholders will have experienced substantial dilution of their ownership interests in their respective companies without receiving the expected commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the expected strategic and financial benefits currently anticipated from the Merger.

During the pendency of the Merger, Second Sight and NPM may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect their respective businesses.

Covenants in the Merger Agreement impede the ability of Second Sight and NPM to make acquisitions, subject to certain exceptions relating to fiduciary duties, as set forth in the Merger Agreement, or to complete other transactions that are not in the ordinary course of business pending completion of the Merger. As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors during such period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating, encouraging, or entering certain extraordinary transactions, such as a merger, sale of assets, or other business combination outside the ordinary course of business with any third party, subject to certain exceptions relating to fiduciary duties, as set forth in the Merger Agreement. Any such transactions could be more favorable to such party’s shareholders that the transactions contemplated by the Merger Agreement.

Certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.

The terms of the Merger Agreement prohibit each of Second Sight and NPM from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when such party’s board of directors determines in good faith that an unsolicited alternative takeover proposal is or is reasonably likely to lead to a superior takeover proposal and that failure to cooperate with the proponent of the proposal would be reasonably likely to be inconsistent with the board of directors’ fiduciary duties.

Because the lack of a public market for NPM common stock makes it difficult to evaluate the value of NPM common stock, the shareholders of NPM may receive shares of Second Sight common stock in the Merger that have a value that is less than, or greater than, the fair market value of NPM common stock.

The outstanding common stock of NPM is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of NPM. Because the percentage of Second Sight common stock to be issued to NPM’s shareholders was determined based on negotiations between the parties, it is possible that the value of Second Sight common stock to be received by NPM’s shareholders will be less than the fair market value of NPM or Second Sight may pay more than the aggregate fair market value for NPM.

If the conditions to the merger are not satisfied or waived, the merger will not occur.

Even if the merger is approved by the shareholders of Second Sight and NPM, other conditions must be satisfied or waived to complete the merger. These conditions are set forth in the Merger Agreement and described in the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” in this proxy statement/prospectus. Second Sight and NPM cannot assure you that all of the conditions will be satisfied or waived. Certain of the closing conditions are incapable of being waived. If the conditions are not satisfied or waived, the merger will not occur or will be delayed, and Second Sight and NPM each may lose some or all of the intended benefits of the merger.

The merger may fail to qualify as a “reorganization” for U.S. federal income tax purposes, resulting in recognition of taxable gain or loss by holders of NPM common stock.

Second Sight and NPM intend for the merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, as described in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” in this proxy

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statement/prospectus. In the event that the merger does not qualify as a “reorganization,” the merger would generally result in taxable gain or loss for each U.S. Holder (as defined hereafter) of NPM common stock, with the amount of such gain or loss determined by the amount that each NPM shareholder’s adjusted tax basis in the NPM common stock surrendered is less or more than the fair market value of the Second Sight common stock. Each holder of NPM common stock is urged to consult with his, her, or its own tax advisor with respect to the tax consequences of the merger.

Business development activity involves numerous risks, including the risks that Second Sight may be unable to integrate an acquired business successfully and that Second Sight may assume liabilities that could adversely affect it.

In order to transform its business, pursue strategic opportunities, and enhance shareholder value Second Sight entered into the Merger Agreement. Second Sight cannot be sure the merger will result in a successful acquisition, development or launch of products that will prove to be commercially successful or will improve the long-term viability of Second Sight’s business. Acquisitions or licenses could require Second Sight to raise significant capital and potentially incur significant dilution through the issuance of new shares of common stock. These strategic transactions involve many risks, including, but not limited to, the following:

difficulties in achieving identified financial revenue synergies, growth opportunities, operating synergies, and cost savings;
difficulties in assimilating the personnel, operations and products of NPM, and the potential loss of key employees and advisers;
difficulties in consolidating intellectual properties portfolios and corporate infrastructures of the respective parties;
Second Sight’s inability to achieve expected revenues and gross margins for any products Second Sight may acquire;
the diversion of management’s attention from other business concerns; and
difficulties in reorganizing, winding-down, or liquidating operations if not successful.

Business development activities require significant transaction costs, including substantial fees for investment bankers, attorneys, and accountants. Any acquisition could result in Second Sight’s assumption of material unknown and/or unexpected liabilities. Second Sight also cannot provide assurance that it will achieve any cost savings or synergies relating to recent or future acquisitions. Additionally, in any acquisition agreement, the negotiated representations, warranties, and agreements of the selling parties may not entirely protect Second Sight, and liabilities resulting from any breaches could exceed negotiated indemnity limitations. These factors could impair Second Sight’s growth and ability to compete, divert resources from other potentially more profitable areas, or otherwise cause a material adverse effect on its business, financial position, and results of operations.

The financial statements of acquired companies, or those that may be acquired in the future, are prepared by management of such companies, and are not independently verified by Second Sight’s management. In addition, any pro forma financial statements prepared by Second Sight to give effect to such acquisitions may not accurately reflect the results of operations of such companies that would have been achieved had the acquisition of such entities been completed at the beginning of the applicable periods.

If Second Sight does not successfully consummate a strategic transaction, its board of directors may decide to pursue a dissolution and liquidation of Second Sight. In such an event, the amount of cash available for distribution to Second Sight shareholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.

There can be no assurance that the process to identify a strategic transaction will result in a successfully consummated transaction. If no transaction is completed, the Second Sight Board may decide to pursue a dissolution and liquidation of the company. In such an event, the amount of cash available for distribution to Second Sight shareholders will depend heavily on the timing of such decision and, ultimately, such liquidation since the amount of cash available for distribution continues to decrease as Second Sight funds its operations while it evaluates its strategic alternatives. In addition, if the Second Sight board of directors was to approve and recommend, and its shareholders were to approve, a dissolution and liquidation of the company, Second Sight would be required under California corporate law to pay outstanding obligations of the Company. As a result of this requirement, a portion of Second Sight’s assets may need to be reserved pending the resolution of such obligations. In addition, Second Sight may be subject to litigation or other claims related to a dissolution and liquidation of the company. If a dissolution and liquidation were pursued, the

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Second Sight board of directors, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of Second Sight common stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up of the company.

The change of name and ticker symbol of Second Sight as a part of the merger may result in detrimental consequences associated with investors and customers’ confusion.

It is expected that Second Sight will change the corporate name and ticker symbol as a result of the merger which would require Second Sight to undergo significant rebranding efforts in the eyes of investors and potential customers. It may experience a loss in goodwill associated with existing brand name, customer confusion, and a loss of business connections and will incur substantial costs in connection with rebranding and protection of its intellectual property.

Risks Related to the Proposed Stock Split

The reverse stock split may not increase the combined company’s stock price over the long-term.

The principal purpose of the reverse stock split is to increase the per-share market price of Second Sight’s common stock above the minimum bid price requirement under the Nasdaq rules so that the listing of Second Sight and the shares of Second Sight common stock being issued in the merger on Nasdaq will be approved. It cannot be assured, however, that the reverse stock split will accomplish this objective for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of Second Sight’s common stock, it cannot be assured that the reverse stock split will increase the market price of its common stock by a multiple of the reverse stock split ratio mutually agreed by Second Sight and NPM, or result in any permanent or sustained increase in the market price of Second Sight’s common stock, which is dependent upon many factors, including Second Sight’s business and financial performance, general market conditions and prospects for future success. Thus, while the stock price of Second Sight might meet the listing requirements for Nasdaq initially, it cannot be assured that it will continue to do so.

The reverse stock split may decrease the liquidity of the combined company’s common stock.

Although the Second Sight board of directors believes that the anticipated increase in the market price of the combined company’s common stock resulting from the proposed reverse stock split could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for the combined company’s common stock. In addition, the reverse stock split may not result in an increase in the combined company’s stock price necessary to satisfy Nasdaq’s initial listing requirements for the combined company.

The reverse stock split may lead to a decrease in the combined company’s overall market capitalization.

Should the market price of the combined company’s common stock decline after the reverse stock split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the reverse stock split. A reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in the combined company’s overall market capitalization. If the per share market price does not increase in proportion to the reverse stock split ratio, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of the combined company’s common stock will remain the same after the reverse stock split is effected, or that the reverse stock split will not have an adverse effect on the combined company’s stock price due to the reduced number of shares outstanding after the reverse stock split.

Risks Related to Dependence on Second Sight’s Commercial Products

Despite promising results from the Early Feasibility Study for Orion being conducted at UCLA and Baylor School of Medicine, Second Sight currently has no commercial products or product revenue and may never become profitable.

To date, Second Sight has not generated profit from sales of its now discontinued Argus II product and will not generate revenues until it completes the development and attain the marketing approval for Orion. Second Sight has relied principally on financing from the sale of equity securities and the receipt of government and other grants to fund its operations. Second Sight expects that its future

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financial results will depend primarily on its success in further developing the Orion, conducting FDA approved clinical trials and obtaining clearance or approval for, launching, selling and supporting its Orion technology. To establish these operations Second Sight will need to expend significant resources on hiring additional personnel, conducting continued scientific and product research and development, engaging in further pre-clinical and clinical investigation, giving expanded attention to intellectual property development and prosecution, seeking domestic and international regulatory approvals, marketing and promotion, capital expenditures, working capital, general and administrative expenses, and fees and expenses associated with its capital raising efforts. Second Sight expects to incur costs and expenses related to consulting costs, laboratory development costs, hiring of scientists, engineers, sales representatives and other operational personnel, and the continued development of relationships with potential partners as it continues to seek regulatory clearance or approval for its products. As a pre-revenue company Second Sight continues to incur significant operating losses, and it expects to continue to incur additional losses for at least the next several years. Second Sight cannot assure you that it will generate revenue or be profitable in the future. Second Sight’s future or updated Orion products may never be cleared or approved or become commercially viable or accepted for use.

Investment in medical device technology entails material uncertainty and is highly speculative. It entails substantial upfront capital expenditures over time and significant risk that any potential product will fail to demonstrate adequate safety, efficacy, clinical utility or acceptance by physicians and blind individuals. Investors should evaluate an investment in Second Sight in light of the uncertainties encountered by developing medical technology companies in a competitive environment. There can be no assurance that its efforts will be successful or that it will ultimately be able to achieve profitability. Even if Second Sight achieves profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. Second Sight’s failure to become and remain profitable could adversely affect the market price of its common stock and could significantly impair its ability to raise capital, expand its business or continue to implement its business plan.

Second Sight’s commercial and financial success depends on its products being accepted in the market, and if not achieved, will result in its not being able to generate revenues to support its operations.

Even if Second Sight is able to obtain favorable reimbursement within the markets that it serves, commercial success of its products will depend, among other things, on their acceptance by retinal specialists, ophthalmologists, brain surgeons, general practitioners, low vision therapists and mobility experts, hospital purchasing and controlling departments, patients, and other members of the medical community. The degree of market acceptance of any of Second Sight’s product candidates will depend on factors that include:

cost of treatment;
pricing and availability of future alternative products;
the extent of available third-party coverage or reimbursement;
perceived efficacy of the Orion system relative to other future products and medical solutions; and
prevalence and severity of adverse side effects associated with treatment.

The activities of competitive medical device companies, or others, may limit Second Sight’s revenue from the sale of the Orion system.

Second Sight’s commercial opportunities for the Orion system may be reduced if its competitors develop or market products that are more effective, are better tolerated, receive better reimbursement terms, achieve greater acceptance by physicians, have better distribution channels, or are less costly.

Currently, to Second Sight’s knowledge, no other medical devices comparable to the Orion system have been approved by regulatory agencies, in the U.S. or Europe, to restore some functional vision in persons who have become blind due to unpreventable causes. Other visual prosthesis companies such as Pixium are developing retinal implant technologies to partially restore some vision in blind patients mainly from age related macular degeneration. Pixium’s initial RP prosthesis product was withdrawn from the market. A previous competitor, Retina Implant, has withdrawn from the market. Neither Retina Implant nor Pixium has filed for market approval with the FDA. To Second Sight’s knowledge Pixium has obtained an IDE for a feasibility study in the U.S. for its PRIMA product, which is directed toward age related macular degeneration or AMD and is conducting a pivotal trial of PRIMA in several countries in Europe. The Illinois Institute of Technology’s Intracortical Visual Prosthesis group is currently recruiting

27

participants for a US early feasibility study of a visual cortical prosthesis and has recently implanted one subject. Neuralink has recently demonstrated a cortical implant in animal models. Vision restoration is one of Neuralink’s stated goals. These and other potentially competitive therapies, if or when developed or brought to market, may result in pricing and market access pressure even if the Orion system is otherwise viewed as a preferable therapy.

Many privately and publicly funded universities and other organizations are engaged in research and development of potentially competitive products and therapies, such as stem cell and gene therapies, some of which may target multiple indications of Second Sight’s product candidates. These organizations include pharmaceutical companies, biotechnology companies, public and private universities, hospital centers, government agencies and research organizations. Second Sight’s competitors include large and small medical device and biotechnology companies that may have significant access to capital resources, competitive product pipelines, substantial research and development staff and facilities, and substantial experience in medical device development.

Second Sight may face substantial competition in the future and may not be able to keep pace with the rapid technological changes which may result from others discovering, developing or commercializing products before or more successfully than Second Sight does.

In general, the development and commercialization of new medical devices is highly competitive and is characterized by extensive research and development and rapid technological change. Physicians and persons who may be suitable for the Orion implant likely will consider many factors including product reliability, clinical outcomes, product availability, price, and product and patient support services that Second Sight may be able to provide. Market share as it develops can shift as a result of technological innovation and other business factors. Major shifts in industry market share have occurred in connection with product problems, physician advisories and safety alerts, reflecting the importance of product quality and reliability in the medical device industry, and any quality problems with Second Sight’s processes, goods and services could harm its reputation for producing high-quality products and would erode its competitive advantage, sales and market share. Second Sight’s competitors may develop products or other novel approaches and technologies to deal with treating blindness that are more effective, safer or less costly than any that Second Sight is developing, and if those products gain market acceptance its revenue and financial results could be adversely affected.

If Second Sight fails to develop new products or enhance existing products, its leadership in the markets it serves could erode, and its business, financial condition and results of operations may be adversely affected.

Despite early positive results in Second Sight’s limited initial trials at UCLA and Baylor School of Medicine, its ongoing development efforts may never demonstrate the feasibility of its Orion technology.

Second Sight’s research and development efforts remain subject to all of the risks associated with the development of new technology. Second Sight’s Orion technology, though based on its FDA approved Argus II retinal prosthesis, is not yet fully developed. Development of the underlying technology, including the further development and refinement of Second Sight’s Orion technology, may be affected by unanticipated technical or other problems, among other development and research issues, and the possible insufficiency of funds needed in order to complete development of these products or devices. Regulatory and clinical hurdles, adverse reactions experienced in trials, or other operational or regulatory challenges also may result in delays and cause Second Sight to incur additional expenses that may increase its need for capital and result in additional losses. For example, three of the six subjects implanted in the Early Feasibility Study have been explanted by the subjects’ request. While all had been implanted at least three years, the explants represent a limit in the long-term data that can be collected in the current study. If Second Sight cannot complete, or if it experiences significant delays in developing its technology, applications or products for use by those patients who can benefit from vision restoration, particularly after incurring significant expenditures, Second Sight’s business may fail, and investors may lose the entirety of their investment.

Since Second Sight has a history of operating losses and has no current revenue producing operations, the future of its business is difficult to evaluate.

To date, Second Sight’s operations on a consolidated basis have consisted of the continued development and clinical studies of its Orion-focused technologies and implementation of the early parts of Second Sight’s business plan. Second Sight has incurred significant operating losses in each year since its inception and it will continue to incur additional losses for the next several years. In addition, its losses may be greater than expected and its operating results may suffer. Second Sight has limited historical financial data upon which it may base its projected revenue and base its planned operating expenses. This operating history makes it difficult to evaluate its technology or prospective operations and business prospects.

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Clinical development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and initial trials may not be predictive of future trial results.

Clinical testing is expensive and can take several or more years to complete, and its outcome is inherently uncertain. Failure or delay can occur at any time during the clinical trial process. Success in nonclinical studies and early feasibility clinical studies does not ensure that expanded clinical trials that will be used to support regulatory submissions will be successful. These setbacks may be caused by, among other things, nonclinical findings made while clinical trials were underway, and safety or efficacy observations made in clinical trials, including previously unreported adverse events. Even if Second Sight’s clinical trials are completed, the results may not be sufficient to obtain regulatory approval or clearance for its product candidates.

Interim “top-line” and preliminary results from Second Sight’s clinical trials that it announces or publishes from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, Second Sight may publish interim top-line or preliminary results from its clinical trials. Interim results from clinical trials that it may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or top line results also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data Second Sight previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Differences between preliminary or interim data and final data could significantly harm Second Sight’s business prospects and may cause the trading price of its common stock to fluctuate significantly.

Risks Related to Second Sight’s Common Stock

Second Sight has not been profitable to date and expect its operating losses to continue for the foreseeable future; Second Sight may never be profitable.

Second Sight has incurred operating losses and generated negative cash flows since its inception and have financed its operations principally through equity investments and borrowings. Second Sight’s ability to generate sufficient revenues to fund operations is uncertain. For the fiscal year ended December 31, 2020, Second Sight generated no revenue from operations and incurred a net loss of $14.9 million. For the fiscal year ended December 31, 2021, Second Sight generated no revenue from operations and incurred a net loss of $8.9 million. Second Sight’s total accumulated deficit through December 31, 2021, was $328.6 million.

As a result of Second Sight’s limited commercial operating history, revenue is difficult to forecast. Second Sight expects expenses to increase in the future as it expands its activities in connection with the further development of Orion. Second Sight cannot assure you that it will be profitable in the future. Accordingly, the extent of Second Sight’s future losses and the time required to achieve profitability, if ever, is uncertain. Failure to achieve profitability could materially and adversely affect the value of its common stock and its ability to effect additional financings. The success of the business depends on its ability to increase revenues to offset expenses. If Second Sight does not achieve profitability, or otherwise fall short of projections, its business, financial condition and operating results will be materially adversely affected.

Sales, or the availability for sale, of substantial amounts of Second Sight’s common stock could adversely affect the value of its common stock.

Second Sight cannot predict the effect, if any, that future sales of its common stock, or the availability of its common stock for future sales, will have on the market price of its common stock. Sales of substantial amounts of its common stock in the public market and the availability of shares for future sale could adversely affect the prevailing market price of its common stock. This in turn could impair Second Sight’s future ability to raise capital through an offering of its equity securities.

There may be future sales or other dilution of Second Sight’s equity, which may adversely affect the market price of its common stock.

Second Sight is not restricted from issuing additional shares of common stock. The market price of Second Sight’s common stock could decline as a result of sales of its common stock and warrants or the perception that such sales could occur. Second Sight may issue and sell additional shares of its common stock in private placements or registered offerings in the future. Second Sight also may

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conduct additional registered rights offerings in the future pursuant to which it may issue shares of its common stock or other securities.

Risks Relating to Second Sight’s Operations

The COVID-19 pandemic has had an adverse effect on Second Sight’s business and results of operations and is expected to continue to have further adverse effects, which could be material, on its business, results of operations, financial condition, liquidity, and capital investments.

In December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China and has since spread globally. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. In addition, most states in the U.S., including California, where Second Sight is headquartered, have declared a state of emergency. The pandemic has resulted in government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place or stay-at-home orders, and business shutdowns.

In accordance with local and state guidelines regarding the COVID-19 pandemic, Second Sight is requiring all of Second Sight’s employees to wear masks in the office and use their best judgement to work remotely or work in the office. While many of Second Sight’s employees are accustomed to working remotely, much of its workforce has not historically been remote. Although Second Sight continues to monitor the situation and may adjust its current policies as more information and public health guidance becomes available, restricting the ability to do business in person may create operational or other challenges, any of which could harm its business, financial condition and results of operations.

In addition, Second Sight’s clinical trials have been affected by the COVID-19 outbreak. Patient visits in ongoing clinical trials have been delayed, for example, due to prioritization of hospital resources toward the COVID-19 outbreak, travel restrictions imposed by governments, and the inability to access sites for initiation and monitoring. For example, scheduled patient visits to Second Sight’s clinical sites at UCLA and Baylor were temporarily put on hold due to COVID-19. Visits have now resumed at both sites. In addition, the validation study for the revised FLORA assessment was paused due to travel requirements for its completion. Also, some of Second Sight’s suppliers of certain materials used in the development of its product candidates are located in areas impacted by COVID-19 which could limit its ability to obtain sufficient materials for its product candidates. COVID-19 has and will continue to adversely affect global economies and financial markets of many countries, resulting in an economic downturn that could affect demand for Second Sight’s product candidates, if approved, and impact its operating results. Even after the COVID-19 pandemic has subsided, Second Sight may continue to experience an adverse impact to Second Sight’s business as a result of the continued global economic impact of the pandemic. Second Sight could experience further harm to its business, and it cannot anticipate all of the ways in which health epidemics such as COVID-19 and its variants could adversely impact its business. Although Second Sight is continuing to monitor and assess the effects of the COVID-19 pandemic on its business, the ultimate impact of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change.

COVID-19 has directly and indirectly adversely affected Second Sight and will likely continue to do so for an uncertain period of time. In March and April 2020 Second Sight laid off the majority of its employees as a result of COVID-19 and an inability to obtain financing. Second Sight retains approximately fifteen of Second Sight’s employees to oversee current operations, including some that were re-hired once its financial situation improved, and the future of Second Sight became clearer. The cumulative effects of COVID-19 and its variants on Second Sight cannot be predicted at this time, but could include, without limitation:

reputational damages of Second Sight and its products;
inability to raise additional funds to finance and continue Second Sight’s operations;
inability to maintain adequate office laboratory facilities;
inability to retain and hire experienced personnel;
diminished ability, or inability, to enroll patients or complete clinical trials and other activities required to achieve regulatory clearance of Second Sight’s products under development
inability to finalize Second Sight’s plan for and enroll patients into its proposed pivotal clinical trial;

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material delays or inability to complete development and commercialization of Orion;
inability to satisfy Nasdaq’s continued listing requirements and possible delisting; and
other uncertain events that may have negative impact on Second Sight’s operations.

Materials necessary to manufacture Orion may not be available on commercially reasonable terms, or at all, which may delay development, manufacturing and commercialization of Second Sight’s products.

Second Sight relies on numerous suppliers to provide materials, components and services necessary to produce the Orion system and next generation product candidates. Certain suppliers are currently sole source because of Second Sight’s low manufacturing volumes and its need for specialty technical or other engineering expertise. Second Sight’s suppliers may be unable or unwilling to deliver these materials and services to it timely as needed or on commercially reasonable terms. Should this occur, Second Sight would seek to qualify alternative suppliers or develop in-house manufacturing capability but may be unable to do so. Substantial design or manufacturing process modifications and regulatory approval might be required to facilitate or qualify an alternate supplier. Even where Second Sight could qualify alternative suppliers the substitution of suppliers may be at a higher cost and cause time delays including delays associated with additional possible FDA review, that could impede the production of the Orion system, reduce gross profit margins and impact its ability to deliver its products as may be timely required to meet demand.

Any failure or delay in completing clinical trials or studies for new product candidates or next generation of Second Sight’s products and the expense of those trials could adversely affect its business.

Preclinical studies and clinical trials required to demonstrate the safety and efficacy of incremental changes, including new wearables and software enhancements and for new product candidates such as Orion are time consuming and expensive. If Second Sight is required to conduct additional clinical trials or other studies with respect to any of Second Sight’s product candidates beyond those that it has contemplated, if it is unable to successfully complete its clinical trials or other studies or if the results of these trials or studies are not positive or are only modestly positive, Second Sight may be delayed in obtaining marketing approval for those product candidates, it may not be able to obtain marketing approval or it may obtain approval for indications that are not as broad as intended. Second Sight’s product development costs also will increase if it experiences delays in testing or approvals.

The completion of clinical trials for Second Sight’s product candidates could be delayed because of its inability to manufacture or obtain from third parties materials sufficient for use in preclinical studies and clinical trials; delays in patient enrollment and variability in the number and types of patients available for clinical trials; difficulty in maintaining contact with patients after treatment, resulting in incomplete data; poor effectiveness of product candidates during clinical trials; unforeseen safety issues or side effects; and governmental or regulatory delays and changes in regulatory requirements and guidelines.

If Second Sight incur significant delays in its clinical trials, its competitors may be able to bring their products to market before Second Sight does which could result in harming Second Sight’s ability to commercialize its products or potential products. If Second Sight experiences any of these occurrences its business will be materially harmed.

Second Sight has lost key management and staff personnel because of Covid-19 pandemic. If it fails to recruit highly skilled personnel to replace employees who have left it, Second Sight’s ability to identify, develop and commercialize new or next generation product candidates will be impaired, could result in loss of markets or market share and could make it less competitive.

Second Sight has laid off the majority of its employees including key members of its executive management team because Covid-19 outbreak affected its ability to fund its operations. its existing employees could leave it with little or no prior notice. The loss of any management executive or any other principal member of its management team or its inability to attract and retain skilled employees could impair its ability to identify, develop and market new products or effectively deal with regulatory and reimbursement matters. Will McGuire, its President and Chief Executive Officer, tendered his resignation effective March 27, 2020 and its Board appointed Matthew Pfeffer, a member of its Board of Directors, as acting chief executive officer, and Edward Sedo, its Controller, as Principal Accounting and Financial Officer. On March 26, 2021 Matthew Pfeffer relinquished his position as acting chief executive officer and the Board appointed Scott Dunbar, its Senior Patent Counsel and Compliance Officer, as acting chief executive officer. To the extent that Second Sight loses experienced personnel, it is critical that it develop other employees, hire new qualified personnel and successfully manage the transfer of critical knowledge. No assurance can be given that it will be able to do so.

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Second Sight could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.

The U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Second Sight intends to adopt policies for compliance with these anti-bribery laws, which often carry substantial penalties. Second Sight cannot assure you that its internal control policies and procedures always will protect Second Sight from reckless or other inappropriate acts committed by Second Sight’s affiliates, employees or agents. Violations of these laws, or allegations of such violations, could have a material adverse effect on its business, financial position and results of operations and could cause the market value of Second Sight’s common stock to decline.

Risks Related to Intellectual Property and Other Legal Matters

If Second Sight or its licensors are unable to protect its/their intellectual property, then Second Sight’s financial condition, results of operations and the value of Second Sight’s technology and products could be adversely affected.

Patents and other proprietary rights are essential to Second Sight’s business, and its ability to compete effectively with other companies is dependent upon the proprietary nature of its technologies. Second Sight also rely upon trade secrets, know-how, continuing technological innovations and licensing opportunities to develop, maintain and strengthen its competitive position. Second Sight seek to protect these, in part, through confidentiality agreements with certain employees, consultants and other parties. Second Sight’s success will depend in part on the ability of its licensors to obtain, maintain (including making periodic filings and payments) and enforce patent protection for their intellectual property, in particular, those patents to which it has secured exclusive rights. Second Sight’s licensors may not successfully prosecute or continue to prosecute the patent applications which Second Sight has licensed. Even if patents are issued in respect of these patent applications, Second Sight or its licensors may fail to maintain these patents, may determine not to pursue litigation against entities that are infringing upon these patents, or may pursue such enforcement less aggressively than it ordinarily would. Without adequate protection for the intellectual property that Second Sight owns or licenses, other companies might be able to offer substantially identical products for sale, which could unfavorably affect Second Sight’s competitive business position and harm its business prospects. Two patents licensed from the John Hopkins University (the JHU Patents) expired in 2018, along with Second Sight’s License Agreement with the Johns Hopkins University. The expiration of the JHU Patents removes a barrier to entry for competitors who may be interested in selling a product competitive with Argus II. The JHU Patents are specific to retinal stimulation and have no effect on Orion technology.

Even if issued, patents may be challenged, invalidated, or circumvented, which could limit Second Sight’s ability to stop competitors from marketing similar products or limit the length of term of patent protection that Second Sight may have for its products.

Litigation or third-party claims of intellectual property infringement or challenges to the validity of Second Sight’s patents would require it to use resources to protect its technology and may prevent or delay the development, regulatory approval or commercialization Orion system or new product candidates. Further, the validity of some of its patents has been challenged.

Pixium has three currently pending oppositions in the European Patent Office (EPO) challenging the validity of European patents owned by Second Sight. The EPO proceedings involving Pixium and Second Sight are:

EP1937352 Sub- Threshold Stimulation to Precondition Neurons for Supra-Threshold Stimulation - cancelled in the Opposition Division, appeal pending.
EP2061549 - Package for an Implantable Neural Stimulation Device - Cancelled in the Opposition Division, appeal pending.
EP2185236 - Implantable Device for the Brain - Upheld in the Opposition Division, appeal pending.

If Second Sight is the target of claims by third parties asserting that its products or intellectual property infringe upon the rights of others it may be forced to incur substantial expenses or divert substantial employee resources from its business and, if successful, those claims could result in Second Sight’s having to pay substantial damages or prevent it from developing one or more product candidates. Further, if a patent infringement suit were brought against Second Sight or its collaborators, it or they could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit.

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The validity of some of Second Sight’s patents has been challenged. If Second Sight experiences patent infringement claims, or if it elects to avoid potential claims others may be able to assert, Second Sight or its collaborators may choose to seek, or be required to seek, a license from the third-party and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if Second Sight or its collaborators were able to obtain a license, the rights may be nonexclusive, which would give Second Sight’s competitors access to the same intellectual property. Ultimately, Second Sight could be prevented from commercializing a product, or be forced to cease some aspect of its business operations if, as a result of actual or threatened patent infringement claims, Second Sight or its collaborators are unable to enter into licenses on acceptable terms. This could harm Second Sight’s business significantly. The cost to Second Sight of any litigation or other proceeding, regardless of its merit, even if resolved in its favor, could be substantial. Some of Second Sight’s competitors may be able to bear the costs of such litigation or proceedings more effectively than Second Sight can because of their having greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on Second Sight’s ability to compete in the marketplace. Intellectual property litigation and other proceedings may, regardless of their merit, also absorb significant management time and employee resources.

If Second Sight fails to comply with its obligations in the agreements under which it licenses development or commercialization rights to products or technology from third parties, it could lose license rights that are important to its business.

Second Sight holds an exclusive license from the Doheny Eye Institute (DEI) to intellectual property relating to the Argus II visual prosthesis and Orion cortical visual prosthesis. This license imposes various commercialization, milestone payment, profit sharing, insurance and other obligations on Second Sight. If Second Sight fails to comply with any material obligations, DEI will have the right to terminate the license, which covers part of the Argus and Orion systems. The existing or future patents to which Second Sight has rights based on its agreements with DEI may be too narrow to prevent third parties from developing or designing around these patents. Additionally, Second Sight may lose its exclusive rights to the patents and patent applications it licenses in the event of a breach or termination of the license agreement. The license expires with the expiration of the last of the licensed patents on August 8, 2033. The royalty in the agreement is 0.5% of the patented portion of Argus II system sales. All of the patents in the DEI agreement are co-owned by Second Sight and DEI. Second Sight licenses DEI’s interest in the patents to maintain its exclusive use on that intellectual property. Should the license terminate, Second Sight retains the right to utilize the intellectual property but may not be able to prevent others from doing so, in which case Second Sight may lose a competitive advantage.

If Second Sight is unable to protect the intellectual property used in its products, others may be able to copy its innovations which may impair its ability to compete effectively in Second Sight’s markets.

The strength of Second Sight’s patents involves complex legal and scientific questions and can be uncertain. Second Sight has over 300 issued patents and over 15 pending patent applications worldwide as of December 31, 2021. Second Sight’s patent applications may be challenged or fail to result in issued patents and its existing or future patents may be too narrow to prevent third parties from developing or designing around its intellectual property and in that event, it may lose competitive advantage and its business may suffer.

Further, the patent applications that Second Sight licenses or has filed may fail to result in issued patents. The claims may need to be amended. Even after amendment, a patent may not issue and in that event, it may not obtain the exclusive use of the intellectual property that it seeks and may lose competitive advantage which could result in harm to Second Sight’s business.

Third-party claims of intellectual property infringement may prevent or delay Second Sight’s development and commercialization activities for Orion.

Although Second Sight is not currently aware of any litigation or other proceedings or third-party claims of intellectual property infringement related to the Argus II or Orion systems, the medical device industry is characterized by many litigation cases regarding patents and other intellectual property rights. Other parties may in the future allege that Second Sight’s activities infringe their patents or that Second Sight is employing their proprietary technology without authorization. Second Sight may not have identified all the patents, patent applications or published literature that affect Second Sight’s business either by blocking its ability to commercialize its product, by preventing the patentability of one or more aspects of its products or those of its licensors or by covering the same or similar technologies that may affect its ability to market its product.

In addition, even in the absence of litigation, Second Sight may need to obtain licenses from third parties to advance Second Sight’s research or allow commercialization of its product candidates, and it has done so from time to time. Second Sight may fail to

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obtain future licenses at a reasonable cost or on reasonable terms, if at all. In that event, Second Sight may be unable to further develop and commercialize one or more of its product candidates, which could harm its business significantly.

Second Sight may become involved in future lawsuits to protect or enforce its patents or the patents of its licensors, which could be expensive, time consuming and unsuccessful.

Competitors may infringe Second Sight’s patents or the patents of its licensors. To counter infringement or unauthorized use, Second Sight may file infringement claims, which can be expensive and time consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or of Second Sight’s licensors is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that Second Sight’s patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of Second Sight’s patents at risk of being invalidated or interpreted narrowly and could put Second Sight’s patent applications at risk of not issuing.

The U.S. Patent and Trademark Office may initiate interference proceedings to determine the priority of inventions described in or otherwise affecting Second Sight’s patents and patent applications or those of Second Sight’s collaborators or licensors. An unfavorable outcome could require Second Sight to cease using the technology or to attempt to license rights to it from the prevailing party. Second Sight’s business could be harmed if a prevailing party does not offer it a license on terms that are acceptable to Second Sight. Litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distraction of Second Sight’s management and other employees. Second Sight may not be able to prevent, alone or with Second Sight’s licensors, misappropriation of Second Sight’s proprietary rights, particularly in countries where the laws may not protect those rights as fully as in the U.S.

Second Sight is increasingly dependent on sophisticated information technology systems, including systems from third parties, and if it fails to properly maintain the integrity of Second Sight’s data or if Second Sight’s products do not operate as intended, Second Sight’s business could be materially and adversely affected.

Second Sight is increasingly dependent on sophisticated information technology systems for Second Sight’s products and infrastructure, and it relies on these information technology systems, including technology from third-party vendors, to process, transmit and store electronic information in Second Sight’s day-to-day operations. Second Sight continuously monitor, upgrade and expand the systems it operates to improve information systems capabilities. Second Sight’s information systems require an ongoing commitment of significant resources to maintain, protect, and enhance existing systems and develop or contract new systems to keep pace with continuing changes in information processing technology, evolving systems and regulatory standards, and the increasing need to protect patient and customer information. In addition, third parties may attempt to hack into Second Sight’s products or systems and may obtain data relating to patients with Second Sight’s products or proprietary information. If Second Sight fails to maintain or protect Second Sight’s information systems and data integrity with cyber security effectively, it could lose existing customers, have difficulty attracting new customers, have problems in determining product cost estimates and establishing appropriate pricing, have difficulty preventing, detecting, and controlling fraud, have disputes with customers, physicians, and other health care professionals, have regulatory sanctions, fines, or penalties imposed, have increases in operating expenses, incur expenses or lose revenue as a result of a data privacy breach, or suffer other adverse consequences. There can be no assurance that Second Sight’s process of upgrading and expanding Second Sight’s information systems capabilities, protecting and enhancing Second Sight’s systems including cyber security methods, and developing new systems to keep pace with continuing changes in information processing technology will be successful or that additional systems issues will not arise in the future. Second Sight’s products contain hardware and software protections which are intended to prevent unauthorized access or control of Second Sight’s implanted device. However, if an unauthorized user is able to breach Second Sight’s controls and gain access to one of Second Sight’s devices implanted in a patient, serious harm, injury and/or death may result. Any significant breakdown, intrusion, interruption, corruption, or destruction of these systems, as well as any data breaches, could have a material adverse effect on Second Sight’s business.

Product liability lawsuits could divert Second Sight’s resources, result in substantial liabilities and reduce the commercial potential of Second Sight’s products.

Second Sight face a risk of product liability claims arising from the prosthesis being implanted, and it is possible that it may be held liable for injuries of patients who receive Second Sight’s product. These lawsuits may divert Second Sight’s management from pursuing Second Sight’s business strategy and may be costly to defend. In addition, if Second Sight is held liable in any of these lawsuits, it may incur substantial liabilities and may be forced to limit or forego further commercialization of one or more of Second Sight’s products. Second Sight maintains product liability insurance relating to Second Sight’s clinical trials and commercial sales, with an aggregate coverage limit under these insurance policies of $10 million, and while it believes this amount of insurance

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currently is sufficient to cover Second Sight’s product liability exposure, these limits may not prove adequate to fully cover potential liabilities. In addition, Second Sight may not be able to obtain or maintain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims, which could prevent or inhibit the commercial production and sale of Second Sight’s products. If the use of Second Sight’s products harm or are alleged to harm people, it may be subject to costly and damaging product liability claims that exceed Second Sight’s policy limits and cause Second Sight significant losses that could seriously harm Second Sight’s financial condition or reputation.

Legislative or regulatory reform of the health care system in the U.S. and foreign jurisdictions may adversely impact Second Sight’s business, operations or financial results.

Second Sight’s industry is highly regulated and changes in law may adversely impact Second Sight’s business, operations or financial results. In March 2010, the Patient Protection and Affordable Care Act, and a related reconciliation bill were signed into law. This legislation changes the current system of healthcare insurance and benefits intended to broaden coverage and control costs. The law also contains provisions that will affect companies in the medical device industry and other healthcare related industries by imposing additional costs and changes to business practices.

Moreover, in some foreign countries, including countries in Europe and Canada, the pricing of approved medical devices is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take 12 months or longer after the receipt of regulatory approval and product launch. To obtain reimbursement or pricing approval in some countries, Second Sight may be required to conduct a clinical trial that compares the cost-effectiveness of Second Sight’s product candidate to other available therapies. Second Sight’s business could be materially harmed if reimbursement of Second Sight’s products is unavailable or limited in scope or amount or if pricing is set at unsatisfactory levels.

Second Sight cannot predict what healthcare reform initiatives may be adopted in the future. Further federal and state legislative and regulatory developments appear likely, and it expects ongoing initiatives in the U.S. and Europe. These reforms could have an adverse effect on Second Sight’s ability to obtain timely regulatory approval for new products and on anticipated revenues from product candidates, both of which may affect Second Sight’s overall financial condition.

Second Sight is a “non-accelerated filer” and a “smaller reporting company” for SEC filing purposes and it cannot be certain if the reduced disclosure requirements applicable will make Second Sight’s common stock less attractive to investors.

For so long as Second Sight remains a ‘non-accelerated filer” it may take advantage of certain exemptions from various requirements that are applicable to public companies that are not ‘non-accelerated filers,” including not being required to comply with the independent auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in Second Sight’s periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Investors may find Second Sight’s common stock less attractive because Second Sight relies on these exemptions. If some investors find Second Sight’s common stock less attractive as a result, there may be a less active trading market for Second Sight’s common stock, and Second Sight’s stock price may be more volatile or may decline.

In addition, Section 107 of the JOBS Act also provides that a ”smaller reporting company” can take advantage of an extended transition period for complying with new or revised accounting standards. However, Second Sight chose to “opt out” of this extended transition period, and as a result, it intends to comply with new or revised accounting standards on the relevant dates that adoption of those standards may be required. Second Sight’s decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Risks Relating to Second Sight’s Financial Results and Need for Financing

Fluctuations in Second Sight’s quarterly operating results and cash flows could adversely affect the price of Second Sight’s common stock.

Second Sight’s operating results will be affected by numerous factors such as:

materially reduced revenue Second Sight receives as a result of refocusing Second Sight’s business and resources to the Orion II as it discontinued the production of the Argus II systems, and eliminated Second Sight’s marketing and implants of the Argus II;

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the status of Second Sight’s preclinical and clinical development programs;
continued clinical results from Second Sight’s Early Feasibility Study of six subjects currently under way at UCLA and Baylor;
the filing and acceptance of an IDE with the FDA to initiate a larger pivotal trial for regulatory approval;
clinical results from conducting Second Sight’s larger pivotal trial(s):
three of Second Sight’s six patient EFS study have had the devices explanted which could cause Second Sight to have difficulty recruiting future subjects for implantation;
Second Sight’s ability to obtain regulatory approval of the Orion system in the U.S. and other additional jurisdictions;
the emergence of products that compete with Second Sight’s product candidates;
Second Sight’s ability to leverage Argus II technology for cortical stimulation using Orion;
the status of Second Sight’s preclinical and clinical development programs, variations in the level of expenses related to Second Sight’s existing product candidates or preclinical and clinical development programs;
execution of collaborative, licensing or other arrangements, and the timing of payments received or made under those arrangements;
any intellectual property infringement lawsuits to which Second Sight may become a party; and
Second Sight’s ability to obtain reimbursement from government or private payors at levels Second Sight deems adequate to sustain Second Sight’s operations.

If Second Sight’s quarterly operating results fall below the expectations of investors or securities analysts, or if it experiences delays in reaching commercialization of the Orion system the price of Second Sight’s common stock could decline substantially. Any quarterly fluctuations in Second Sight’s operating results and cash flows may cause the price of Second Sight’s stock to fluctuate substantially. Second Sight believes that, in the near term, quarterly comparisons of Second Sight’s financial results are not necessarily meaningful and should not be relied upon as an indication of Second Sight’s future performance.

Second Sight needs additional capital to support Second Sight’s operations and growth. Additional capital may be difficult to obtain restricting Second Sight’s operations and resulting in additional dilution to Second Sight’s stockholders.

Second Sight’s business requires additional capital for implementation of Second Sight’s long term business plan. Second Sight currently estimate that Second Sight’s existing cash and cash equivalents can sustain Second Sight’s operations for at least 24 months. The actual amount of funds that Second Sight will need for Second Sight’s business will be determined by many factors, some of which are beyond Second Sight’s control, and Second Sight may need funds sooner than currently anticipated. These factors include:

the amount of Second Sight’s future operating losses;
legal, accounting and other costs associated with the proposed merger with NPM;
expenses relating to the Early Feasibility Study of the Orion;
ongoing commercialization planning for the Orion system;
the amount of Second Sight’s research and development, including research and development for the Orion visual prosthesis, marketing and general and administrative expenses; and

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regulatory changes and technological developments in Second Sight’s markets.

In a rights offering completed on February 22, 2019 Second Sight sold approximately 5,976,000 units, each priced at $5.792 for net cash proceeds of approximately $34.4 million. Each unit consisted of one share and one immediately exercisable warrant having an exercise price of $11.76 per share. Entities controlled by Gregg Williams, Second Sight’s Chairman of the Board of Directors, acquired approximately 5,180,000 units in the offering for an aggregate investment of approximately $30 million.

In May 2020, March 2021 and June 2021 Second Sight sold 7.5 million shares, 4.65 million shares and 11.5 million shares for net proceeds of $6.7 million, $24.5 million and $53.3 million, respectively. On December 8, 2020 Second Sight borrowed $1 million from Gregg Williams, Chairman of the Board of Directors and $1.2 million from two unaffiliated shareholders. These loan obligations were unsecured, bore interest at 12% per year and were repaid during 2021.

As Second Sight requires additional funds, it may seek to fund Second Sight’s operations through the sale of additional equity securities, debt financing and strategic collaboration agreements. Second Sight cannot be sure that additional financing from any of these sources will be available when needed or that, if available, the additional financing will be obtained on terms favorable to it or Second Sight’s stockholders. If Second Sight raises additional funds by selling shares of Second Sight’s capital stock, the ownership interest of Second Sight’s current stockholders will be diluted. If Second Sight is unable to obtain additional funds on a timely basis or on terms favorable to Second Sight, it may be required to cease or reduce certain research and development projects, to sell some or all of Second Sight’s technology or assets or business units or to merge all or a portion of Second Sight’s business with another entity.

Second Sight’s ability to utilize and benefit from Second Sight’s net operating loss carryforwards and certain other tax attributes may be limited.

As of December 31, 2021, Second Sight had federal and state of California income tax net operating loss carryforwards, which may be applied to future taxable income, of approximately $124.3 million and $76.8 million, respectively. To the extent that Second Sight continues to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until these unused losses expire. However, Second Sight may be unable to use these losses to offset taxable income before Second Sight’s unused losses expire at various dates that range from 2035 through 2037 for federal net operating losses generated before 2018. Federal net operating losses generated for year 2018 and forward do not expire. State net operating losses expire from 2033 through 2041. Under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss, or NOL, carryforwards to offset its post-change taxable income may be limited. Limitations may also apply to the utilization of other pre-change tax attributes as a result of an ownership change.

Risks Related to Second Sight’s Business and Industry

Second Sight has incurred operating losses since inception and may continue to incur losses for the foreseeable future.

Second Sight has had a history of operating losses and it expects that operating losses will continue into the near term. Although Second Sight has had sales of the Argus II product, these limited sales were insufficient to cover Second Sight’s operating expenses. Given the limited addressable market of Argus II, Second Sight no longer market the Argus II and have focused all of Second Sight’s resources on the development of Orion. Second Sight’s ability to generate positive cash flow will hinge on Second Sight’s ability to develop the Orion visual prosthesis, correctly price Second Sight’s product to Second Sight’s markets, and obtain government and private insurance reimbursement. As of December 31, 2021, Second Sight had stockholders’ equity of $68.4 million and an accumulated deficit of $328.6 million. Second Sight cannot assure you that it will be profitable even if it successfully commercializes Second Sight’s products. Failure to become and remain profitable may adversely affect the market price of Second Sight’s common stock and Second Sight’s ability to raise capital and continue operations.

Second Sight’s business is subject to international economic, political and other risks that could negatively affect Second Sight’s results of operations or financial position.

Second Sight anticipates that revenue from Europe and other countries outside the U.S. may be material to Second Sight’s future long-term success. Accordingly, Second Sight’s operations are subject to risks associated with doing business internationally, including:

currency exchange variations;

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extended collection timelines for accounts receivable;
greater working capital requirements;
multiple legal frameworks and unexpected changes in legal and regulatory requirements;
the need to ensure compliance with the numerous regulatory and legal requirements applicable to Second Sight’s business in each of these jurisdictions and to maintain an effective compliance program to ensure compliance with these requirements;
political changes in the foreign governments impacting health policy and trade;
tariffs, export restrictions, trade barriers and other regulatory or contractual limitations that could impact Second Sight’s ability to sell or develop Second Sight’s products in certain foreign markets;
trade laws and business practices favoring local competition; and
adverse economic conditions, including the stability and solvency of business financial markets, financial institutions and sovereign nations and the healthcare expenditure of domestic or foreign nations.

The realization of any of these or other risks associated with operating in Europe or other non-U.S. countries could have a material adverse effect on Second Sight’s business, results of operations or financial condition.

Second Sight is subject to stringent domestic and foreign medical device regulation and any unfavorable regulatory action may materially and adversely affect Second Sight’s financial condition and business operations.

Second Sight’s products, development activities and manufacturing processes are subject to extensive and rigorous regulation by numerous government agencies, including the FDA and comparable foreign agencies. To varying degrees, each of these agencies monitors and enforces Second Sight’s compliance with laws and regulations governing the development, testing, manufacturing, labeling, marketing, distribution, and the safety and effectiveness of Second Sight’s medical devices. The process of obtaining marketing approval or clearance from the FDA and comparable foreign bodies for new products, or for enhancements, expansion of the indications or modifications to existing products, could:

take a significant, indeterminate amount of time;
result in product shortages due to regulatory delays;
require the expenditure of substantial resources;
involve rigorous pre-clinical and clinical testing, and possibly post-market surveillance;
involve modifications, repairs or replacements of Second Sight’s products;
require design changes of Second Sight’s products;
result in limitations on the indicated uses of Second Sight’s products; and
result in Second Sight’s never being granted the regulatory approval Second Sight seek.

Any of these occurrences that Second Sight might experience will cause Second Sight’s operations to suffer, harm Second Sight’s competitive standing and result in further losses that adversely affect Second Sight’s financial condition.

Second Sight has ongoing responsibilities under FDA and international regulations, both before and after a product is commercially released. For example, Second Sight is required to comply with the FDA’s Quality System Regulation (QSR), which mandates that manufacturers of medical devices adhere to certain quality assurance requirements pertaining, among other things, to

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validation of manufacturing processes, controls for purchasing product components, and documentation practices. As another example, the Medical Device Reporting regulation requires Second Sight to provide information to the FDA whenever there is evidence that reasonably suggests that a device may have caused or contributed to a death or serious injury, or that a malfunction occurred which would be likely to cause or contribute to a death or serious injury upon recurrence. Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA. If the FDA were to conclude that Second Sight is not in compliance with applicable laws or regulations, or that any of Second Sight’s medical devices are ineffective or pose an unreasonable health risk, the FDA could ban such medical devices, detain or seize such medical devices, order a recall, repair, replacement, or refund of such devices, or require Second Sight to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health. The FDA has been increasing its scrutiny of the medical device industry and the government is expected to continue to scrutinize the industry closely with inspections and possibly enforcement actions by the FDA or other agencies. Additionally, the FDA may restrict manufacturing and impose other operating restrictions, enjoin and restrain certain violations of applicable law pertaining to medical devices and assess civil or criminal penalties against Second Sight’s officers, employees, or Second Sight. Any adverse regulatory action, depending on its magnitude, may restrict Second Sight from effectively manufacturing, marketing and selling Second Sight’s products. In addition, negative publicity and product liability claims resulting from any adverse regulatory action could have a material adverse effect on Second Sight’s financial condition and results of operations.

The number of preclinical and clinical tests that will be required for regulatory approval varies depending on the disease or condition to be treated, the jurisdiction in which Second Sight is seeking approval and the regulations applicable to that particular medical device. Regulatory agencies, including those in the U.S., Canada, Europe and other countries where medical devices are regulated, can delay, limit or deny approval of a product for many reasons. For example,

a medical device may not be safe or effective;
regulatory agencies may interpret data from preclinical and clinical testing differently than Second Sight does;
regulatory agencies may not approve Second Sight’s manufacturing processes;
regulatory agencies may conclude that Second Sight’s device does not meet quality standards for durability, long-term reliability, biocompatibility, electromagnetic compatibility, electrical safety; and
regulatory agencies may change their approval policies or adopt new regulations.

The FDA may make requests or suggestions regarding conduct of Second Sight’s clinical trials, resulting in an increased risk of difficulties or delays in obtaining regulatory approval in the U.S. Any of these occurrences could prove materially harmful to Second Sight’s operations and business.

Any revenue from sales of Orion will be dependent upon the pricing and reimbursement guidelines adopted in each country and if pricing and reimbursement levels are inadequate to achieve profitability Second Sight’s operations will suffer.

Second Sight’s financial success is dependent on Second Sight’s ability to price Second Sight’s products in a manner acceptable to government and private payers while still maintaining Second Sight’s profit margins. Numerous factors that may be beyond Second Sight’s control may ultimately impact Second Sight’s pricing of Orion and determine whether Second Sight is able to obtain reimbursement or reimbursement at adequate levels from governmental programs and private insurance. If Second Sight is unable to obtain reimbursement or Second Sight’s product is not adequately reimbursed, it will experience reduced sales, Second Sight’s revenues likely will be adversely affected, and it may not become profitable.

Obtaining reimbursement approvals is time consuming, requires substantial management attention, and is expensive. Second Sight’s business will be materially adversely affected if Second Sight does not receive approval for reimbursement of Orion under government programs and from private insurers on a timely or satisfactory basis. Limitations on coverage could also be imposed at the local Medicare Administrative Contractor level or by fiscal intermediaries in the U.S., and by regional or national funding agencies in Europe. Second Sight’s business could be materially adversely affected if the Medicare program, local Medicare Administrative Contractors or fiscal intermediaries were to make such a determination and deny, restrict or limit the reimbursement of Orion. Similarly, in Europe, these governmental and other agencies could deny, restrict or limit the reimbursement of Orion at the hospital, regional or national level. Second Sight’s business also could be adversely affected if surgeons and the facilities within which they operate are not adequately reimbursed by Medicare and other funding agencies for the cost of the procedure in which they implant the

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Orion on a basis satisfactory to the administering surgeons and their facilities. If the local contractors that administer the Medicare program and other funding agencies are slow to reimburse surgeons or provider facilities for the Orion system, the surgeons and facilities may delay their payments to Second Sight, which would adversely affect Second Sight’s working capital requirements. Also, if the funding agencies delay reimbursement payments to the hospitals, any increase to their working capital requirements could reduce their willingness to treat blind patients who wish to have Second Sight’s Orion devices implanted. If reimbursement for Second Sight’s products is unavailable, limited in scope or amount, or if pricing is set at unsatisfactory levels, Second Sight’s business will be materially harmed.

Second Sight’s product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

In order to obtain marketing approval for Orion Second Sight must demonstrate the safety and efficacy of Orion through clinical trials as well as additional supporting data. If Orion is associated with undesirable side effects in clinical trials or have characteristics that are unexpected, Second Sight may need to interrupt, delay or abandon Orion’s development, cause it to have reduced functionality, or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Second Sight is conducting an initial feasibility clinical study of Orion at UCLA and Baylor, but it cannot guarantee that any positive results in this limited trial will successfully translate to a pivotal clinical trial. It is not uncommon to observe results in human clinical trials that are unexpected based on limited trials testing, and many product candidates fail in large clinical trials despite promising limited clinical trial results. Moreover, clinical data is often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain marketing approval for their products. No assurance can be given that Second Sight will not encounter similar results in Second Sight’s Orion trials.

Human subjects in Second Sight’s clinical trials may suffer significant adverse events, tolerability issues or other side effects associated with the surgical implantation, chronic implantation, and chronic use of the Orion device. These events include, but are not limited to, the following (events that are also anticipated during or following explanation of the Orion device are identified with an asterisk (*)): intracranial hemorrhage*; subcutaneous hematoma*; vascular injury causing stroke or hemorrhage (e.g. injury to the superior sagittal sinus or posterior cerebral artery perforators)*; hydrocephalus*; intracranial hypotension or cerebrospinal fluid (CSF) leak*; headache or pain in the head, including deep pain*; tingling at the implant site*; brain edema*; infection*; meningitis*; implant site pain, swelling, discharge or effusion*; suture-related complications or stitch abscess*; skin erosion on and/or around the implant site; adverse tissue reaction to the implant; tissue damage at the implant/explant site*; cranial defect/bone damage*; decline in residual vision*; dizziness/syncope*; foreign body sensation at the implant site*; activation of motor or sensory neurons (e.g., muscle twitch); clinically symptomatic seizure*; development of epilepsy; coma*; death*; psychiatric events, including but not limited to mood changes, depression, suicidality, and psychosis*; neurological deficit, including but not limited to language (dysphemia), dysesthesias, paresis, paresthesia, visual field, motor deficit (including apraxia), and memory impairment*; drug hypersensitivity, adverse drug reaction, or therapeutic agent toxicity*; events related to any surgery and general anesthesia including cardiac risks, including stroke/transient ischemic attack, arrhythmia, cardiac arrest, and myocardial infarction*, venous thromboembolic (VTE) disease*; pneumonia*, urinary tract infection*, post-operative delirium*, postoperative constipation*, post-operative vomiting or nausea*, or post-operative fever*; injuries due to falls or bumps; skin irritation or burns; Orion system failure or malfunction; array migration; damage to the Orion electronics case; device interaction including the Orion device may interfere with the proper functioning of other electronic devices and emissions from other electronic equipment may interfere with the proper functioning of the Orion device; and (explant only) inability to remove all or part of the Orion device due to fibrosis or other reason.

No assurance can be given that Second Sight will not encounter adverse events in Second Sight’s Orion trials. The observed efficacy and extent of light perception and vision restoration for subjects implanted with Orion in Second Sight’s feasibility study may not be maintained over the long term or may not be observed in a larger pivotal clinical trial. If general clinical trials of Orion fail to demonstrate efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, Second Sight may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of Orion.

For example, in June 2018, one subject in Second Sight’s Early Feasibility Study for Orion (“EFS”) experienced a seizure while in the clinic when Second Sight was evaluating a specific video stimulation algorithm. The seizure resolved quickly with medication and the subject was released from the clinic without need for hospitalization or further treatment. The subject was allowed to continue using the Orion device after the serious adverse event was reviewed by a safety committee for the study and clinicians at the implanting institution.

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In addition, in January 2019 Second Sight observed higher impedance levels on 11 of 60 electrodes with the first EFS subject implanted with the Orion device in January 2018. As a result, some of these electrodes no longer generated a phosphene, or observable spot of light, for the subject. Mechanical and software safeguards are built into the device to avoid excessive electrical stimulation and, as a result, the higher impedance levels do not pose any known safety risks to the subject. Given the pattern of high impedances, Second Sight took the precaution of disabling half of the electrodes on the array to ensure that other potentially affected electrodes were not used. The subject continued to use the device and participate in the clinical study. This subject was explanted (electively, to be able to undergo an MRI for an unrelated issue) after having been implanted for 42 months. Analysis of the explanted device indicated that it was still functional, and there were no signs of corrosion or material damage to the electrodes. There was visible damage to the cable, likely due to stresses in silicone attributable to the manufacturing process of the first batch of implants. The manufacturing process was changed for later implants. Second Sight currently has no indication that the issue exists with any of the Orion devices implanted in each of the other three current EFS subjects, each of whom has been implanted about 4 years. Prior to initiation of EFS, Second Sight subjected six Orion implants to accelerated aging tests and had no failures for what was the equivalent of up to 6.5 years.

In October 2019, Second Sight also observed changes to impedances (higher and lower) on most electrodes with the sixth EFS subject implanted with the device in January 2019. These impedance changes were coincident with a loss of most perception from the device, though there is no indication of a medical adverse event or a device defect. When examined again in November 2019, this sixth EFS subject showed improved perception and more normal impedances including performance on the 12-month visual function and functional vision assessments that was similar to pre-incident performance. Second Sight is currently investigating the possible root cause(s) for these changes, which may or may not be device related (that is, the possible root causes may be subject related). This subject was explanted (also electively) after having been implanted for 36 months. Analysis of this explanted device has not been completed.

In March 2022, a third EFS subject underwent elective explant after having been implanted for 46 months. Analysis of this explanted device has not been completed.

Second Sight cannot provide any assurance that it will not experience similar or other issues with any of the implanted Orion devices, be able to determine the root cause of the issue or to ascertain whether the issue is isolated or systemic in nature. Additional testing, investigation, design changes or mitigation activities may delay Second Sight’s plans to conduct additional clinical studies for Orion and/or Second Sight’s marketing approval and may have a material adverse effect on Second Sight’s business.

If device defects, significant adverse events or other side effects are observed in any of Second Sight’s future clinical trials, it may have difficulty recruiting subjects to the clinical trial, subjects may drop out of Second Sight’s trial, or it may be required to abandon the trial or Second Sight’s development efforts of that product candidate altogether. Second Sight, the FDA or other applicable regulatory authorities may suspend clinical trials of Orion at any time for various reasons, including a belief that subjects in such trials are being exposed to unacceptable health risks. Devices developed in the prosthesis industry that initially showed promise in early-stage studies have later been found to cause side effects that prevented their further development. Even if the side effects do not preclude Orion from obtaining or maintaining marketing approval, undesirable side effects may inhibit market acceptance of the approved product due to its actual or perceived safety and tolerability profile. Any of these developments could materially harm Second Sight’s business, financial condition and prospects.

Should Orion obtain marketing approval, adverse effects associated with it may also develop after such approval and could lead to requirements for conducting additional clinical safety trials, placing additional warnings in the labeling, imposing significant restrictions on Orion, or withdrawing the Orion from the market while further incurring attendant costs of explants and exposure to litigation. Second Sight cannot predict whether Orion will cause significant adverse effects in humans that would preclude or lead to the revocation of regulatory approval. However, any such event, were it to occur, would cause substantial harm to Second Sight’s business and financial condition and would result in the diversion of Second Sight’s management’s attention.

Second Sight is also subject to stringent government regulation in European and other foreign countries, which could delay or prevent Second Sight’s ability to sell Second Sight’s products in those jurisdictions.

Second Sight intends to pursue market authorizations for the Orion system and other product candidates in additional jurisdictions and undergo additional audits. For Second Sight to market Second Sight’s products in Europe and some other international jurisdictions, Second Sight and Second Sight’s distributors and agents must obtain required regulatory registrations or approvals. The approval procedure varies among countries and jurisdictions and can involve additional testing, and the time and costs required to obtain approval may differ from that required to obtain an approval by the FDA. Approval by the FDA does not ensure approval by

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regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or jurisdictions or by the FDA. Violations of foreign laws governing use of medical devices may lead to actions against Second Sight by the FDA as well as by foreign authorities. Second Sight must also comply with extensive regulations regarding safety, efficacy and quality in those jurisdictions. Second Sight may not be able to obtain all the required regulatory registrations or approvals, or it may be required to incur significant costs in obtaining or maintaining any regulatory registrations or approvals it receives. Delays in obtaining any registrations or approvals required for marketing Second Sight’s products, failure to receive these registrations or approvals, or future loss of previously obtained registrations or approvals would limit Second Sight’s ability to sell Second Sight’s products internationally. For example, international regulatory bodies have adopted various regulations governing product standards, packaging requirements, labeling requirements, import restrictions, tariff regulations, duties and tax requirements. These regulations vary from country to country. In order to sell Second Sight’s products in Europe, it must reestablish Second Sight’s ISO 13485:2016 certification and CE mark certification that have lapsed, which is an international symbol of quality and compliance with applicable European medical device directives. Failure to maintain the ISO 13485:2016 certification or CE mark certification or other international regulatory approvals would prevent Second Sight from selling in some countries in Europe and elsewhere. The failure to obtain these approvals could harm Second Sight’s business materially

Even if Second Sight obtain clearance or approval to sell Second Sight’s products, it is subject to ongoing requirements and inspections that could lead to the restriction, suspension or revocation of Second Sight’s clearance.

Second Sight, as well as any potential collaborative partners such as distributors, will be required to adhere to applicable FDA regulations regarding good manufacturing practice, which include testing, control, and documentation requirements. Second Sight is subject to similar regulations in foreign countries. Even if regulatory approval of a product is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. Ongoing compliance with good manufacturing practice and other applicable regulatory requirements is strictly enforced in the United States through periodic inspections by state and federal agencies, including the FDA, and in international jurisdictions by comparable agencies. Failure to comply with these regulatory requirements could result in, among other things, warning letters, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, failure to obtain premarket clearance or premarket approval for devices, withdrawal of approvals previously obtained, and criminal prosecution. The restriction, suspension or revocation of regulatory approvals or any other failure to comply with regulatory requirements would limit Second Sight’s ability to operate and could increase Second Sight’s costs.

Second Sight has no large-scale manufacturing experience, which could limit Second Sight’s growth.

Second Sight’s limited manufacturing experience may not enable it or any outside suppliers to make Second Sight’s products in the volumes that would be necessary for it to achieve a significant amount of commercial sales. Second Sight’s product involves new and technologically complex materials and processes. As Second Sight move from making product for clinical trials to larger quantities for greater commercial distribution, it must develop new internal or external manufacturing techniques and processes that allow it to scale production. Second Sight may not be able to establish and maintain reliable, efficient, full scale manufacturing at commercially reasonable costs in a timely fashion. Difficulties Second Sight encounter in manufacturing scale-up, or Second Sight’s failure to implement and maintain Second Sight’s or outside manufacturing facilities in accordance with good manufacturing practice regulations, international quality standards or other regulatory requirements, could result in a delay or termination of production. To date, Second Sight’s manufacturing activities have largely been to provide units for clinical testing and commercial sales of the now discontinued Argus II system. Second Sight may face substantial difficulties in reestablishing and maintaining manufacturing and obtaining the manufacturing from outside suppliers for Second Sight’s products at a larger commercial scale and those difficulties may impact the quality of Second Sight’s products and adversely affect Second Sight’s ability to increase sales.

To establish Second Sight’s sales and marketing infrastructure, it will need to grow the size of Second Sight’s organization, and it may experience delays or other difficulties in managing this growth.

As Second Sight’s development and commercialization plans and strategies evolve, it will need to expand the size of Second Sight’s employee base for managerial, operational, sales, marketing, financial and other resources. Future growth would impose significant added responsibilities on members of management, including the need to identify, recruit, maintain, motivate and integrate additional employees. Second Sight’s management team may have to use a substantial amount of time to manage these growth activities. Second Sight’s future financial performance and Second Sight’s ability to commercialize the Orion system and Second Sight’s other product candidates and compete effectively will depend, in part, on Second Sight’s ability to timely and effectively

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manage any future growth and related costs. Second Sight may not be able to effectively manage a rapid pace of growth and timely implement improvements to Second Sight’s management infrastructure and control systems.

Second Sight may acquire additional businesses or form strategic alliances in the future, and it may not realize the benefits of such acquisitions or alliances.

Second Sight may acquire additional businesses or products, form strategic alliances or create joint ventures with third parties that it believes will complement or augment Second Sight’s proposed Orion development activity and business. If Second Sight acquires businesses with promising markets or technologies, it may not be able to realize the benefit of acquiring such businesses if it is unable to successfully integrate them with Second Sight’s existing operations and company culture. Second Sight may have difficulty in developing, manufacturing and marketing the products of a newly acquired company that enhances the performance of Second Sight’s combined businesses or product lines to realize value from expected synergies. Second Sight cannot assure that, following an acquisition, it will achieve the revenues or specific net income that justifies the acquisition.

Risks Related to the Securities Market, and Ownership of Second Sight’s Common Stock

Although Second Sight believes that Second Sight’s strategy to (i) leverage proven Argus II technology to develop the Orion visual cortical prosthesis and (ii) significantly expand Second Sight’s addressable market to include a portion of the almost six million patients who are blind from eye trauma, optic nerve disease and injury, diabetic retinopathy, glaucoma and other untreatable causes is more likely to address a better and faster way to treat many causes of blindness, it will incur material near term losses, market uncertainty and Second Sight’s stock may experience significant fluctuations as it continues to focus exclusively on Orion.

Based on assessments of the development of Second Sight’s Orion technology and the positive results in Second Sight’s Early Feasibility Study of the six subjects implanted with the Orion at UCLA Medical Center and at Baylor College of Medicine, in May 2019 the Second Sight board approved an acceleration of Second Sight’s transition from the Argus II to the Orion platform so Second Sight may more rapidly implement Second Sight’s strategy of treating blindness domestically and worldwide. As a result, it will or has:

accelerated the changeover to, and upgrades of, Second Sight’s supply chain, manufacturing and quality assurance processes, as well as Second Sight’s facilities and talent pool to the Orion program and suspended production of Argus II system;
manufacture Orion devices that Second Sight will require to support FDA approval of the Orion commercial product;
seek to conduct a larger feasibility study or a pivotal clinical trial with the intent of seeking regulatory approval for marketing Orion in the U.S.;
terminated Second Sight’s commercial activities and other costs associated with expanding or maintaining Argus II sales;
incurred non-cash impairment charges of approximately $1.2 million of which $0.5 million related to Argus II inventory and $0.7 million to write-down Second Sight’s fixed assets that were not directly related to the development of Orion in the year ended December 31, 2020;
incurred cash severance and related expenses of approximately $800,000 in the year ended December 31, 2020 affecting employees primarily associated with Argus II operations and $0.2 million in material and overhead costs associated with Argus II; and
reduce and assess Second Sight’s current level of support of the Argus II patient population.

As a result of this transition from Argus II, Second Sight’s future success will depend on the further development, regulatory approval and commercialization of the Orion product. Although Second Sight believes this more rapid changeover and implementation of Second Sight’s long-term strategy for treating blindness by Orion will provide it a sizable, commercially sustainable domestic and worldwide market for Second Sight’s products, in the near term it will incur significant losses, market volatility and regulatory uncertainty, including uncertainty associated with pricing and reimbursement coverage with no current assurance of market acceptance. No assurance can be given that this strategy will achieve domestic and regulatory approvals or result in commercial viability of Second Sight’s products or Second Sight.

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If Second Sight is unable to obtain sufficient funding, it may be unable to execute Second Sight’s business plan and fund operations. it may not be able to obtain additional financing on commercially reasonable terms, or at all.

Second Sight has experienced operating losses, and it may continue to incur operating losses for the next several years as it implements Second Sight’s business plan. Currently, Second Sight has no revenue and do not have arrangements in place for all the anticipated financing that would be required to fully implement Second Sight’s business plan. Second Sight’s prior losses combined with expected future losses, have had and will continue to have, for the foreseeable future, an adverse effect on Second Sight’s stockholders’ equity and working capital.

Second Sight will need to raise additional capital in order to continue to execute Second Sight’s business plan in the future however there is no assurance that it will be successful, or that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to Second Sight. If Second Sight is unable to raise sufficient additional funds, it will need to further scale back Second Sight’s operations. The ongoing COVID-19 pandemic and resulting negative impact on the global macroeconomic environment and capital markets may make it more difficult for it to raise additional funds.

Second Sight cannot give any assurance that it will be able to obtain all the necessary funding that it may need. In addition, Second Sight believes that it will require additional capital in the future to fully develop Second Sight’s technologies and planned products to the stage of FDA approvals and a commercial launch. Second Sight has pursued and may pursue additional funding through various financing sources, including the private sale of Second Sight’s equity and debt securities, licensing fees for Second Sight’s technology and joint ventures with capital partners and project type financing. If Second Sight raises funds by issuing equity or equity-linked securities, dilution to some or all Second Sight’s stockholders will result. Any equity securities issued may also provide for rights, preferences, or privileges senior to those of holders of Second Sight’s common stock. The terms of debt securities issued or borrowings could impose significant restrictions on Second Sight’s operations. Second Sight also may seek government-based financing, such as development and research grants. There can be no assurance that funds will be available on commercially reasonable terms, if at all.

The incurrence of indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in restrictive covenants, such as limitations on Second Sight’s ability to incur additional debt or issue additional equity, limitations on Second Sight’s ability to acquire or license intellectual property rights, and other operating restrictions that could adversely affect Second Sight’s ability to conduct Second Sight’s business. In addition, the issuance of additional equity securities by Second Sight, or the possibility of such issuance, may cause the market price of Second Sight’s common stock to decline. In the event that Second Sight enters into collaborations or licensing arrangements to raise capital, it may be required to accept unfavorable terms. These agreements may require that it relinquish, or license to a third party on unfavorable terms, Second Sight’s rights to technologies or product candidates that it otherwise would seek to develop or commercialize itself or reserve certain opportunities for future potential arrangements when it might otherwise be able to achieve more favorable terms. In addition, it may be forced to work with a partner on one or more of Second Sight’s products or market development programs, which could lower the economic value of those programs to Second Sight.

If Second Sight is unable to obtain adequate financing or financing on terms satisfactory to it when it requires it, Second Sight may terminate or delay the development of one or more of Second Sight’s Orion features updated products, delay clinical trials necessary to market Second Sight’s products, or delay establishment of sales and marketing capabilities or other activities necessary to commercialize Second Sight’s products. If this were to occur, Second Sight’s ability to grow and support Second Sight’s business and to respond to market challenges could be significantly limited or Second Sight may be unable to continue operations, in which case you could lose your entire investment.

If Second Sight’s development activity, regulatory efforts and substantial investments related to Orion do not result in a commercial product or if it never achieves profitability or positive free cash flow, Second Sight’s stock price will decline, it will not be able to sustain operations and Second Sight’s stockholders may incur a complete loss of their investment in Second Sight. The price of Second Sight’s common stock has been and may continue to be volatile and the value of your investment could decline.

Medical technology stocks have historically experienced high levels of volatility. The trading prices of Second Sight’s common stock have fluctuated and may continue to fluctuate substantially. The market price of Second Sight’s common stock may be higher or lower than the price you pay, depending on many factors, some of which are beyond Second Sight’s control and may not be related to

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Second Sight’s operating performance. These fluctuations could cause you to lose substantially all or part of your investment in Second Sight’s common stock. Factors that could cause fluctuations in the trading price of Second Sight’s common stock include:

announcements of new offerings, products, services, therapies, treatments or technologies, commercial relationships, acquisitions or other events by Second Sight or Second Sight’s competitors;
challenges to Second Sight’s patents and the patents and intellectual property that it licenses;
United States and European approvals or denials of Second Sight’s products;
price and volume fluctuations in the overall stock market from time to time;
significant volatility in the market price and trading volume of medical device or technology companies in general;
fluctuations in the trading volume of Second Sight’s shares or the size of Second Sight’s public float;
actual or anticipated changes or fluctuations in Second Sight’s results of operations;
whether Second Sight’s results of operations meet the expectations of securities analysts or investors;
actual or anticipated changes in the expectations of investors or securities analysts;
litigation involving Second Sight, Second Sight’s industry, or both;
regulatory developments in the United States, foreign countries, or both;
general economic conditions and trends;
major catastrophic events;
sales of large blocks of Second Sight’s common stock;
departures of key employees; and
an adverse impact on Second Sight’s business from any of the other risks cited herein.

In addition, if the market for medical technology stocks or the stock market, in general, experiences a loss of investor confidence, the trading price of Second Sight’s common stock could decline for reasons unrelated to Second Sight’s business, results of operations or financial condition. The trading price of Second Sight’s common stock might also decline in reaction to events that affect other companies in Second Sight’s industry even if these events do not directly affect Second Sight. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. If Second Sight’s stock price is volatile, Second Sight may become the target of securities litigation. Securities litigation could result in substantial costs and divert Second Sight’s management’s attention and resources from Second Sight’s business. This could have a material adverse effect on Second Sight’s business, results of operations and financial condition.

If shares of Second Sight’s common stock cease to be listed on a national exchange it will not be subject to compliance with rules requiring the adoption of certain corporate governance measures and as a result Second Sight’s stockholders may experience reduced protections.

Each of the New York Stock Exchange and the Nasdaq Stock Market LLC require the implementation of various measures relating to corporate governance for listed companies. These quantitative and qualitative measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities which are listed on those stock exchanges. While Second Sight has adopted these measures, it will not be required to comply with many of the corporate governance provisions if Second Sight’s common stock is not listed on a national securities exchange. As a result, if Second Sight cease to be listed on national

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exchange and elect to cease compliance with any of the corporate governance measures required by national exchanges, Second Sight’s stockholders may lose protections afforded to listed companies.

If shares of Second Sight’s common stock cease to be listed on a national exchange they could become subject to the “penny stock” rules of the SEC and the trading market in Second Sight’s securities may become limited, which will make transactions in Second Sight’s stock cumbersome and may reduce the value of an investment in the stock.

Rule 15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to Second Sight, as any equity security that is no longer trading on a national exchange and has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of Second Sight’s common stock and cause a decline in the market value of Second Sight’s common stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

If shares of Second Sight’s common stock cease to be listed on a national exchange Second Sight’s securities will not be eligible for federal preemption rights and be subject to state “blue sky” laws which may affect Second Sight’s capabilities of raising capital.

Each state has its own securities laws, often called “blue sky” laws, which (i) limit sales of securities to a state’s residents unless the securities are registered in that state or qualify for an exemption from registration, and (ii) govern the reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or the transaction must be exempt from registration. The applicable broker must be registered in that state. it does not know whether securities will be registered or exempt from registration under the laws of any state. If Second Sight’s securities cease to be listed on the national exchange, a determination regarding registration will be made by those broker-dealers, if any, who agree to serve as the market-makers for Second Sight’s common stock. Registering or qualifying shares with states can be time consuming. Compliance and regulatory costs may vary from state to state and may adversely affect future financings and Second Sight’s ability to raise capital.

If Second Sight’s common stock is delisted from national exchange some institutional investors may not be allowed to purchase Second Sight’s shares and may be required to liquidate their current positions in Second Sight’s stock which could negatively affect the price and volatility of Second Sight’s shares.

Institutional investors may be restricted by their investment policies from investing in shares of companies that are not listed on a national exchange and may be required to liquidate their positions if Second Sight’s securities are delisted from a national exchange. Liquidations, should they occur, may increase volatility and cause wide fluctuations and further declines in the prices of Second Sight’s securities.

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Delisting of Second Sight’s common stock from a national exchange can cause material dilution of Second Sight’s stock in future financings which can erode shareholder value.

If it is not able to maintain listing of Second Sight’s securities on Nasdaq the trading prices of Second Sight’s securities may decline and it may need to sell larger amounts of Second Sight’s securities to obtain needed operating capital, possibly at prices which are at further discounts to the market or upon other terms that are less favorable to Second Sight, subjecting Second Sight’s shareholders to material dilution and losses to their investment.

Sales of substantial amounts of Second Sight’s common stock in the public or private markets could reduce the price of Second Sight’s common stock and may dilute your voting power and ownership interest in Second Sight.

As a result of the merger, there will be approximately 150,321,455 shares of common stock of Second Sight issued and outstanding, of which approximately 108,727,817 will be freely traded securities, as a result of the prior Second Sight offerings, prior Rule 144 sales and the shares registered under the registration statement of which this proxy is a part. Approximately 41,593,638 issued and outstanding shares of common stock of Second Sight will be subject to lock-up agreements ending 180 days after the Effective Time of the merger. The market or the perception that these sales might occur could significantly reduce the market price of the combined company’s common stock and impair the combined company’s ability to raise adequate capital through the sale of additional equity securities.

Entities controlled by Gregg Williams, Second Sight’s Chairman of the Board, have the ability to influence or materially affect the outcome of matters submitted for stockholder approval, may limit your ability to influence outcomes of director elections and may have interests that differ from those of Second Sight’s other stockholders.

As of March 1, 2022, entities controlled and beneficially owned by Gregg Williams, Second Sight’s Chairman of the Board, own of record an aggregate of approximately 25.1% of the outstanding shares of Second Sight’s common stock (or 35.1% after giving effect to Mr. Williams’ right to acquire beneficial ownership of 6,055,532 shares of common stock upon exercise of options or warrants). As a result, Mr. Williams is able to exercise substantial influence over all matters requiring stockholder approval, including

electing or defeating the election of Second Sight’s directors;
amending or preventing amendment of Second Sight’s articles of incorporation or bylaws;
effecting or preventing a merger, sale of assets or other corporate transaction; and
materially affecting the outcome of any other matter submitted to Second Sight’s stockholders for vote.

Mr. Williams may also have interests that differ from other stockholders and he may vote in a manner that is or could be deemed as adverse to interests of other stockholders. His significant stock ownership could discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of Second Sight, which in turn could reduce Second Sight’s stock price or prevent Second Sight’s stockholders from realizing a premium over Second Sight’s stock price. This concentration of voting power may have the effect of deterring, delaying or impeding actions that could be beneficial to other stockholders. See also “Risk Relating to the Proposed Merger” below.

Second Sight does not intend to pay dividends for the foreseeable future and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of Second Sight’s common stock.

Second Sight has never declared or paid any dividends on Second Sight’s common stock. Second Sight intends to retain any earnings to finance the operation and expansion of Second Sight’s business, and it does not anticipate paying any cash dividends in the future. As a result, you may only receive a return on your investment in Second Sight’s common stock if the market price of Second Sight’s common stock increases.

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Future sales and issuances of Second Sight’s equity securities or rights to purchase Second Sight’s equity securities, including pursuant to Second Sight’s equity incentive plans, would result in dilution of the percentage ownership of Second Sight’s stockholders and could cause Second Sight’s stock price to fall.

To the extent Second Sight raises additional capital by issuing equity securities; Second Sight’s stockholders may experience substantial dilution. Second Sight may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner it determines from time to time. If Second Sight sell common stock, convertible securities or other equity securities in more than one transaction, investors may be diluted by subsequent sales. Such sales may also result in material dilution to Second Sight’s existing stockholders, and new investors could gain rights superior to existing stockholders.

The public market for Second Sight’s common stock has been volatile since completion of Second Sight’s initial public offering in November 2014. This volatility may affect the ability of Second Sight’s investors to sell their shares as well as the price at which they sell their shares.

Second Sight completed Second Sight’s initial public offering in November 2014. Since that time, Second Sight’s per share and day-to-day trading prices have often been volatile. This volatility may continue or increase in the future. The market price for the shares may be significantly affected by factors such as progress in the development of Second Sight’s technology, progress in Second Sight’s pre-clinical and clinical trials, agreements with research facilities or co-development partners, commercialization of Second Sight’s technology, coverage by third-party payors, variations in quarterly and yearly operating results, general trends in the medical device industry, and changes in FDA and foreign regulations affecting it and Second Sight’s industry. Furthermore, in recent years the stock market has experienced extreme price and volume fluctuations that are unrelated or disproportionate to the operating performance of the affected companies. Those broad market fluctuations may adversely affect the market price of Second Sight’s common stock.

Substantial future sales of shares of Second Sight’s common stock in the public market could cause Second Sight’s stock price to fall.

If Second Sight’s common stockholders (including those persons who may become common stockholders upon exercise of Second Sight’s options or warrants or upon completion of Second Sight’s acquisition of Nano Precision Medical, Inc. as noted below) sell substantial amounts of Second Sight’s common stock, or the public market perceives that stockholders might sell substantial amounts of Second Sight’s common stock, the market price of Second Sight’s common stock could decline significantly. Such sales also might make it more difficult for Second Sight to sell equity or equity-related securities in the future at a time and price that Second Sight’s management deems appropriate.

Second Sight has the right to issue shares of preferred stock. If it was to issue preferred stock, it is likely to have rights, preferences and privileges that may adversely affect the common stock.

Second Sight is authorized to issue 10 million shares of “blank check” preferred stock, with such rights, preferences and privileges as may be determined from time to time by the Second Sight Board. The Second Sight Board is empowered, without stockholder approval, to issue preferred stock in one or more series, and to fix for any series the dividend rights, dissolution or liquidation preferences, redemption prices, conversion rights, voting rights, and other rights, preferences and privileges for the preferred stock. No shares of preferred stock are presently issued and outstanding and it has no immediate plans to issue shares of preferred stock. The issuance of shares of preferred stock, depending on the rights, preferences and privileges attributable to the preferred stock, could adversely reduce the voting rights and powers of the common stock and the portion of Second Sight’s assets allocated for distribution to common stockholders in a liquidation event, and could also result in dilution in the book value per share of Second Sight’s common stock. The preferred stock could also be utilized, under certain circumstances, as a method for raising additional capital or discouraging, delaying or preventing a change in control of Second Sight, to the detriment of the holders of Second Sight’s common stock. Second Sight cannot assure you that it will not, under certain circumstances, issue shares of Second Sight’s preferred stock.

Second Sight may be assessed penalties and fines under California’s board gender diversity statutes which require all publicly held companies based in California to meet the minimum requirements for female directors and directors from underrepresented communities on their boards of directors as of January 1, 2021.

As of January 1, 2021, all publicly held domestic or foreign corporations whose principal executive offices are located in California must meet the minimum requirements for female directors and for directors from underrepresented communities on their

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boards as required respectively by Women on Boards (SB 826) and Underrepresented Communities on Boards (AB 979). California law authorizes the California Secretary of State to impose fines to enforce compliance of SB 826 including a $100,000 fine for "failure to timely file board member information with the Secretary of State"; a $100,000 fine for a first violation, defined as "each director seat required by this section to be held by a female, which is not held by a female during at least a portion of a calendar year"; and a $300,000 fine for subsequent violations. Second Sight currently has one female director and under California’s staggered compliance schedule as of December 31, 2021 it is required to have to have a minimum of three female directors. To date Second Sight has not filed board information with the Secretary of State. To Second Sight’s knowledge the Secretary of State has not to date imposed any fines. California has also instituted a parallel Board diversity compliance and reporting framework focused on directors "from an underrepresented community," which is defined to mean "an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender." Under the law’s staggered compliance schedule a publicly held corporation whose principal executive offices are located in California must have at least one director from an underrepresented community on its board as of December 31, 2021. Companies that fail to timely comply with AB 979 will be fined $100,000 for the first violation and $300,000 for subsequent violations. Second Sight is not in compliance with these provisions.

A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, a novel strain of coronavirus, may materially and adversely affect Second Sight’s business and Second Sight’s financial results.

Public health epidemics or widespread outbreaks of contagious diseases could adversely impact Second Sight’s business. Any outbreak of contagious diseases, and other adverse public health developments, such as the recent novel strain of coronavirus (COVID-19), initially limited to a region in China and now affecting the global community, could impact Second Sight’s operations depending on future developments, which are highly uncertain, largely beyond Second Sight’s control and cannot be predicted with certainty. These uncertain factors include the duration of the outbreak, potential impact to Second Sight’s employees who may contract the disease or be subject to quarantine, new information which may emerge concerning the severity of the disease and the actions to contain or treat its impact, such as the temporary closure of facilities or diversion of healthcare resources, including clinical trial sites, the flow of goods in Second Sight’s supply chains and the ability for third-party service providers to fulfill their contractual obligations to Second Sight. These factors may disrupt Second Sight’s ability to conduct Second Sight’s existing and future clinical trials in the U.S., cause disruptions or restrictions on Second Sight’s employees’ ability to work and have a material adverse effect on Second Sight’s overall productivity.

Second Sight may also experience a more challenging fundraising environment that may restrict Second Sight’s access to capital both publicly and privately amid the recent escalated volatility of the U.S. and global financial markets, increases in travel restrictions, quarantines, business shutdowns or warnings and from potential disruptions or delays of trade, scientific, and investor conferences. Should Second Sight experiences any of these or other currently unforeseen consequences of a health epidemic, pandemic or other outbreak, including the current COVID-19 outbreak, Second Sight’s business, financial condition, and results of operations could be materially and adversely affected.

Risks Related to NPM

Risks Related to NPM’s Financial Liquidity and Capitalization

NPM is a preclinical-stage company, has a limited operating history, is not currently profitable, does not expect to become profitable in the near future, and may never become profitable.

NPM is a preclinical-stage biopharmaceutical company. Since NPM’s incorporation, it has focused primarily on the development of its proprietary NanoPortal technology and the development of miniaturized, subdermal drug implants capable of the long-term delivery of medicine in patients with chronic diseases with high unmet medical need. All of NPM’s product candidates are in early-stage development and none of NPM’s product candidates have entered into clinical-stage testing, been approved for marketing, or are being marketed or commercialized.

As a result, NPM has no meaningful historical operations upon which to evaluate NPM’s business and prospects and has not yet demonstrated an ability to obtain marketing approval for any of its product candidates or successfully overcome the risks and uncertainties frequently encountered by companies in the biopharmaceutical industry. NPM has not generated any revenues to date and continues to incur significant research and development and other expenses. As a result, NPM has not been profitable and has incurred operating losses in every reporting period since its inception. For the years ended 2020 and 2021, NPM reported net losses of $9.3 million and $12.8 million, respectively, and had an accumulated deficit of $58.9 million as of December 31, 2021.

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For the foreseeable future, NPM expects to continue to incur losses, which will increase significantly from historical levels as NPM expands its drug development activities, seeks regulatory approvals for its product candidates and begins to commercialize them if they are approved by the U.S. Food and Drug Administration (the “FDA”) the European Medicines Agency (the “EMA”) or comparable foreign authorities. Even if NPM succeeds in developing and commercializing one or more product candidates, NPM may never become profitable.

In addition, NPM may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors and risks frequently experienced by clinical-stage biopharmaceutical companies in rapidly evolving fields. NPM also may need to transition from a company with a research and development focus to a company capable of supporting commercial activities. NPM has not yet demonstrated an ability to successfully overcome such risks and difficulties, or to make such a transition. If it does not adequately address these risks and difficulties or successfully make such a transition, its business will suffer.

NPM is dependent on the success of one or more of NPM’s current product candidates and NPM cannot be certain that any of them will receive regulatory approval or be commercialized.

NPM has spent significant time, money and effort on the licensing and development of its core assets, including NPM-119 (exenatide implant) in pre-clinical stage development, NPM-139 and NPM-159 (undisclosed drug molecules) in initial feasibility testing with NPM’s proprietary NanoPortal implant technology. To date, no pivotal clinical trials designed to provide clinically and statistically significant proof of efficacy, or to provide sufficient evidence of safety to justify approval, have been completed with any of NPM’s product candidates. All of NPM’s product candidates will require additional development, including clinical trials as well as further preclinical studies to evaluate their toxicology, carcinogenicity and pharmacokinetics and optimize their formulation, and regulatory clearances before they can be commercialized. Positive results obtained during early development do not necessarily mean later development will succeed or that regulatory clearances will be obtained. NPM’s drug development efforts may not lead to commercial drugs, either because NPM’s product candidates fail to be safe and effective or because NPM has inadequate financial or other resources to advance NPM’s product candidates through the clinical development and approval processes. If any of NPM’s product candidates fail to demonstrate safety or efficacy at any time or during any phase of development, NPM would experience potentially significant delays in, or be required to abandon, development of the product candidate.

NPM does not anticipate that any of its current product candidates will be eligible to receive regulatory approval from the FDA, the EMA or comparable foreign authorities and begin commercialization for a number of years, if ever. Even if NPM ultimately receives regulatory approval for any of these product candidates, NPM, or its potential future partners, if any, may be unable to commercialize them successfully for a variety of reasons. These include, for example, the availability of alternative treatments, lack of cost-effectiveness, the cost of manufacturing the product on a commercial scale and competition with other drugs. The success of NPM’s product candidates may also be limited by the prevalence and severity of any adverse side effects or the willingness of patients and healthcare providers to use or administer NPM’s drug implants. If NPM fails to commercialize one or more of its current product candidates, NPM may be unable to generate sufficient revenues to attain or maintain profitability, and NPM’s financial condition and stock price may decline.

NPM expects to continue to incur significant research and development expenses, which may make it difficult for NPM to attain profitability.

NPM expects to expend substantial funds in research and development, including preclinical studies and clinical trials of its product candidates, and to manufacture and market any product candidates in the event they are approved for commercial sale. NPM also may need additional funding to develop or acquire complementary companies, technologies, and assets, as well as for working capital requirements and other operating and general corporate purposes. Moreover, NPM’s planned increases in staffing will dramatically increase NPM’s costs in the near and long-term.

However, NPM’s spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products. Due to NPM’s limited financial and managerial resources, NPM must focus on a limited number of research programs and product candidates and on specific indications. NPM’s resource allocation decisions may cause it to fail to capitalize on viable commercial products or profitable market opportunities.

Because the successful development of NPM’s product candidates is uncertain, NPM is unable to precisely estimate the actual funds NPM will require to develop and potentially commercialize them. In addition, NPM may not be able to generate sufficient revenue, even if NPM is able to commercialize any of its product candidates, to become profitable.

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NPM has never generated meaningful revenue and may never be profitable.

NPM may never be able to develop or commercialize marketable products or achieve profitability. Revenue from the sale of any product candidate for which regulatory approval is obtained will be dependent, in part, upon the size of the markets in the territories for which NPM gains regulatory approval, the accepted price for the product, the acceptance of the product by physicians and patients, the ability to obtain reimbursement at any price and whether NPM owns the commercial rights for that territory. NPM’s growth strategy depends on its ability to generate revenue. In addition, if the number of addressable patients is not as anticipated, the indication or intended use approved by regulatory authorities is narrower than expected, or the target patient population for treatment is narrowed by competition, physician choice or treatment guidelines, NPM may not generate significant revenue from sales of such products, even if approved. Even if NPM is able to generate revenue from the sale of any approved products, NPM may not become profitable and may need to obtain additional funding to continue operations. Even if NPM achieves profitability in the future, they may not be able to sustain profitability in subsequent periods.

NPM’s failure to achieve sustained profitability would depress the value of our company and could impair its ability to raise capital, expand its business, diversify its research and development pipeline, market its product candidates, if approved, and pursue or continue its operations. NPM’s prior losses, combined with expected future losses, have had, and will continue to have an adverse effect on its shareholders’ equity and working capital.

NPM’s ability to generate revenue and achieve profitability depends significantly on its ability to achieve several objectives relating to the development and commercialization of its product candidates.

NPM’s business depends entirely on the successful development and commercialization of product candidates. NPM has no products approved for commercial sale and do not anticipate generating any revenue from product sales for the next several years, if ever. NPM’s ability to generate revenue and achieve profitability depends significantly on its ability, or any current or future collaborator’s ability, to achieve several objectives, including:

successful and timely completion of preclinical and clinical development of NPM-119 and its other future product candidates;
establishing and maintaining relationships with contract research organizations (CROs) and clinical sites for the clinical development NPM-119 and our other future product candidates;
timely receipt of marketing approvals from applicable regulatory authorities for any product candidates for which we successfully complete clinical development;
developing an efficient and scalable manufacturing process for our candidates, including obtaining finished products that are appropriately packaged for sale;
establishing and maintaining commercially viable supply and manufacturing relationships with third parties that can provide adequate, in both amount and quality, products and services to support clinical development and meet the market demand for our product candidates, if approved;
successful commercial launch following any marketing approval, including the development of a commercial infrastructure, whether in-house or with one or more collaborators;
a continued acceptable safety profile following any marketing approval of our product candidates;
commercial acceptance of our product candidates by patients, the medical community and third-party payors;
satisfying any required post-marketing approval commitments to applicable regulatory authorities;
identifying, assessing, and developing new product candidates;

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obtaining, maintaining, and expanding patent protection, trade secret protection and regulatory exclusivity, both in the United States and Canada and internationally;
protecting our rights in our intellectual property portfolio;
defending against third-party interference or infringement claims, if any;
entering into, on favorable terms, any collaboration, licensing, or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates;
obtaining coverage and adequate reimbursement by third-party payors for our product candidates;
addressing any competing therapies and technological and market developments; and
attracting, hiring, and retaining qualified personnel.

NPM may never be successful in achieving its objectives and, even if they do, may never generate revenue that is significant or large enough to achieve profitability. If NPM does achieve profitability, they may not be able to sustain or increase profitability on a quarterly or annual basis. Its failure to become and remain profitable would decrease the value of the company and could impair its ability to maintain or further its research and development efforts, raise additional necessary capital, grow its business, and continue its operations.

NPM’s financial statements include an explanatory paragraph that expresses substantial doubt on NPM’s ability to continue as a going concern, and NPM must raise additional funds to finance its operations to remain a going concern.

Based on its cash balances, recurring losses since inception, and inadequacy of existing capital resources to fund planned operations for a twelve-month period from the date its financial statements were made available, NPM’s independent registered public accounting firm has included an explanatory paragraph in its report on NPM’s financial statements as of and for the years ended 2020 and 2021 expressing substantial doubt about its ability to continue as a going concern. NPM will, during 2022 and 2023, require significant additional funding to continue operations. If NPM is unable to raise additional funds when needed, it will not be able to continue development of its product candidates, or NPM will be required to delay, scale back or eliminate some or all of its development programs or cease operations. Any additional equity or debt financing that NPM is able to obtain may be dilutive to its current shareholders and debt financing, if available, may involve restrictive covenants or unfavorable terms. If NPM raises funds through collaborative or licensing arrangements, it may be required to relinquish, on terms that are not favorable to NPM, rights to some of its technologies or product candidates that it would otherwise seek to develop or commercialize. Moreover, if NPM is unable to continue as a going concern, it may be forced to liquidate its assets and the values it receives for its assets in liquidation or dissolution could be significantly lower than the values reflected in its financial statements.

Given NPM’s lack of current cash flow, NPM will need to raise additional capital; however, it may be unavailable to NPM or, even if capital is obtained, may cause dilution or place significant restrictions on NPM’s ability to operate its business.

Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive, and uncertain process that takes years to complete. NPM’s operations have consumed substantial amounts of cash since inception, and we expect our expenses to increase in connection with our ongoing activities, particularly as we conduct clinical trials of, and seek marketing approval for NPM-119, and advance its other programs. Even if one or more of the product candidates that NPM develops is approved for commercial sale, NPM anticipates incurring significant costs associated with sales, marketing, manufacturing, and distribution activities. NPM’s expenses could increase beyond expectations if required by the FDA, the European Medicines Agency (EMA) or other regulatory agencies to perform clinical trials or preclinical studies in addition to those that the company currently anticipates. Other unanticipated costs may also arise. Because the design and outcome of NPM’s planned and anticipated clinical trials are highly uncertain, NPM cannot reasonably estimate the actual amount of resources and funding that will be necessary to successfully complete the development and commercialization of any product candidate it develops. NPM is not permitted to market or promote NPM-119, or any other product candidate, before it receives marketing approval from the FDA. Accordingly, NPM will need to obtain substantial additional funding in order to continue its operations.

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Since NPM may be unable to generate sufficient, if any, cash flow to fund its operations for the foreseeable future, NPM may need to seek additional equity or debt financing to provide the capital required to maintain or expand its operations.

There can be no assurance that NPM will be able to raise sufficient additional capital on acceptable terms or at all. If such additional financing is not available on satisfactory terms, or is not available in sufficient amounts, NPM may be required to delay, limit, or eliminate the development of business opportunities and its ability to achieve its business objectives, its competitiveness, and its business, financial condition and results of operations may be materially adversely affected. In addition, NPM may be required to grant rights to develop and market product candidates that it would otherwise prefer to develop and market itself. NPM’s inability to fund its business could lead to the loss of your investment.

NPM’s future capital requirements will depend on many factors, including, but not limited to:

the scope, rate of progress, results and cost of its clinical trials, preclinical studies, and other related activities;
its ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such arrangements;
the timing of, and the costs involved in, obtaining regulatory approvals for any of its current or future product candidates;
the number and characteristics of the product candidates it seeks to develop or commercialize;
the cost of manufacturing clinical supplies, and establishing commercial supplies, of its product candidates;
the cost of commercialization activities if any of its current or future product candidates are approved for sale, including marketing, sales, and distribution costs;
the expenses needed to attract and retain skilled personnel;
the costs associated with being a public company;
the amount of revenue, if any, received from commercial sales of its product candidates, should any of its product candidates receive marketing approval; and
the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing possible patent claims, including litigation costs and the outcome of any such litigation.

If NPM raises additional capital by issuing equity securities, the percentage ownership of its existing shareholders may be reduced, and accordingly these shareholders may experience substantial dilution. NPM may also issue equity securities that provide for rights, preferences, and privileges senior to those of its common stock. Given NPM’s need for cash and that equity issuances are the most common type of fundraising for similarly situated companies, the risk of dilution is particularly significant for NPM’s shareholders.

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NPM’s ability to utilize its net operating loss (“NOL”) carryforwards and certain other tax attributes may be limited.1

Under Section 382 of the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period), the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. NPM has not completed a study to assess whether any ownership changes, as defined by Section 382 of the Code, have occurred. Past, current and future ownership changes may limit NPM’s ability to utilize remaining tax attributes. As of December 31, 2021, NPM had federal and state NOL carryforwards of $50.9 and $50.2 million, respectively. NPM also had federal, including orphan drug, and state research and development credit carryforwards of $1.0 and $1.6 million, respectively. Furthermore, under recently enacted U.S. tax legislation, although the treatment of tax losses generated in taxable years ending before December 31, 2017, has generally not changed, tax losses generated in taxable years beginning after December 31, 2017 may only be utilized to offset 80 % of taxable income annually. This change may require NPM to pay federal income taxes in future years despite generating a loss for federal income tax purposes in prior years.

Risks Related to NPM’s Product Development and Commercialization

If development of NPM’s product candidates does not produce favorable results, NPM, and its collaborators, if any, may be unable to commercialize these products.

To receive regulatory approval for the commercialization of NPM’s core assets including NPM-119, or any other product candidates that NPM may develop, adequate and well-controlled clinical trials must be conducted to demonstrate safety and efficacy in humans to the satisfaction of the FDA, the EMA, and comparable foreign authorities. To support marketing approval, these agencies may require successful results in one or more Phase 3 clinical trials, which NPM’s current product candidates have not yet reached and may never reach. The development process is expensive, can take many years and has an uncertain outcome. Failure can occur at any stage of the process. NPM may experience numerous unforeseen events during, or as a result of, the development process that could delay or prevent commercialization of NPM’s current or future product candidates, including the following:

clinical trials may produce negative or inconclusive results;
preclinical studies conducted with product candidates during clinical development to, among other things, evaluate their toxicology, carcinogenicity and pharmacokinetics and optimize their formulation may produce unfavorable results;
patient recruitment and enrollment in clinical trials may be slower than NPM anticipates;
costs of development may be greater than NPM anticipates;
NPM’s product candidates may cause undesirable side effects that delay or preclude regulatory approval or limit their commercial use or market acceptance, if approved;
collaborators who may be responsible for the development of NPM’s product candidates may not devote sufficient resources to these clinical trials or other preclinical studies of these candidates or conduct them in a timely manner; or

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NPM may face delays in obtaining regulatory approvals to commence one or more clinical trials;
NPM may face delays in the development process and/or commercialization associated with the availability and sourcing key raw materials and/or key components; and
NPM may encounter difficulties in developing NPM-119 or other NPM product candidates related to NPM’s proprietary NanoPortal implant technology or difficulties associated with the long-term purity, potency, safety, or stability of NPM’s product candidates.

Success in early development does not mean that later development will be successful because, for example, product candidates in later-stage clinical trials may fail to demonstrate sufficient safety and efficacy despite having progressed through initial clinical trials.

In the future, NPM or any potential future collaborative partner will be responsible for establishing the targeted endpoints and goals for development of its product candidates. These targeted endpoints and goals may be inadequate to demonstrate the safety and efficacy levels required for regulatory approvals. Even if NPM believes data collected during the development of its product candidates are promising, such data may not be sufficient to support marketing approval by the FDA, the EMA, or comparable foreign authorities. Further, data generated during development can be interpreted in different ways, and the FDA, the EMA or comparable foreign authorities may interpret such data in different ways than NPM or NPM’s collaborators. NPM’s failure to adequately demonstrate the safety and efficacy of NPM’s product candidates would prevent NPM’s receipt of regulatory approval, and ultimately the potential commercialization of these product candidates.

Since NPM does not currently possess the resources necessary to independently develop and commercialize its product candidates or any other product candidates that NPM may develop, NPM may seek to enter into collaborative agreements to assist in the development and potential future commercialization of some or all of these assets as a component of NPM’s strategic plan. However, NPM’s discussions with potential collaborators may not lead to the establishment of collaborations on acceptable terms, if at all, or it may take longer than expected to establish new collaborations, leading to development and potential commercialization delays, which would adversely affect NPM’s business, financial condition, and results of operations.

NPM’s product candidates may cause undesirable side effects that could delay or prevent their regulatory approval or commercialization or have other significant adverse implications on NPM’s business, financial condition, and results of operations.

Undesirable side effects observed in clinical trials or in supportive preclinical studies with NPM’s product candidates could interrupt, delay, or halt their development and could result in the denial of regulatory approval by the FDA, the EMA, or comparable foreign authorities for any or all targeted indications or adversely affect the marketability of any such product candidates that receive regulatory approval. In turn, this could eliminate or limit NPM’s ability to commercialize its product candidates.

NPM’s product candidates may exhibit adverse effects in preclinical toxicology studies and adverse interactions with other drugs. There are also risks associated with additional requirements the FDA, the EMA or comparable foreign authorities may impose for marketing approval with regard to a particular disease.

NPM’s product candidates may require a risk management program that could include patient and healthcare provider education, usage guidelines, appropriate promotional activities, a post-marketing observational study, and ongoing safety and reporting mechanisms, among other requirements. Prescribing could be limited to physician specialists or physicians trained in the use of the drug or could be limited to a more restricted patient population. Any risk management program required for approval of NPM’s product candidates could potentially have an adverse effect on NPM’s business, financial condition, and results of operations.

Undesirable side effects involving NPM’s product candidates may have other significant adverse implications on NPM’s business, financial condition, and results of operations. For example:

NPM may be unable to obtain additional financing on acceptable terms, if at all;
NPM’s collaborators may terminate any development agreements covering these product candidates;

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if any development agreements are terminated, NPM may determine not to further develop the affected product candidates due to resource constraints and may not be able to establish additional collaborations for their further development on acceptable terms, if at all;
if NPM were to later continue the development of these product candidates and receive regulatory approval, earlier findings may significantly limit their marketability and thus significantly lower NPM’s potential future revenues from their commercialization;
NPM may be subject to product liability or shareholder litigation; and
NPM may be unable to attract and retain key employees.

In addition, if any of NPM’s product candidates receive marketing approval and NPM or others later identify undesirable side effects caused by the product:

regulatory authorities may withdraw their approval of the product, or NPM or NPM’s partners may decide to cease marketing and sale of the product voluntarily;
NPM may be required to change the way the product is administered, conduct additional clinical trials or preclinical studies regarding the product, change the labeling of the product, or change the product’s manufacturing facilities; and
NPM’s reputation may suffer.

Any of these events could prevent NPM from achieving or maintaining market acceptance of the affected product and could substantially increase the costs and expenses of commercializing the product, which in turn could delay or prevent NPM from generating significant revenues from the sale of the product.

Since Intarcia Therapeutic’s six-month, subdermal exenatide implant using the Duros® technology has not received FDA approval and its ultimate ability to secure US approval remains uncertain, there are no assurances that NPM-119, using NPM’s proprietary NanoPortal technology, will be successful in securing US approval.

In November 2016, Intarcia Therapeutics filed an original NDA for ITCA-650 exenatide implant for the treatment of Type II diabetes. The FDA rejected both the original and resubmitted NDAs in 2017 and 2020, respectively. In September 2020, The FDA published a proposal to refuse the ITCA 650 NDA though the FDA provided an opportunity for hearing. Subsequent public correspondence from the FDA asserts that the ITCA-650 NDA does not meet criteria for approval because (i) data submitted in the application do not show that the product would be safe under the proposed conditions of use and (ii) the methods used in, and the facilities and controls used for, the manufacture, processing, or packing of the product are not shown to be adequate to preserve its identity, strength, quality, and purity. Further correspondence disclosed additional deficiencies which included, but were not limited to, data that did not demonstrate adequate device reliability in regard to dose delivery. This may be related to Intarcia’s proprietary Duros® implant technology. While NPM-119 relies on NPM’s proprietary NanoPortal technology, there are no assurances that NPM-119 will not achieve similar or worse clinical or CMC findings than those generated in the ITCA-650 development program. Similar results would significantly jeopardize the approvability of NPM-119, and potentially other products that employ the NanoPortal technology and would have an adverse impact on NPM’s future revenues.

NPM’s efforts to identify and develop product candidates beyond NPM’s current product candidates may not succeed, and any product candidates NPM recommends for clinical development may not actually begin clinical trials.

NPM intends to expand its existing pipeline of core assets by advancing drug implants from future and ongoing feasibility programs into pre-clinical and clinical development. However, the process of researching and developing drug implants is expensive, time-consuming, and unpredictable. Data from NPM’s current preclinical programs may not support the clinical development of its lead compounds or other compounds from these programs, and NPM may not identify any additional drug compounds suitable for recommendation for clinical development. Moreover, any drug compounds NPM recommends for clinical development may not demonstrate, through preclinical studies, indications of safety and potential efficacy that would support advancement into clinical trials. Such findings would potentially impede NPM’s ability to maintain or expand NPM’s development pipeline. NPM’s ability to identify new drug implants and advance them into preclinical and clinical development also depends upon NPM’s ability to fund its

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research and development operations, and NPM cannot be certain that additional funding will be available on acceptable terms, or at all.

Delays in the commencement or completion of clinical trials could result in increased costs to NPM and delay NPM’s ability to establish strategic collaborations.

Delays in the commencement or completion of clinical trials could significantly impact NPM’s drug development costs. NPM does not know whether planned clinical trials will begin on time or be completed on schedule, if at all. The commencement of clinical trials can be delayed for a variety of reasons, including, but not limited to, delays related to:

obtaining regulatory approval to commence one or more clinical trials;
reaching agreement on acceptable terms with prospective third-party contract research organizations (“CROs”) and clinical trial sites;
manufacturing sufficient quantities of a product candidate or other materials necessary to conduct clinical trials;
obtaining institutional review board approval to conduct one or more clinical trials at a prospective site;
recruiting and enrolling patients to participate in one or more clinical trials; and
the failure of NPM’s collaborators to adequately resource NPM’s product candidates due to their focus on other programs or as a result of general market conditions.

In addition, once a clinical trial has begun, it may be suspended or terminated by NPM, NPM’s collaborators, the institutional review boards, or, if applicable, data safety monitoring boards charged with overseeing NPM’s clinical trials, the FDA, the EMA, or comparable foreign authorities due to a number of factors, including:

failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols;
inspection of the clinical trial operations or clinical trial site by the FDA, the EMA or comparable foreign authorities resulting in the imposition of a clinical hold;
unforeseen safety issues; or
lack of adequate funding to continue the clinical trial.

If NPM experiences delays in the completion or termination of any clinical trial of its product candidates, the commercial prospects of NPM’s product candidates will be harmed, and NPM’s ability to commence product sales and generate product revenues from any of NPM’s product candidates will be delayed. In addition, any delays in completing NPM’s clinical trials will increase NPM’s costs and slow down its product candidate development and approval process. Delays in completing NPM’s clinical trials could also allow NPM’s competitors to obtain marketing approval before NPM does or shorten the patent protection period during which NPM may have the exclusive right to commercialize its product candidates. Any of these occurrences may harm NPM’s business, financial condition, and prospects significantly. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of NPM’s product candidates.

Results of preclinical trials may not be predictive of the results of later-stage clinical trials.

The results of preclinical studies of product candidates, including NPM-119 (exenatide Implant) may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy results despite having progressed through preclinical studies and initial clinical trials. Many companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to adverse safety profiles or lack of efficacy, notwithstanding promising results in earlier studies. Similarly, NPM’s future clinical trial results may not be successful for these or other reasons.

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As product candidates are developed through preclinical, early-stage clinical and late-stage clinical trials towards approval and commercialization, it is customary that various aspects of the development program, such as manufacturing and methods of administration, are altered along the way in an effort to optimize processes and results. While these types of changes are common and are intended to optimize the product candidates for late-stage clinical trials, approval and commercialization, such changes carry the risk that they will not achieve these intended objectives.

Any of these changes could make the results of NPM’s planned clinical trials or other future clinical trials less predictable and could cause NPM’s product candidates to perform differently, including causing toxicities, which could delay completion of NPM’s clinical trials, delay approval of its product candidates, and/or jeopardize NPM’s ability to commence product sales and generate revenues.

If NPM experiences delays in the enrollment of patients in its clinical trials, NPM’s receipt of necessary regulatory approvals could be delayed or prevented.

NPM may not be able to initiate or continue clinical trials for NPM’s product candidates if NPM is unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or other regulatory authorities. Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications NPM is investigating.

If NPM fails to enroll and maintain the number of patients for which the clinical trial was designed, the statistical power of that clinical trial may be reduced, which would make it harder to demonstrate that the product candidate being tested in such clinical trial is safe and effective. Additionally, enrollment delays in NPM’s clinical trials may result in increased development costs for NPM’s product candidates, which would cause the value of NPM to decline and limit its ability to obtain additional financing. NPM’s inability to enroll a sufficient number of patients for any of its current or future clinical trials would result in significant delays or may require NPM to abandon one or more clinical trials altogether.

If NPM has difficulty identifying, training and/or certifying an adequate number of healthcare professionals to properly implant and, when appropriate, explant NPM’s drug implants, NPM’s ability to execute clinical trials and successfully commercialize NPM’s product candidates could limit NPM’s commercial opportunity

NPM’s drug implants will require properly trained healthcare professionals, which may include doctors, nurse practitioners and nurses, for the sub-dermal placement of NPM’s drug implants in patients. These healthcare professionals would also be responsible for removal and replacement of a new drug implant after the useful life of the implant is achieved. Based on similar products on the market, NPM anticipates the certification of healthcare professionals will require a relatively short on-line training module. However, there is no certainty that sufficient numbers of trained and/or certified healthcare professionals will be available or that the training or certification requirements will not be more burdensome than anticipated. Both factors could lead to lower product adoption which would result in lower sales.

If NPM’s competitors have product candidates that are approved faster, marketed more effectively, are better tolerated, have a more favorable safety profile, or are demonstrated to be more effective than NPM’s, NPM’s commercial opportunity may be reduced or eliminated.

The biopharmaceutical industry is characterized by rapidly advancing technologies, intense competition, and a strong emphasis on proprietary products. While NPM believes that its technology, knowledge, experience, and scientific resources provide it with competitive advantages, NPM faces potential competition from many different sources, including commercial biopharmaceutical enterprises, academic institutions, government agencies and private and public research institutions. Any product candidates that NPM successfully develops and commercializes will compete with existing therapies and new therapies that may become available in the future.

Many of NPM’s competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical studies, clinical trials, regulatory approvals, and marketing approved products than NPM does. Some of NPM’s competitors include companies such as Novo Nordisk, AstraZeneca, and Eli Lilly. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. NPM’s competitors may succeed in developing technologies and therapies that are more effective, better tolerated or less costly than any

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which NPM is developing, or that would render NPM’s product candidates obsolete and noncompetitive. Even if NPM obtains regulatory approval for any of its product candidates, NPM’s competitors may succeed in obtaining regulatory approvals for their products earlier than NPM does. NPM will also face competition from these third parties in recruiting and retaining qualified scientific and management personnel, in establishing clinical trial sites and patient registration for clinical trials, and in acquiring and in-licensing technologies and products complementary to NPM’s programs or advantageous to NPM’s business.

The key competitive factors affecting the success of each of NPM’s product candidates, if approved, are likely to be its efficacy, safety, tolerability, frequency and route of administration, convenience and price, the level of branded and generic competition and the availability of coverage and reimbursement from government and other third-party payors.

Multiple GLP-1 receptor agonist products have been proven effective to reduce cardiovascular morbidity and mortality, including Trulicity (dulaglutide), Ozempic (semaglutide injection), Rybelsus (semaglutide oral), and Victoza (liraglutide), Medical Guidelines may recommend preferential use of GLP-1 receptor agonists that have positive cardiovascular morbidity and mortality data in the products approved labeling. Since Bydureon BCise, the NPM-119 reference drug, did not demonstrated a reduction in cardiovascular morbidity and mortality, NPM-119 will not have this claim in the approved product label unless NPM generates positive CVOT data with NPM-119. The lack of a CVOT benefit in the NPM-119 label may decrease revenue and profits.

NPM is subject to a multitude of manufacturing risks, any of which could substantially increase NPM’s costs and limit supply of its product candidates.

The process of manufacturing NPM’s product candidates is complex, highly regulated, and subject to several risks. For example, the process of manufacturing NPM’s product candidates is susceptible to product loss due to contamination, equipment failure or improper installation or operation of equipment, or vendor or operator error. Even minor deviations from normal manufacturing processes for any of NPM’s product candidates could result in reduced production yields, product defects, and other supply disruptions. If microbial, viral, or other contaminations are discovered in NPM’s product candidates or in the manufacturing facilities in which its product candidates are made, such manufacturing facilities may need to be closed for an extended period to investigate and remedy the contamination. In addition, the manufacturing facilities in which its product candidates are made could be adversely affected by equipment failures, labor shortages, natural disasters, power failures and numerous other factors.

In addition, any adverse developments affecting manufacturing operations for NPM’s product candidates may result in shipment delays, inventory shortages, lot failures, withdrawals or recalls, or other interruptions in the supply of NPM’s product candidates. NPM also may need to take inventory write-offs and incur other charges and expenses for product candidates that fail to meet specifications, undertake costly remediation efforts, or seek costlier manufacturing alternatives.

The commercial success of NPM’s product candidates depends upon their market acceptance among physicians, patients, healthcare payors, and the medical community.

Even if NPM’s product candidates obtain regulatory approval, NPM’s products, if any, may not gain market acceptance among physicians, patients, healthcare payors and the medical community. The degree of market acceptance of any of NPM’s approved product candidates will depend on several factors, including:

the effectiveness of NPM’s approved product candidates as compared to currently available products;
adequately trained healthcare professionals willing to administer NPM’s product candidates;
patient willingness to adopt NPM’s approved product candidates in place of current therapies;
NPM’s ability to provide acceptable evidence of safety and efficacy;
relative convenience and ease of administration;
the prevalence and severity of any adverse side effects;
restrictions on use in combination with other products;

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availability of alternative treatments;
pricing and cost-effectiveness assuming either competitive or potential premium pricing requirements, based on the profile of NPM’s product candidates and target markets;
effectiveness of NPM’s or its partners’ sales and marketing strategy;
NPM’s ability to obtain sufficient third-party coverage or reimbursement; and
potential product liability claims.

In addition, the potential market opportunity for NPM’s product candidates is difficult to precisely estimate. NPM’s estimates of the potential market opportunity for its product candidates include several key assumptions based on NPM’s industry knowledge, industry publications, third-party research reports and other surveys. Independent sources have not verified all of NPM’s assumptions. If any of these assumptions proves to be inaccurate, then the actual market for NPM’s product candidates could be smaller than NPM’s estimates of its potential market opportunity. If the actual market for NPM’s product candidates is smaller than NPM expects, NPM’s product revenue may be limited, it may be harder than expected to raise funds and it may be more difficult for NPM to achieve or maintain profitability. If NPM fails to achieve market acceptance of NPM’s product candidates in the U.S. and abroad, NPM’s revenue will be limited, and it will be more difficult to achieve profitability.

If NPM fails to obtain and sustain an adequate level of reimbursement for its potential products by third-party payors, potential future sales would be materially adversely affected.

There will be no viable commercial market for NPM’s product candidates, if approved, without reimbursement from third-party payors. Reimbursement policies may be affected by future healthcare reform measures. NPM cannot be certain that reimbursement will be available for its current product candidates, or any other product candidate NPM may develop. Additionally, even if there is a viable commercial market, if the level of reimbursement is below NPM’s expectations, NPM’s anticipated revenue and gross margins will be adversely affected.

Third-party payors, such as government or private healthcare insurers, carefully review and increasingly question and challenge the coverage of and the prices charged for drugs. Reimbursement rates from private health insurance companies vary depending on the company, the insurance plan, and other factors. Reimbursement rates may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. There is a current trend in the U.S. healthcare industry toward cost containment.

Large public and private payors, managed care organizations, group purchasing organizations and similar organizations are exerting increasing influence on decisions regarding the use of, and reimbursement levels for, particular treatments. Such third-party payors, including Medicare, may question the coverage of, and challenge the prices charged for, medical products and services, and many third-party payors limit coverage of or reimbursement for newly approved healthcare products. Third-party payors may also limit the covered indications. Cost-control initiatives could decrease the price NPM might establish for products, which could result in product revenues being lower than anticipated. NPM believes its drugs may be priced higher than existing generic drugs and more consistent with current branded drugs. If NPM is unable to show a significant benefit relative to existing generic drugs, Medicare, Medicaid, and private payors may not be willing to provide reimbursement for NPM’s drugs, which would significantly reduce the likelihood of NPM’s products gaining market acceptance.

NPM expects that private insurers will consider the efficacy, cost-effectiveness, safety, and tolerability of NPM’s potential products in determining whether to approve reimbursement for such products and at what level. Obtaining these approvals can be a time consuming and expensive process. NPM’s business, financial condition and results of operations would be materially adversely affected if NPM does not receive approval for reimbursement of its potential products from private insurers on a timely or satisfactory basis. Limitations on coverage could also be imposed at the local Medicare carrier level or by fiscal intermediaries. Medicare Part D, which provides a pharmacy benefit to Medicare patients, does not require participating prescription drug plans to cover all drugs within a class of products. NPM’s business, financial condition and results of operations could be materially adversely affected if Part D prescription drug plans were to limit access to, or deny or limit reimbursement of, NPM’s product candidates.

Reimbursement systems in international markets vary significantly by country and by region, and reimbursement approvals must be obtained on a country-by-country basis. In many countries, the product cannot be commercially launched until reimbursement is

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approved. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. The negotiation process in some countries can exceed 12 months. To obtain reimbursement or pricing approval in some countries, NPM may be required to conduct a clinical trial that compares the cost-effectiveness of its products to other available therapies.

If the prices for NPM’s potential products are reduced or if governmental and other third-party payors do not provide adequate coverage and reimbursement of NPM’s drugs, the combined company’s future revenue, cash flows and prospects for profitability will suffer.

Since NPM’s drug implants will provide medicine for up to six months or longer, there may be additional risks associated with the third-party payer’s willingness or desire to reimburse the full product cost at the time of purchase. NPM may develop customized reimbursement practices or policies to address potential concerns from payers if appropriate. There are no assurances that customized reimbursement practices or policies, if needed, will be effective and the potential impact on revenues and profits is difficult to project.

Risks Related to Regulatory Approval and Other Legal and Compliance Matters

NPM’s product candidates are subject to extensive regulation under the FDA, the EMA, or comparable foreign authorities, which can be costly and time consuming, cause unanticipated delays or prevent the receipt of the required approvals to commercialize NPM’s product candidates.

The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, export, marketing, and distribution of NPM’s product candidates are subject to extensive regulation by the FDA and other U.S. regulatory agencies, the EMA, or comparable authorities in foreign markets. In the U.S., neither NPM nor NPM’s collaborators are permitted to market NPM’s product candidates until NPM or NPM’s collaborators receive clearance to conduct clinical investigations under an investigational new drug application (“IND”) from the FDA or receive similar approvals abroad. In addition, NPM nor NPM’s collaborators will not be permitted to market NPM’s product candidates until NPM or NPM’s collaborators receive approval of a new drug application (“NDA”) from the FDA or receive similar approvals abroad. The process of obtaining these approvals is expensive, often takes many years, and can vary substantially based upon the type, complexity and novelty of the product candidates involved. Approval policies or regulations may change and may be influenced by the results of other similar or competitive products, making it more difficult for NPM to achieve such approval in a timely manner or at all. Any guidance that may result from recent FDA advisory panel discussions may make it more expensive to develop and commercialize such product candidates. In addition, as a company, NPM has not previously filed INDs or NDAs with the FDA or filed similar applications with other foreign regulatory agencies. This lack of experience may impede NPM’s ability to obtain FDA or other foreign regulatory agency approval in a timely manner, if at all, for NPM’s product candidates for which development and commercialization is NPM’s responsibility.

Despite the time and expense invested, regulatory approval is never guaranteed. The FDA, the EMA or comparable foreign authorities can delay, limit, or deny approval of a product candidate for many reasons, including:

a product candidate may not be deemed safe or effective;
agency officials of the FDA, the EMA or comparable foreign authorities may not find the data from non-clinical or preclinical studies, chemistry, manufacturing, and controls, and/or clinical trials generated during development to be sufficient;
the FDA, the EMA or comparable foreign authorities may not approve NPM’s or NPM’s third-party manufacturers’ processes or facilities; or
the FDA, the EMA or a comparable foreign authority may change its approval policies or adopt new regulations.

NPM’s inability to obtain these approvals would prevent NPM from commercializing its product candidates.

NPM is planning to streamline the clinical development of NPM-119 (exenatide implant) through use of the 505(b)2 pathway in the US. If the 505(b)2 regulatory pathway is not available, the costs of development may significantly increase and the projected timeline to approval and launch would be significantly delayed.

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Although NPM has discussed its intention to use the 505(b)2 regulatory pathway to support registration in the US with the FDA, there are no formal assurances that this approach will be acceptable. Since NPM has not yet filed an IND or initiated clinical investigations with NPM-119, there are no assurances that additional pre-clinical clinical studies will be required to support registration and approval in the US. The 505(b)2 regulatory pathway, if acceptable, will allow NPM to rely on one or more investigations conducted by another company without requiring NPM to obtain a right of reference. For NPM-119, NPM would rely on certain information from Bydureon® and Bydureon BCise®, AstraZeneca’s exenatide extended-release injectable suspension products. If NPM is unable to reference data generated for Bydureon® and Bydureon BCise®, additional clinical studies, including a cardiovascular outcomes (CVOT) study, may be required and would add significant additional costs and a significant delay in the proposed timeline to NPM-119 approval and commercial launch. Further, if a CVOT study was conducted, there are no assurances that the study would generate positive results and support US registration.

NPM and its contract manufacturers are subject to significant regulation with respect to manufacturing NPM’s product candidates. The manufacturing facilities on which NPM relies may not continue to meet regulatory requirements.

All entities involved in the preparation of therapeutics for clinical trials or commercial sale, including NPM’s contract manufacturers for its product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in clinical trials must be manufactured in accordance with cGMP. These regulations govern manufacturing processes and procedures and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale. Poor control of production processes can lead to the introduction of contaminants or to inadvertent changes in the properties or stability of NPM’s product candidates that may not be detectable in final product testing. NPM or its contract manufacturers must supply all necessary documentation in support of an NDA or marketing authorization application (“MAA”) on a timely basis and must adhere to GLP and cGMP regulations enforced by the FDA, the EMA, or comparable foreign authorities through their facilities inspection program. Some of NPM’s contract manufacturers may not have produced a commercially approved pharmaceutical product and therefore may not have obtained the requisite regulatory authority approvals to do so. The facilities and quality systems of some or all of NPM’s third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of NPM’s product candidates or any of its other potential products. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of NPM’s product candidates or any of NPM’s other potential products or the associated quality systems for compliance with the regulations applicable to the activities being conducted. Although NPM plans to oversee the contract manufacturers, NPM cannot control the manufacturing process of, and is completely dependent on, NPM’s contract manufacturing partners for compliance with the regulatory requirements. If these facilities do not pass a pre-approval plant inspection, regulatory approval of the products may not be granted or may be substantially delayed until any violations are corrected to the satisfaction of the regulatory authority, if ever.

The regulatory authorities also may, at any time following approval of a product for sale, audit the manufacturing facilities of NPM’s third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of NPM’s product specifications or applicable regulations occurs independent of such an inspection or audit, NPM or the relevant regulatory authority may require remedial measures that may be costly or time consuming for NPM or a third party to implement, and that may include the temporary or permanent suspension of a clinical trial or commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon NPM or third parties with whom NPM contracts could materially harm NPM’s business, financial condition, and results of operations.

If NPM or any of its third-party manufacturers fail to maintain regulatory compliance, the FDA, the EMA, or comparable foreign authorities can impose regulatory sanctions including, among other things, refusal to approve a pending application for a product candidate, withdrawal of an approval, or suspension of production. As a result, NPM’s business, financial condition, and results of operations may be materially and adversely affected.

Additionally, if supply from one manufacturer is interrupted, an alternative manufacturer would need to be qualified through an NDA supplement or MAA variation, or equivalent foreign regulatory filing, which could result in further delay. The regulatory agencies may also require additional studies or trials if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in NPM’s desired clinical and commercial timelines. These factors could cause NPM to incur higher costs and could cause the delay or termination of clinical trials, regulatory submissions, required approvals, or commercialization of NPM’s product candidates. Furthermore, if NPM’s suppliers fail to meet contractual requirements and NPM is unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, NPM’s clinical trials may be delayed, or NPM could lose potential revenue.

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Even if NPM’s product candidates receive regulatory approval in the U.S., it may never receive approval or commercialize NPM’s products outside of the U.S.

In order to market any products outside of the U.S., NPM must establish and comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy. Approval procedures vary among countries and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the U.S. as well as other risks. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. Failure to obtain regulatory approval in other countries or any delay seeking or obtaining such approval would impair NPM’s ability to develop foreign markets for its product candidates. A CE mark is required for NPM devices before marketing in EU countries. This requires a significant effort and NPM may never receive approval.

Even if any of NPM’s product candidates receive regulatory approval, its product may not be commercially viable or successful.

If any of NPM’s product candidates receive regulatory approval, the FDA, the EMA, or comparable foreign authorities may still impose significant restrictions on the indicated uses or marketing of the product candidates or impose ongoing requirements for potentially costly post-approval studies and trials. In addition, regulatory agencies subject a product, its manufacturer and the manufacturer’s facilities to continual review and periodic inspections. If a regulatory agency discovers previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, NPM’s collaborators, or NPM, including requiring withdrawal of the product from the market. NPM’s product candidates will also be subject to ongoing FDA, the EMA, or comparable foreign authorities’ requirements for the labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information on the drug. If NPM’s product candidates fail to comply with applicable regulatory requirements, a regulatory agency may:

issue warning letters or other notices of possible violations;
impose civil or criminal penalties or fines or seek disgorgement of revenue or profits;
suspend any ongoing clinical trials;
refuse to approve pending applications or supplements to approved applications filed by NPM or NPM’s collaborators;
withdraw any regulatory approvals
impose restrictions on operations, including costly new manufacturing requirements, or shut down NPM’s manufacturing operations; or
seize or detain products or require a product recall.

The FDA, the EMA and comparable foreign authorities actively enforce the laws and regulations prohibiting the promotion of off-label uses.

The FDA, the EMA and comparable foreign authorities strictly regulate the promotional claims that may be made about prescription products, such as NPM’s product candidates, if approved. In particular, a product may not be promoted for uses that are not approved by the FDA, the EMA or comparable foreign authorities as reflected in the product’s approved labeling. If NPM receives marketing approval for its product candidates for NPM’s proposed indications, physicians may nevertheless use NPM’s products for their patients in a manner that is inconsistent with the approved label, if the physicians personally believe in their professional medical judgment that NPM’s products could be used in such manner. However, if NPM is found to have promoted its products for any off label uses, the federal government could levy civil, criminal, or administrative penalties, and seek fines against NPM. Such enforcement has become more common in the industry. The FDA, the EMA or comparable foreign authorities could also request that NPM enter into a consent decree or a corporate integrity agreement or seek a permanent injunction against NPM under which specified promotional conduct is monitored, changed, or curtailed. If NPM cannot successfully manage the promotion of its product

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candidates, if approved, NPM could become subject to significant liability, which would materially adversely affect NPM’s business, financial condition, and results of operations.

Current and future legislation may increase the difficulty and cost of commercializing NPM’s product candidates and may affect the prices NPM may obtain if NPM’s product candidates are approved for commercialization.

In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay regulatory approval of NPM’s product candidates, restrict, or regulate post-approval activities and affect NPM’s ability to profitably sell any product candidates that obtain regulatory approval. NPM expects that current laws, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and in additional downward pressure on the price that NPM, or any its collaborators, may receive for any approved products.

Current and future legislation may increase the difficulty and cost to commercialize NPM’s candidates, if approved, and affect the prices obtained, including changes in coverage and reimbursement policies in certain market segments for NPM’s product candidates, which could make it difficult to sell NPM’s product candidates, if approved, profitably. Third-party payors, whether domestic or foreign, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system that could impact NPM’s ability to sell NPM’s products profitably.

In particular, in 2010, the Affordable Care Act (“ACA”), was enacted, which, among other things, subjected biologic products to potential competition by lower-cost biosimilars, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjected manufacturers to new annual fees and taxes for certain branded prescription drugs, and provided incentives to programs that increase the federal government’s comparative effectiveness research. Under the American Rescue Plan Act of 2021, effective January 1, 2024, the statutory cap on Medicaid Drug Rebate Program rebates that manufacturers pay to state Medicaid programs will be eliminated. Elimination of this cap may require pharmaceutical manufacturers to pay more in rebates than it receives on the sale of products, which could have a material impact on the viability NPM’s business and the accuracy of NPM’s projections of future development.

In July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at increasing competition for prescription drugs. In response to this executive order, the Department of Health and Human Services (“HHS”) has released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and potential legislative policies that Congress could pursue to advance these principles. In addition, Congress is considering legislation that, if passed, could have significant impact on prices of prescription drugs covered by Medicare, including limitations on drug price increases, which may adversely affect NPM’s profitability. At the state level, a number of states are considering or have recently enacted state drug price transparency and reporting laws that could substantially increase NPM’s compliance burdens and expose us to greater liability under such state laws once we begin commercialization after obtaining regulatory approval for any of NPM’s products.

Since its enactment, there have been executive, judicial, and Congressional challenges to certain aspects of the ACA. In June 2021, the United States Supreme Court held that Texas and other challengers had no legal standing to challenge the ACA, dismissing the case without specifically ruling on the constitutionality of the ACA. Accordingly, the ACA remains in effect in its current form. It is unclear how this Supreme Court decision, future litigation, or healthcare measures promulgated by the Biden administration will impact NPM’s business, financial condition, and results of operations. Complying with any new legislation or changes in healthcare regulation could be time-intensive and expensive, resulting in material adverse effect on NPM’s business.

In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect in 2013, and will remain in effect through 2031, with the exception of a temporary suspension implemented under various COVID-19 relief legislation from May 1, 2020, through March 31, 2022, unless additional Congressional action is taken. Under the current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 3% in the final fiscal year of this sequester.

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The American Taxpayer Relief Act of 2012 further reduced Medicare payments to several providers, including hospitals and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal, and state levels directed at containing or lowering the cost of healthcare. NPM cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect:

the demand for NPM’s product candidates if NPM obtains regulatory approval;
NPM’s ability to receive or set a price that it believes is fair for its products;
NPM’s ability to generate revenue and achieve or maintain profitability;
the level of taxes that NPM is required to pay; and
the availability of capital.

NPM expects that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, lower reimbursement, and new payment methodologies. This could lower the price that NPM receives for any approved products. Any denial in coverage or reduction in reimbursement from Medicare or other government-funded programs may result in a similar denial or reduction in payments from private payors, which may prevent NPM from being able to generate sufficient revenue, attain profitability or commercialize NPM’s product candidates, if approved.

Recent initiatives by the FDA to enhance and modernize various regulatory pathways for device products and its overall approach to safety and innovation in the medical technology industry creates the possibility of changing product development costs, requirements, and other factors and additional uncertainty for NPM’s future products and business.

Regulatory requirements may change in the future in a way that adversely affects NPM. Any change in the laws or regulations that govern the clearance and approval processes or the post-market compliance requirements relating to NPM’s current and future products could make it more difficult and costly to obtain clearance or approval for new products, or to produce, market and distribute existing products.

For example, the FDA and other government agencies have been focusing on the cybersecurity risks associated with certain medical devices and encouraging device manufacturers to take a more proactive approach to assessing the cybersecurity risks of their devices both during development and on a periodic basis after the devices are in commercial distribution. These regulatory efforts could lead to new FDA requirements in the future or additional product liability or other litigation risks if any of NPM’s products is considered to be susceptible to third-party tampering. In December 2016, Congress passed the 21st Century Cures Act, which made multiple changes to the FDA’s rules for medical devices as well as for clinical trials, and in August 2017, Congress passed the Medical Device User Fee reauthorization package, which affects medical device regulation both pre- and post-approval and could have certain impacts on NPM’s business. Since that time, the FDA has announced a series of efforts to modernize and streamline the 510(k) notification and regulatory review process and monitoring post-market safety and issued a final rule to formalize the De Novo classification process to provide clarity to innovative device developers. In addition, the next FDA reauthorization package is currently being negotiated and is required to be finalized by Congress in mid-2022. Changes in the FDA 510(k) process could make clearance more difficult to obtain, increase delay, add uncertainty, and have other significant adverse effects on NPM’s ability to obtain and maintain clearance for NPM’s products.

It is unclear at this time whether and how various activities initiated or announced by the FDA to modernize the U.S. medical device regulatory system could affect NPM’s business, as some of the FDA’s new medical device safety and innovation initiatives have not been formalized and remain subject to change. For example, a 2018 Medical Device Safety Action Plan announced by former FDA Commissioner Gottlieb included a particular focus on post-market surveillance and how to respond when new safety concerns emerge once a product is on the market. The increased attention that the medical technology industry is receiving from FDA leadership that understands the challenging and rapidly changing nature of the U.S. healthcare system creates the possibility of unanticipated regulatory and other potential changes to NPM’s products and NPM’s overall business. In response to the COVID-19

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public health emergency, the FDA’s device and diagnostic center leadership has exercised a significant amount of enforcement discretion to meet the medical community’s and patients’ needs for remote monitoring and other innovative solutions that involve digital health products. In December 2021, the FDA issued draft guidance documents describing a phased transition process for medical devices that were developed or modified during the course of the pandemic to treat COVID-19 patients or allow greater access to patients, including medical imaging devices that were developed or modified in accordance with FDA’s Enforcement Policy for Imaging Systems During the COVID-19 Public Health Emergency. It is unclear how those policies could impact the medical device industry in the future.

Changes in funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact NPM’s business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including (i) government budget and funding levels, (ii) the ability to hire and retain key personnel and accept the payment of user fees and (iii) statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect its business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process NPM’s regulatory submissions, which could have a material adverse effect on NPM’s business.

If NPM faces allegations of noncompliance with the law and encounter sanctions, its reputation, revenues, and liquidity may suffer, and any of NPM’s product candidates that are ultimately approved for commercialization could be subject to restrictions or withdrawal from the market.

Any government investigation of alleged violations of law could require NPM to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect NPM’s ability to generate revenues from any of its product candidates that are ultimately approved for commercialization. If regulatory sanctions are applied or if regulatory approval is withdrawn, NPM’s business, financial condition and results of operations will be adversely affected. Additionally, if NPM is unable to generate revenues from product sales, NPM’s potential for achieving profitability will be diminished and NPM’s need to raise capital to fund its operations will increase.

NPM is exposed to product liability, non-clinical and clinical liability risks which could place a substantial financial burden upon NPM, should lawsuits be filed against NPM.

NPM’s business exposes it to potential product liability and other liability risks that are inherent in the testing, manufacturing, and marketing of medical products and the subsequent sale of these products by us or NPM’s potential collaborators. In addition, the use in NPM’s clinical trials of pharmaceutical and related products and the subsequent sale of these products by NPM or its potential collaborators may cause NPM to bear a portion of or all product liability risks. A successful liability claim or series of claims brought against NPM could have a material adverse effect on NPM’s business, financial condition, and results of operations.

NPM’s research and development activities involve the use of hazardous materials, which subject NPM to regulation, related costs and delays and potential liabilities.

NPM’s research and development activities may involve the controlled use of hazardous materials and chemicals. If an accident occurs, NPM could be held liable for resulting damages, which could be substantial. NPM is also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials. Additional federal, state, and local laws and regulations affecting NPM’s operations may be adopted in the future. NPM may incur substantial costs to comply with, and substantial fines or penalties if NPM violates any of these laws or regulations.

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Risks Relating to NPM’s Intellectual Property

NPM may not be able to protect its proprietary or licensed technology in the marketplace.

NPM depends on NPM’s ability to protect its proprietary or licensed technology. NPM relies on trade secret, patent, copyright and trademark laws, and confidentiality, licensing, and other agreements with employees and third parties, all of which offer only limited protection. NPM’s success depends in large part on NPM’s ability and any licensor’s or licensee’s ability to obtain and maintain patent protection in the U.S. and other countries with respect to NPM’s proprietary or licensed technology and products. NPM may in-license additional intellectual property rights to develop NPM’s product candidates in the future. NPM cannot be certain that patent enforcement activities by its current or future licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents or other intellectual property rights. NPM also cannot be certain that its current or future licensors will allocate sufficient resources or prioritize their or NPM’s legal enforcement of such patents. Even if NPM is not a party to these legal actions, an adverse outcome could prevent NPM from continuing to license intellectual property that NPM may need to operate its business, which would have a material adverse effect on its business, financial condition, and results of operations.

NPM believes it will be able to obtain, through prosecution of patent applications covering NPM’s owned technology and technology licensed from others, adequate patent protection for NPM’s proprietary drug technology, including those related to NPM’s in-licensed intellectual property. If NPM is compelled to spend significant time, money and resources protecting or enforcing its licensed patents and future patents NPM may own, designing around patents held by others or licensing or acquiring, potentially for large fees, patents or other proprietary rights held by others, NPM’s business, financial condition, and results of operations may be materially and adversely affected. If NPM is unable to effectively protect the intellectual property that NPM owns or in-licenses, other companies may be able to offer the same or similar products for sale, which could materially adversely affect NPM’s business, financial condition, and results of operations. The patents of others from whom NPM may license technology, and any future patents NPM may own, may be challenged, narrowed, invalidated, or circumvented, which could limit NPM’s ability to stop competitors from marketing the same or similar products or limit the length of term of patent protection that NPM may have for its products.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and NPM’s patent protection for licensed patents, pending patent applications and potential future patent applications and patents could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or patent applications will be due to be paid to the U.S. Patent and Trademark Office (“USPTO”) and various governmental patent agencies outside of the U.S. in several stages over the lifetime of the applicable patent and/or patent application. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If this occurs with respect to NPM’s in-licensed patents or patent applications NPM may file in the future, NPM’s competitors might be able to use its technologies, which would have a material adverse effect on NPM’s business, financial condition, and results of operations.

The patent positions of pharmaceutical products are often complex and uncertain. The breadth of claims allowed in pharmaceutical patents in the U.S. and many jurisdictions outside of the U.S. is not consistent. For example, in many jurisdictions, the support standards for pharmaceutical patents are becoming increasingly strict. Some countries prohibit method of treatment claims in patents. Changes in either the patent laws or interpretations of patent laws in the U.S. and other countries may diminish the value of NPM’s licensed or owned intellectual property or create uncertainty. In addition, publication of information related to NPM’s current product candidates and potential products may prevent NPM from obtaining or enforcing patents relating to these product candidates and potential products, including without limitation composition-of-matter patents, which are generally believed to offer the strongest patent protection.

Patents that NPM currently owns or licenses and patents that NPM may own or license in the future do not necessarily ensure the protection of NPM’s licensed or owned intellectual property for a number of reasons, including, without limitation, the following:

the patents may not be broad or strong enough to prevent competition from other products that are identical or similar to NPM’s product candidates;

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there can be no assurance that the term of a patent can be extended under the provisions of patent term extensions afforded by U.S. law or similar provisions in foreign countries, where available;
the issued patents and patents that NPM may obtain or license in the future may not prevent generic entry into the market for NPM’s product candidates;
NPM, or third parties from whom NPM in-license or may license patents, may be required to disclaim part of the term of one or more patents;
there may be prior art of which NPM is not aware that may affect the validity or enforceability of a patent claim;
there may be prior art of which NPM is aware, which NPM does not believe affects the validity or enforceability of a patent claim, but which, nonetheless, ultimately may be found to affect the validity or enforceability of a patent claim;
there may be other patents issued to others that will affect NPM’s freedom to operate;
if the patents are challenged, a court could determine that they are invalid or unenforceable;
there might be a significant change in the law that governs patentability, validity and infringement of NPM’s licensed patents or any future patents NPM may own that adversely affects the scope of NPM’s patent rights;
a court could determine that a competitor’s technology or product does not infringe NPM’s licensed patents, or any future patents NPM may own; and
the patents could irretrievably lapse due to failure to pay fees or otherwise comply with regulations or could be subject to compulsory licensing. If NPM encounters delays in NPM’s development or clinical trials, the period of time during which NPM could market its potential products under patent protection would be reduced.

NPM’s competitors may be able to circumvent its licensed patents or future patents NPM may own by developing similar or alternative technologies or products in a non-infringing manner. NPM’s competitors may seek to market generic versions of any approved products by submitting abbreviated new drug applications to the FDA in which NPM’s competitors claim that NPM’s licensed patents or any future patents NPM may own are invalid, unenforceable, or not infringed. Alternatively, NPM’s competitors may seek approval to market their own products similar to or otherwise competitive with NPM’s products. In these circumstances, NPM may need to defend or assert NPM’s licensed patents, or any future patents NPM may own, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find NPM’s licensed patents or any future patents NPM may own invalid or unenforceable. NPM may also fail to identify patentable aspects of its research and development before it is too late to obtain patent protection. Even if NPM owns or in-licenses valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve NPM’s business objectives.

The issuance of a patent is not conclusive as to its inventorship, scope, ownership, priority, validity, or enforceability. In this regard, third parties may challenge NPM’s licensed patents, or any future patents NPM may own in the courts or patent offices in the U.S. and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated, or held unenforceable, in whole or in part, which could limit NPM’s ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of Second Sight’s technology and potential products. In addition, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized.

NPM may not be successful in obtaining or maintaining necessary rights to its product candidates through acquisitions and in-licenses.

One of NPM’s programs may require the use of proprietary rights held by third parties. NPM may need to acquire or in-license additional intellectual property in the future with respect to other product candidates. Moreover, NPM may be unable to acquire or in-license any compositions, methods of use, processes, or other intellectual property rights from third parties that NPM identifies as necessary for its product candidates. NPM may face competition with regard to acquiring and in-licensing third-party intellectual

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property rights, including from a number of more established companies. These established companies may have a competitive advantage over NPM due to their size, cash resources and greater clinical development and commercialization capabilities. In addition, companies that perceive NPM to be a competitor may be unwilling to assign or license intellectual property rights to NPM. NPM also may be unable to acquire or in-license third-party intellectual property rights on terms that would allow it to make an appropriate return on NPM’s investment.

If NPM is unable to successfully obtain required third-party intellectual property rights or maintain NPM’s existing intellectual property rights, NPM may need to abandon development of the related program and NPM’s business, financial condition and results of operations could be materially and adversely affected.

NPM may infringe the intellectual property rights of others, which may prevent or delay its development efforts and prevent NPM from commercializing or increase the costs of commercializing NPM’s products.

NPM’s commercial success depends significantly on NPM’s ability to operate without infringing the patents and other intellectual property rights of third parties. For example, there could be issued patents of which NPM is not aware that NPM’s current or potential future product candidates infringe. There also could be patents that NPM believes NPM does not infringe, but that NPM may ultimately be found to infringe.

Moreover, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made, and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which NPM is unaware that may later result in issued patents that NPM’s product candidates or potential products infringe. For example, pending applications may exist that claim or can be amended to claim subject matter that NPM’s product candidates or potential products infringe. Competitors may file continuing patent applications claiming priority to already issued patents in the form of continuation, divisional, or continuation-in-part applications, in order to maintain the pendency of a patent family and attempt to cover NPM’s product candidates.

Third parties may assert that NPM is employing their proprietary technology without authorization and may sue NPM for patent or other intellectual property infringement. These lawsuits are costly and could adversely affect NPM’s business, financial condition and results of operations and divert the attention of managerial and scientific personnel. If NPM is sued for patent infringement, NPM would need to demonstrate that its product candidates, potential products, or methods either do not infringe the claims of the relevant patent or that the patent claims are invalid, and NPM may not be able to do this. Proving invalidity is difficult. For example, in the U.S., proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if NPM is successful in these proceedings, NPM may incur substantial costs and the time and attention of NPM’s management and scientific personnel could be diverted in pursuing these proceedings, which could have a material adverse effect on NPM. In addition, NPM may not have sufficient resources to bring these actions to a successful conclusion. If a court holds that any third-party patents are valid, enforceable and cover NPM’s products or their use, the holders of any of these patents may be able to block NPM’s ability to commercialize its products unless it acquires or obtains a license under the applicable patents or until the patents expire.

NPM may not be able to enter licensing arrangements or make other arrangements at a reasonable cost or on reasonable terms. Any inability to secure licenses or alternative technology could result in delays in the introduction of NPM’s products or lead to prohibition of the manufacture or sale of products by NPM. Even if NPM is able to obtain a license, it may be non-exclusive, thereby giving NPM’s competitors access to the same technologies licensed to NPM. NPM could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, in any such proceeding or litigation, NPM could be found liable for monetary damages, including treble damages and attorneys’ fees, if NPM is found to have willfully infringed a patent. A finding of infringement could prevent NPM from commercializing its product candidates or force NPM to cease some of its business operations, which could materially and adversely affect NPM’s business, financial condition, and results of operations. Any claims by third parties that NPM has misappropriated their confidential information or trade secrets could have a similar material and adverse effect on NPM’s business, financial condition, and results of operations. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on NPM’s ability to raise the funds necessary to continue NPM’s operations.

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Third-party claims of intellectual property infringement may prevent or delay NPM’s drug discovery and development efforts

NPM’s commercial success depends in part on its and its collaborators avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, as well as administrative proceedings for challenging patents, including interference and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions. Under United States patent reform, procedures including inter parties review and post grant review have been implemented. As stated above, this reform brings uncertainty to the possibility of challenge to its patents in the future. Numerous United States and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which it or its collaborators are developing product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that a product candidate may give rise to claims of infringement of the patent rights of others.

Third parties may assert that NPM or its collaborators are employing their proprietary technology without authorization. There may be third-party patents of which NPM, or its collaborators are currently unaware with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of a NPM product candidate. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that a product candidate may infringe. In addition, third parties may obtain patents in the future and claim that use of NPM or its collaborators’ technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of a product candidate, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block the ability to commercialize the product candidate unless NPM or its collaborators obtain a license under the applicable patents, or until such patents expire or they are finally determined to be held invalid or unenforceable. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of its formulations, processes for manufacture or methods of NPM, including combination therapy or patient selection methods, the holders of any such patent may be able to block the ability to develop and commercialize the product candidate, unless NPM or its collaborators obtain a license or until such patent expires or is finally determined to be held invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all. If NPM or its collaborators are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, NPM’s ability to commercialize a product candidate may be impaired or delayed, which could in turn significantly harm NPM’s business.

Parties making claims against NPM may seek and obtain injunctive or other equitable relief, which could effectively block the ability to further develop and commercialize a product candidate. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from its business. In the event of a successful claim of infringement against NPM, it may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties, or redesign its infringing products, which may be impossible or require substantial time and monetary expenditure. NPM cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms. Furthermore, even in the absence of litigation, NPM or its collaborators may need to obtain licenses from third parties to advance NPM’s research or allow commercialization of a product candidate. NPM may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, NPM or its collaborators would be unable to further develop and commercialize a product candidate, which could harm NPM’s business significantly.

Any claims or lawsuits relating to infringement of intellectual property rights brought by or against NPM will be costly and time consuming and may adversely affect its business, financial condition, and results of operations.

NPM may be required to initiate litigation to enforce or defend its licensed and owned intellectual property. Lawsuits to protect NPM’s intellectual property rights can be very time consuming and costly. There is a substantial amount of litigation involving patent and other intellectual property rights in the biopharmaceutical industry generally. Such litigation or proceedings could substantially increase NPM’s operating expenses and reduce the resources available for development activities or any future sales, marketing, or distribution activities.

In any infringement litigation, any award of monetary damages NPM receives may not be commercially valuable. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of NPM’s confidential information could be compromised by disclosure during litigation. Moreover, there can be no assurance that NPM will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are resolved. Further, any claims NPM asserts against a perceived infringer could provoke these parties to assert counterclaims against NPM alleging that NPM has infringed their patents. Some of NPM’s competitors may be able to sustain the costs of such litigation or

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proceedings more effectively than NPM can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on NPM’s ability to compete in the marketplace.

In addition, NPM’s licensed patents and patent applications, and patents and patent applications that NPM may apply for, own, or license in the future, could face other challenges, such as interference proceedings, opposition proceedings, re-examination proceedings and other forms of post-grant review. Any of these challenges, if successful, could result in the invalidation of, or in a narrowing of the scope of, any of NPM’s licensed patents and patent applications and patents and patent applications that NPM may apply for, own, or license in the future subject to challenge. Any of these challenges, regardless of their success, would likely be time consuming and expensive to defend and resolve and would divert NPM’s management and scientific personnel’s time and attention.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing NPM’s ability to protect NPM’s products.

As is the case with other biopharmaceutical companies, NPM’s success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is costly, time-consuming, and inherently uncertain. For example, the U.S. previously enacted and implemented wide-ranging patent reform legislation. Specifically, on September 16, 2011, the Leahy-Smith America Invents Act (the “Leahy-Smith Act”) was signed into law and included a number of significant changes to U.S. patent law, and many of the provisions became effective in March 2013. However, it may take the courts years to interpret the provisions of the Leahy-Smith Act, and the implementation of the statute could increase the uncertainties and costs surrounding the prosecution of NPM’s licensed and future patent applications and the enforcement or defense of NPM’s licensed and future patents, all of which could have a material adverse effect on NPM’s business, financial condition, and results of operations.

In addition, the U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty regarding NPM’s ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken NPM’s ability to obtain new patents or to enforce patents that NPM might obtain in the future.

NPM may not be able to protect its intellectual property rights throughout the world.

Filing, prosecuting, and defending patents on product candidates in all jurisdictions throughout the world would be prohibitively expensive. Competitors may use NPM’s licensed and owned technologies in jurisdictions where NPM has not licensed or obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where NPM may obtain or license patent protection, but where patent enforcement is not as strong as that in the U.S. These products may compete with NPM’s products in jurisdictions where NPM does not have any issued or licensed patents and any future patent claims, or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for NPM to stop the infringement of NPM’s licensed patents and future patents NPM may own, or marketing of competing products in violation of NPM’s proprietary rights generally. Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the U.S. As a result, NPM may encounter significant problems in protecting and defending its licensed and owned intellectual property both in the U.S. and abroad. For example, China currently affords less protection to a company’s intellectual property than some other jurisdictions. As such, the lack of strong patent and other intellectual property protection in China may significantly increase NPM’s vulnerability regarding unauthorized disclosure or use of its intellectual property and undermine its competitive position. Proceedings to enforce NPM’s future patent rights, if any, in foreign jurisdictions could result in substantial cost and divert its efforts and attention from other aspects of NPM’s business.

NPM may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

To protect NPM’s proprietary and licensed technology and processes, NPM relies in part on confidentiality agreements with its corporate partners, employees, consultants, manufacturers, outside scientific collaborators and sponsored researchers and other

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advisors. These agreements may not effectively prevent disclosure of NPM’s confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover NPM’s trade secrets and proprietary information. Failure to obtain or maintain trade secret protection could adversely affect NPM’s competitive business position.

Although NPM requires all of its employees to assign their inventions to NPM, and requires all of its employees, consultants, advisors and any third parties who have access to its proprietary know how, information or technology to enter into confidentiality agreements, NPM cannot be certain that its trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to NPM trade secrets or independently develop substantially equivalent information and techniques.

NPM may be subject to claims that NPM’s employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties.

NPM expects to employ individuals who were previously employed at other biopharmaceutical companies. Although NPM has no knowledge of any such claims against NPM, NPM may be subject to claims that it or its employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of NPM’s employees’ former employers or other third parties. Litigation may be necessary to defend against these claims. There is no guarantee of success in defending these claims, and even if NPM is successful, litigation could result in substantial cost and be a distraction to NPM’s management and other employees. To date, none of NPM’s employees have been subject to such claims.

If NPM does not obtain additional protection under the Hatch-Waxman Amendments and similar foreign legislation extending the terms of NPM’s licensed patents and any future patents NPM may own, NPM’s business, financial condition and results of operations may be materially and adversely affected.

Depending upon the timing, duration, and specifics of FDA regulatory approval for NPM’s product candidates, one or more of its licensed U.S. patents or future U.S. patents that NPM may license or own may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments. In certain instances, the Hatch-Waxman Amendments permit a patent restoration term of three years and up to five years as compensation for patent term lost during drug development and the FDA regulatory review process. This period is generally one-half the time between the effective date of an investigational new drug application (“IND”) (falling after issuance of the patent), and the submission date of an NDA, plus the time between the submission date of an NDA and the approval of that application. Patent term restorations, however, cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval by the FDA.

The application for patent term extension is subject to approval by the USPTO, in conjunction with the FDA. It takes at least six months to obtain approval of the application for patent term extension. NPM may not be granted an extension because of, for example, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than NPM requests. If NPM is unable to obtain patent term extension or restoration or the term of any such extension is less than NPM requests, the period during which NPM will have the right to exclusively market its product will be shortened and NPM’s competitors may obtain earlier approval of competing products, and NPM’s ability to generate revenues could be materially adversely affected.

Risks Related to NPM’s Reliance on Third Parties

NPM intends to rely on third parties to conduct its preclinical studies and clinical trials and perform other tasks. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with regulatory requirements, NPM may not be able to obtain regulatory approval for or commercialize its product candidates and its business, financial condition and results of operations could be substantially harmed.

NPM intends to rely upon third-party CROs, medical institutions, clinical investigators, and contract laboratories to monitor and manage data for NPM’s ongoing preclinical and clinical programs. Nevertheless, NPM maintains responsibility for ensuring that each of NPM’s clinical trials and preclinical studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards, and NPM’s reliance on these third parties does not relieve NPM of its regulatory responsibilities. NPM and its CROs and other vendors are required to comply with current requirements on good manufacturing practices (“cGMP”) good clinical practices (“GCP”) and good laboratory practice (“GLP”) which are a collection of laws and regulations enforced by the FDA, the EMA, and comparable foreign authorities for all of NPM’s product candidates in clinical development. Regulatory authorities enforce

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these regulations through periodic inspections of preclinical study and clinical trial sponsors, principal investigators, preclinical study and clinical trial sites, and other contractors. If NPM or any of its CROs or vendors fails to comply with applicable regulations, the data generated in NPM’s preclinical studies and clinical trials may be deemed unreliable and the FDA, the EMA or comparable foreign authorities may require NPM to perform additional preclinical studies and clinical trials before approving NPM’s marketing applications. NPM cannot assure that upon inspection by a given regulatory authority, such regulatory authority will determine that any of NPM’s clinical trials comply with GCP regulations. In addition, NPM’s clinical trials must be conducted with products produced consistent with cGMP regulations. NPM’s failure to comply with these regulations may require it to repeat clinical trials, which would delay the development and regulatory approval processes.

NPM may not be able to enter into arrangements with CROs on commercially reasonable terms, or at all. In addition, NPM’s CROs will not be NPM’s employees, and except for remedies available to NPM under its agreements with such CROs, NPM will not be able to control whether they devote sufficient time and resources to NPM’s ongoing preclinical and clinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to NPM’s protocols, regulatory requirements, or for other reasons, NPM’s clinical trials may be extended, delayed or terminated and NPM may not be able to obtain regulatory approval for or successfully commercialize NPM’s product candidates. CROs may also generate higher costs than anticipated. As a result, NPM’s business, financial condition and results of operations and the commercial prospects for NPM’s product candidates could be materially and adversely affected, its costs could increase, and its ability to generate revenue could be delayed.

Switching or adding additional CROs, medical institutions, clinical investigators or contract laboratories involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work replacing a previous CRO. As a result, delays occur, which can materially impact NPM’s ability to meet its desired clinical development timelines. There can be no assurance that NPM will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse effect on NPM’s business, financial condition, or results of operations.

NPM relies on third parties to manufacture NPM’s preclinical and clinical drug supplies, and NPM’s business, financial condition and results of operations could be harmed if those third parties fail to provide NPM with sufficient quantities of drug product or fail to do so at acceptable quality levels or prices.

NPM does not currently have, nor does NPM plan to acquire, the infrastructure or capability internally to fully manufacture NPM’s preclinical and clinical drug supplies for use in its clinical trials, and NPM lacks the resources and the capability to fully manufacture any of NPM’s product candidates on a clinical or commercial scale. NPM relies on its manufacturers to purchase from third-party suppliers the materials necessary to produce NPM’s product candidates for NPM’s clinical trials. There are a limited number of suppliers for raw materials that NPM uses to manufacture its product candidates, and there may be a need to identify alternate suppliers to prevent a possible disruption of the manufacture of the materials necessary to produce NPM’s product candidates for its clinical trials, and, if approved, ultimately for commercial sale. NPM does not have any control over the process or timing of the acquisition of these raw materials by NPM’s manufacturers. Although NPM generally does not begin a clinical trial unless NPM believes it has a sufficient supply of a product candidate to complete such clinical trial, any significant delay or discontinuity in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to replace a third-party manufacturer could considerably delay completion of NPM’s clinical trials, product testing and potential regulatory approval of NPM’s product candidates, which could harm NPM’s business, financial condition and results of operations.

Any collaboration arrangement that NPM may enter in the future may not be successful, which could adversely affect NPM’s ability to develop and commercialize NPM’s current and potential future product candidates.

NPM may seek collaboration arrangements with biopharmaceutical companies for the development or commercialization of its current and potential future product candidates. To the extent that NPM decides to enter into collaboration agreements, NPM will face significant competition in seeking appropriate collaborators. Moreover, collaboration arrangements are complex, and time consuming to negotiate, execute and implement. NPM may not be successful in its efforts to establish and implement collaborations or other alternative arrangements should NPM choose to enter into such arrangements, and the terms of the arrangements may not be favorable to NPM. If NPM collaborates with a third party for development and commercialization of a product candidate, NPM can expect to relinquish some or all of the control over the future success of that product candidate to the third party. The success of NPM’s collaboration arrangements will depend heavily on the efforts and activities of its collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations.

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Disagreements between parties to a collaboration arrangement can lead to delays in developing or commercializing the applicable product candidate and can be difficult to resolve in a mutually beneficial manner. In some cases, collaborations with biopharmaceutical companies and other third parties are terminated or allowed to expire by the other party. Any such termination or expiration would adversely affect NPM’s business, financial condition, and results of operations.

If NPM is unable to develop its own commercial organization or enter into agreements with third parties to sell and market NPM’s product candidates, NPM may be unable to generate significant revenues.

NPM does not have a sales and marketing organization, and NPM has no experience as a company in the sales, marketing, and distribution of medical devises. If any of NPM’s product candidates are approved for commercialization, NPM may be required to develop its sales, marketing, and distribution capabilities, or make arrangements with a third party to perform sales and marketing services. Developing a sales force for any resulting product or any product resulting from any of NPM’s other product candidates is expensive and time consuming and could delay any product launch. NPM may be unable to establish and manage an effective sales force in a timely or cost-effective manner, if at all, and any sales force NPM does establish may not be capable of generating sufficient demand for NPM’s product candidates. To the extent that NPM enters into arrangements with collaborators or other third parties to perform sales and marketing services, NPM’s product revenues are likely to be lower than if NPM marketed and sold its product candidates independently. If NPM is unable to establish adequate sales and marketing capabilities, independently or with others, NPM may not be able to generate significant revenues and may not become profitable.

NPM’s current and future relationships with investigators, healthcare professionals, consultants, third-party payors, and customers will be subject to applicable healthcare regulatory laws. NPM or its collaborators’ failure to comply with those laws could have a material adverse effect on its results of operations and financial condition.

Although we do not currently have any products on the market, our operations may be directly, or indirectly through our prescribers, consultants, customers, and third-party payors, subject to various U.S. federal and state healthcare laws and regulations, including, without limitation, fraud and abuse and other healthcare laws and regulations. These laws may constrain the business or financial arrangements and relationships through which NPM conducts its operations, including how it researches, markets, sells and distributes its product candidates for which it obtains marketing approval. Such laws include, without limitation:

the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information;
the federal healthcare programs’ Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering, or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs, such as the Medicare and Medicaid programs. A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;
federal false claims laws which prohibit, among other things, individuals, or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;
federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation;
the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the government information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to the government ownership and investment interests held by the physicians described above and their immediate family members and payments or other

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“transfers of value” to such physician owners (manufacturers are required to submit reports to the government by the 90th day of each calendar year);
federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;
state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; and state and foreign laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by the Health Insurance Portability and Accountability Act, thus complicating compliance efforts; and
similar healthcare laws and regulations in the European Union and other non-U.S. jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of certain protected information, such as the General Data Protection Regulation, (“GDPR”), which imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the EU (including health data).

If NPM or its collaborators’ operations are found to be in violation of any of such laws or any other governmental regulations that apply to NPM, it may be subject to penalties, including civil and criminal penalties, damages, fines, the curtailment or restructuring of its operations, the exclusion from participation in federal and state healthcare programs or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, and individual imprisonment, any of which could adversely affect its ability to operate NPM’s business and its results of operations.

NPM’s General Risk Factors

If NPM fails to retain current members of NPM’s senior management and scientific personnel, or to attract and keep additional key personnel, NPM may be unable to successfully develop or commercialize NPM’s product candidates.

NPM’s success depends on NPM’s continued ability to attract, retain, and motivate highly qualified management and scientific personnel. However, competition for qualified personnel is intense. NPM may not be successful in attracting qualified personnel to fulfill NPM’s current or future needs and there is no guarantee that any of these individuals will join the combined company on a full-time employment basis, or at all. In the event the combined company is unable to fill critical open employment positions, the company may need to delay its operational activities and goals, including the development of the company’s product candidates, and may have difficulty in meeting its obligations as a public company. NPM does not maintain “key person” insurance on any of its employees.

In addition, competitors and others are likely in the future to attempt to recruit NPM’s employees. The loss of the services of any of NPM’s key personnel, the inability to attract or retain highly qualified personnel in the future or delays in hiring such personnel, particularly senior management, and other technical personnel, could materially and adversely affect NPM’s business, financial condition and results of operations. In addition, the replacement of key personnel likely would involve significant time and costs and may significantly delay or prevent the achievement of NPM’s business objectives.

From time to time, NPM’s management seeks the advice and guidance of certain scientific advisors and consultants regarding clinical and regulatory development programs and other customary matters. These scientific advisors and consultants are not NPM’s employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to NPM. In addition, NPM’s scientific advisors may have arrangements with other companies to assist those companies in developing products or technologies that may compete with NPM’s.

NPM will need to increase the size of NPM’s organization and may not successfully manage NPM’s growth.

NPM is a preclinical-stage biopharmaceutical company with a relatively small number of employees, and NPM’s management systems currently in place are not likely to be adequate to support NPM’s future growth plans. NPM’s ability to grow and to manage

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its growth effectively will require NPM to hire, train, retain, manage, and motivate additional employees and to implement and improve its operational, financial and management systems. These demands also may require the hiring of additional senior management personnel or the development of additional expertise by NPM’s senior management personnel. Hiring a significant number of additional employees, particularly those at the management level, would increase NPM’s expenses significantly. Moreover, if NPM fails to expand and enhance its operational, financial and management systems in conjunction with NPM’s potential future growth, it could have a material adverse effect on NPM’s business, financial condition, and results of operations.

Risks Related to the Combined Company

The market price of the combined company common stock is expected to be volatile and may drop following the merger.

The market price of the combined company’s common stock is likely to be volatile following the merger. The combined company’s stock price could be subject to wide fluctuations in response to a variety of factors including the following:

results from, and any delays in, planned clinical trials for the combined company’s product candidates, or any other future product candidates, and the results of trials of competitors or those of other companies in the combined company’s market sector;
any delay in filing an Investigational New Drug Application, Investigational Device Exemption or NDA for any of the combined company’s product candidates and any adverse development or perceived adverse development with respect to the FDA’s review of that NDA;
significant lawsuits, including patent or shareholder litigation;
inability to obtain additional funding;
failure to successfully develop and commercialize the combined company’s product candidates;
changes in laws or regulations applicable to the combined company’s product candidates;
inability to obtain adequate product supply for the combined company’s product candidates, or the inability to do so at acceptable prices;
unanticipated serious safety concerns related to any of the combined company’s product candidates;
adverse regulatory decisions;
introduction of new products or technologies by the combined company’s competitors;
failure to meet or exceed drug development or financial projections the combined company provides to the public;
failure to meet or exceed the estimates and projections of the investment community;
the perception of the biopharmaceutical industry by the public, legislatures, regulators and the investment community;
announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by the combined company or the combined company’s competitors;
disputes or other developments relating to proprietary rights, including patents, litigation matters and the combined company’s ability to obtain patent protection for the combined company’s licensed and owned technologies;
additions or departures of key scientific or management personnel;

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changes in the market valuations of similar companies;
general economic and market conditions and overall fluctuations in the U.S. equity market;
sales of the combined company’s common stock by the combined company or its shareholders in the future; and
trading volume of the combined company’s common stock.

In addition, the stock market, in general, and small biopharmaceutical companies, in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of the combined company’s common stock, regardless of the combined company’s actual operating performance. Further, a decline in the financial markets and related factors beyond the combined company’s control may cause the combined company’s stock price to decline rapidly and unexpectedly.

Even if the merger is completed, the combined company will need to raise additional capital by issuing securities or debt or through licensing or similar arrangements, which may cause significant dilution to the combined company’s shareholders, restrict the combined company’s operations, or require the combined company to relinquish proprietary rights. Future issuances of the combined company’s common stock pursuant to options and warrants outstanding following the merger and its equity incentive plans, including the Second Sight 2022 Plan, could result in additional dilution.

Following the completion of the merger, the combined company may need to raise additional capital to fund its operations beyond 2023. Additional financing may not be available to the combined company when it needs it or may not be available on favorable terms. To the extent that the combined company raises additional capital by issuing equity securities, the terms of such an issuance may cause more significant dilution to the combined company’s shareholders’ ownership, and the terms of any new equity securities may have preferences over the combined company’s common stock. Any debt financing the combined company enters into may involve covenants that restrict its operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of the combined company’s assets, as well as prohibitions on its ability to create liens, pay dividends, redeem its stock or make investments. In addition, if the combined company raises additional funds through licensing or similar arrangements, it may be necessary to relinquish potentially valuable rights to current product candidates and potential products or proprietary technologies, or grant licenses on terms that are not favorable to the combined company.

In addition, the exercise or conversion of some or all of the combined company’s outstanding options or warrants (or, after the merger, the issuance of equity awards under the Second Sight 2022 Plan) could result in additional dilution in the percentage ownership interest of Second Sight or NPM shareholders.

Sales of a substantial number of shares of the combined company’s common stock by the combined company’s shareholders in the public market could cause the combined company’s stock price to fall.

The market or the perception that these sales might occur could significantly reduce the market price of the combined company’s common stock and impair the combined company’s ability to raise adequate capital through the sale of additional equity securities. In the event the merger is consummated, only a limited portion of issued and outstanding shares of the combined company will be freely tradable, without restriction, in the public market immediately following the merger.

NPM’s directors and executive officers and holders of approximately 49.9% of NPM’s outstanding common stock on an as converted to common stock basis are expected to enter into lock-up agreements with NPM in connection with the closing of the merger pursuant to which they may not, for a period of 180 days from the date of the Effective Time, offer, sell or otherwise transfer or dispose of any of the combined company’s securities, subject to certain exceptions. Sales of these shares, or perceptions that they will be sold, could cause the trading price of the combined company’s common stock to decline.

The combined company’s internal control over financial reporting may not meet the standards required by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, could have a material adverse effect on the combined company’s business and share price.

As a privately held company, NPM was not required to evaluate its internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404 of the Sarbanes-Oxley Act (“Section 404”). Commencing with the combined company’s Annual Report on Form 10-K for this fiscal year, the combined company’s management will be

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required to report on the effectiveness of the combined company’s internal control over financial reporting. The rules governing the standards that must be met for the combined company’s management to assess the combined company’s internal control over financial reporting are complex and require significant documentation, testing and possible remediation.

The combined company cannot assure you that there will not be material weaknesses or significant deficiencies in the combined company’s internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit the combined company’s ability to accurately report its financial condition, results of operations or cash flows. If the combined company is unable to conclude that its internal control over financial reporting is effective, or if the combined company’s independent registered public accounting firm determines the combined company has a material weakness or significant deficiency in the combined company’s internal control over financial reporting once that firm begin its Section 404 reviews, investors may lose confidence in the accuracy and completeness of the combined company’s financial reports, the market price of the combined company’s common stock could decline, and the combined company could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Failure to remedy any material weakness in the combined company’s internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict the combined company’s future access to the capital markets.

After the merger, the combined company’s executive officers, directors, and principal shareholders, if they choose to act together, will continue to control, or significantly influence all matters submitted to shareholders for approval. Furthermore, one of the combined company’s anticipated directors will be appointed by NPM.

Following the completion of the merger, the combined company’s executive officers, directors and greater than 5% shareholders, in the aggregate, will own on a beneficial basis approximately 67.5% of combined company’s outstanding common stock (assuming no exercise of outstanding options). Furthermore, one of the combined company’s anticipated directors will be appointed by NPM. As a result, such persons, or their appointees to the combined company’s board of directors, acting together, will have the ability to control or significantly influence all matters submitted to the combined company’s board of directors or shareholders for approval, including the appointment of the combined company’s management, the election and removal of directors and approval of any significant transaction, as well as the combined company’s management and business affairs. This concentration of ownership may have the effect of delaying, deferring, or preventing a change in control, impeding a merger, consolidation, takeover or other business combination involving the combined company, or discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of the combined company’s business, even if such a transaction would benefit other shareholders.

The combined company may become involved in securities class action litigation that could divert management’s attention and harm the combined company’s business and insurance coverage may not be sufficient to cover all costs and damages.

In the past, securities class action or shareholder derivative litigation often follows certain significant business transactions, such as the sale of a business division or announcement of a merger. The combined company may become involved in this type of litigation in the future. Litigation is often expensive and diverts management’s attention and resources, which could adversely affect the combined company’s business.

The results of operations of the combined company may be negatively impacted if customers do not maintain their favorable perception of our brands and products or as a result of potential litigation associated with the Second Sight Name Change.

Maintaining and continually enhancing the value of the brands is critical to the success of combined company’s business. Brand value is based in large part on investors’ and partners’ perceptions. Success in promoting and enhancing brand value depends in large part on our ability to provide high-quality products. Brand value could diminish significantly due to a number of factors, including adverse publicity about combined company’s products or clinical research associated therewith (whether valid or not), our corporate name changes from “Second Sight Medical Products, Inc.” to “Vivani Medical, Inc.”

In the event the Second Sight Name Change is not widely accepted by our investors and partners or if it proves to be less popular than anticipated, our brand may suffer. Damage to the combined company’s brand, reputation or loss of investors’ confidence in its brand could result in decreased chances of the combined company to access additional funding which may impact on combined company’s business, results of operations or financial condition. Additionally, the Second Sight Name Change may result in lawsuits associated with the new name of the combined company.

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FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/prospectus (if any) contain forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the United States Securities Act of 1933, as amended (the “Securities Act”)) concerning Second Sight, NPM, the proposed merger, and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the management of Second Sight, as well as assumptions made by, and information currently available to, management. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “plan,” “believe,” “intend,” “look forward,” and other similar expressions among others. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: the risk that the conditions to the closing of the merger are not satisfied, including the failure to timely or at all obtain shareholder approval for the merger; uncertainties as to the timing of the consummation of the merger and the ability of each of Second Sight and NPM to consummate the merger; risks related to Second Sight’s ability to correctly estimate its operating expenses and its expenses associated with the merger; risks related to the changes in market price of Second Sight’s common stock and the ability of the combined company to satisfy the requirements of the Nasdaq Listing Rules; the ability of Second Sight or NPM to protect their respective intellectual property rights; competitive responses to the merger, if any; unexpected costs, charges, or expenses resulting from the merger; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger; the impact of the conflicts of interests disclosed in this proxy statement/prospectus and the ability of Second Sight to adequately address it, and legislative, regulatory, political, and economic developments. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere. Second Sight can give no assurance that the conditions to the merger will be satisfied. Except as required by applicable law, Second Sight undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events, or otherwise.

For a discussion of the factors that may cause Second Sight, NPM, or the combined company’s actual results, performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied in such forward-looking statements, or for a discussion of risk associated with the ability of Second Sight and NPM to complete the merger and the effect of the merger on the business of Second Sight, NPM, and the combined company, see the section entitled “Risk Factors.”

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in reports filed with the SEC by Second Sight including the risk factors included in Second Sight’s most recent Annual Report on Form 10-K, and Second Sight’s recent Quarterly Report on Form 10-Q and Current Reports on Form 8-K filed with the SEC. See the section entitled “Where You Can Find More Information.”

If any of these risks or uncertainties materialize or any of these assumptions prove incorrect, the results of Second Sight, NPM, or the combined company could differ materially from the forward-looking statements. All forward-looking statements in this proxy statement/prospectus are current only as of the date on which the statements were made. Except as required by applicable law, Second Sight and NPM do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events.

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THE ANNUAL MEETING OF SECOND SIGHT’S SHAREHOLDERS

Date, Time, and Place

The Second Sight annual meeting will be held on [XX], 2022, at [XX] commencing at [XX] [a.m./pm], Pacific time and will be “virtual,” meaning that you can participate in the meeting online at [XX] at the appointed time and date. Second Sight shareholders are encouraged to access the annual meeting before the start time of [XX] [a.m./pm], Pacific time, on [XX], 2022. Please allow ample time for online check-in. Second Sight shareholders will not be able to attend the annual meeting in person. Second Sight is sending this proxy statement/prospectus to its shareholders in connection with the solicitation of proxies by the Second Sight Board for use at the Second Sight annual meeting and any adjournments or postponements of the Second Sight annual meeting. This proxy statement/prospectus is first being furnished to Second Sight’s shareholders on or about [XX], 2022.

Purpose of the Second Sight Annual Meeting

The purpose of the Second Sight annual meeting is:

1.to approve the Merger Agreement and thereby approve the transactions contemplated thereby, including the merger, the issuance of the Merger Shares, and the change of control resulting from the merger;
2.to approve an amendment to the Second Sight Restated Articles of Incorporation, as amended, to effect a reverse stock split of Second Sight’s common stock, within a range, as determined by the Second Sight Board, of one new share for every 2 to 5 (or any number in between) shares outstanding (the “Second Sight Reverse Stock Split”);
3.to approve an amendment to the Second Sight Restated Articles of Incorporation, as amended, to effect the change of name of Second Sight to “Vivani Medical, Inc.”;
4.to elect the six directors from the nominees named in the accompanying proxy statement to hold office for the ensuing year and until their successors are duly elected and qualified;
5.to approve the Second Sight 2022 Omnibus Plan (the “Second Sight 2022 Plan”);
6.to ratify the selection by the audit committee of the board of directors the appointment of BPM LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022;
7.to consider and vote upon an adjournment of the Second Sight annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the foregoing proposals; and
8.to transact such other business as may properly come before the Second Sight annual meeting or any adjournment or postponement thereof.

Recommendation of the Second Sights Board of Directors

After careful consideration, the Second Sight Board, based on the opinion of the Special Committee regarding Proposals 1, 3, and 5, recommends that Second Sight’s shareholders vote:

FOR” Proposal No. 1 to approve the Merger Agreement and thereby approve the transactions contemplated thereby, including the merger, the issuance of the Merger Shares, and the change of control resulting from the merger;
FOR” Proposal No. 2 to approve the amendment to the Restated Articles of Incorporation, as amended, of Second Sight to effect the Second Sight Reverse Stock Split;
FOR” Proposal No. 3 to approve an amendment to the Second Sight Restated Articles of Incorporation, as amended, to effect the change of name of Second Sight to “Vivani Medical, Inc.”;

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FOR” each of the six nominees named in Proposal No. 4 of the accompanying proxy statements to hold office for the ensuing year and until their successors are duly elected and qualified;
FOR” Proposal No. 5 to approve the Second Sight 2022 Plan;
FOR” Proposal No. 6 to ratify the selection by the audit committee of the board of directors the appointment of BPM LLP as Second Sight’s independent registered public accounting firm for the fiscal year ending December 31, 2022; and
FOR” Proposal No. 7 to consider and vote upon an adjournment of the Second Sight annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the foregoing proposals.

Record Date and Voting Power

Only holders of record of Second Sight’s common stock at the close of business on the record date, [XX], 2022, are entitled to notice of, and to vote at, the Second Sight annual meeting. There were approximately [XX] holders of record of Second Sight’s common stock at the close of business on the record date. At the close of business on the record date, shares of Second Sight’s common stock were issued and outstanding. Each share of Second Sight’s common stock entitles the holder thereof to one vote on each matter submitted for shareholder approval. See the section entitled “Principal Shareholders of Second Sight” in this proxy statement/prospectus for information regarding persons known to Second Sight’s management to be the beneficial owners of more than 5% of the outstanding shares of Second Sight’s common stock.

Voting and Revocation of Proxies

The proxy accompanying this proxy statement/prospectus is solicited on behalf of the Second Sight Board for use at the Second Sight annual meeting.

Voting

If you are a shareholder of record of Second Sight as of the record date referred to above, you may vote by proxy or by attending the Annual Meeting virtually by visiting [XX], where votes can be submitted via live webcast. If you vote by proxy, you can vote by Internet, telephone or by mail as described below.

You may vote via the Internet or by telephone. To vote via the Internet or by telephone, follow the instructions provided in the proxy card that accompanies this proxy statement. If you vote via the Internet or by telephone, you do not need to return a proxy card by mail. Internet and telephone voting are available 24 hours a day. Votes submitted through the Internet or by telephone must be received by [XX] p.m. Eastern Time on [XX], 2022. Alternatively, you may request a printed proxy card by following the instructions provided in the notice.
You may vote by Mail. If you would like to vote by mail, you need to complete, date and sign the proxy card that accompanies this proxy statement and promptly mail it in the enclosed postage-paid envelope so that it is received no later than [XX], 2022. You do not need to put a stamp on the enclosed envelope if you mail it from within the United States. The persons named on the proxy card will vote the shares you own in accordance with your instructions on the proxy card you mail. If you return the proxy card, but do not give any instructions on a particular matter to be voted on at the annual meeting, the persons named on the proxy card will vote the shares you own in accordance with the recommendations of the Second Sight Board.
You may vote at the Annual Meeting. If you choose to vote at the annual meeting virtually, you will need the 16-digit control number included on your notice or on your proxy card. If you are the beneficial owner of your shares, your 16-digit control number may be included in the voting instructions form that accompanied your proxy materials. If your nominee did not provide you with a 16-digit control number in the voting instructions form that accompanied your proxy materials, you may be able to log onto the website of your nominee prior to the start of the annual meeting, on which you will need to select the stockholder communications mailbox link through to the annual meeting, which will automatically populate your 16-digit control number in the virtual annual meeting interface. The method you use to vote will not limit your right to vote at the virtual annual meeting. all shares that have been properly voted and not revoked will be voted at the annual meeting.

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If you are the beneficial owner of shares held of record by a broker or other nominee, you will receive voting instructions from your broker or other nominee. you must follow the voting instructions provided by your broker or other nominee in order to instruct your broker or other nominee how to vote your shares. The availability of telephone and Internet voting options will depend on the voting process of your broker or other nominee. As discussed above, if you received your 16-digit control number in the voting instructions form that accompanied your notice or your proxy materials, or if you are able to link through to the annual meeting from the website of your nominee and populate your 16-digit control number in the virtual annual meeting interface, you will be able to vote virtually at the annual meeting.

Revocation of Proxy

If you are a Stockholder of Record, you may revoke your proxy or change your proxy instructions at any time before your proxy is voted at the annual meeting by:

entering a new vote by Internet or telephone;
signing and returning a new proxy card with a later date;
delivering a written revocation to our Secretary at the address listed on the front page of this proxy statement; or
attending the Annual Meeting and voting via live webcast.

If you are the beneficial owner of your shares, you must contact the broker or other nominee holding your shares and follow their instructions to change your vote or revoke your proxy.

Required Vote The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of common stock outstanding on the record date will constitute a quorum, permitting the conduct of business at the meeting. Shares that are voted “FOR,” “AGAINST,” or “ABSTAIN” in a matter are treated as being present at the meeting for purposes of establishing the quorum, but only shares voted “FOR” or “AGAINST” are treated as shares “represented and voting” at the annual meeting with respect to such matter. The following table describes the voting standard for each proposal and the effects of abstentions and broker non-votes.

    

    

Routine or non-routine

#

Proposal

    

Vote Required

    

Effect of Abstentions

Broker Non-Votes

1

Approval of merger

Affirmative vote of a majority of the issued and outstanding shares of Second Sight common stock entitled to vote

Same effect as an “Against” vote

The matter is not routine. Will have the same effect as an “Against” vote.

2

Reverse Stock Split

Affirmative vote of a majority of the issued and outstanding shares of Second Sight common stock entitled to vote

Same effect as an “Against” vote

The matter is routine. Broker non-votes are not expected.

3

Name Change

Affirmative vote of a majority of the issued and outstanding shares of Second Sight common stock entitled to vote

Same effect as an “Against” vote

The matter is not routine. Will have the same effect as an “Against” vote.

4

Election of Directors

Plurality of votes cast

No effect

The matter is not routine. No effect

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Routine or non-routine

#

Proposal

    

Vote Required

    

Effect of Abstentions

Broker Non-Votes

5

Approval of Second Sight 2022 Plan

Affirmative vote of a majority of the shares of Second Sight common stock represented and voting at the annual meeting if the quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum)

No effect, unless there are insufficient votes in favor of the proposal, such that the affirmative votes constitute less than a majority of the required quorum. In such cases, abstentions will have the same effect as a vote against such proposals.

The matter is not routine. No effect

6

Ratification of Auditor

Affirmative vote of a majority of the shares of Second Sight common stock represented and voting at the annual meeting if the quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum)

Will have no effect, unless there are insufficient votes in favor of the proposal, such that the affirmative votes constitute less than a majority of the required quorum. In such cases, abstentions will have the same effect as a vote against such proposals.

The matter is routine. Broker’s non-votes are not expected.

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Adjournment

Two scenarios:

(iii)    if a quorum is present at the annual meeting, the affirmative vote of holders of a majority of the shares represented and voting at the annual meeting (which shares voting affirmatively also constitute at least a majority of the required quorum) is needed to approve Proposal 7

(iv)    if a quorum is not present at the annual meeting, a majority of the shares present and voting in person or by proxy, even if less than a majority of a quorum, would be sufficient to approve Proposal 7

No effect

The matter is routine. Broker non-votes are not expected.

Solicitation of Proxies

In addition to solicitation by mail, the directors, officers, employees and agents of Second Sight may solicit proxies from Second Sight’s shareholders by personal interview, telephone, telegram or otherwise. Second Sight will pay the costs of printing and filing this proxy statement/prospectus and proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of Second Sight’s common stock for the forwarding of solicitation materials to the beneficial owners of Second Sight’s common stock. Second Sight will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials.

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Second Sight has retained as its proxy solicitor. Second Sight will pay the fees of Morrow Sodali LLC, which Second Sight expects to be approximately $15,000, plus reimbursement of out-of-pocket expenses.

If you have any questions or need assistance voting your shares, please call Morrow Sodali LLC, toll-free at (800) 662-5200, or contact them via e-mail at EYES@info.morrowsodali.com or in writing to 333 Ludlow Street, 5th Floor, South Tower, Stamford, CT 06902.

Other Matters

As of the date of this proxy statement/prospectus, the Second Sight Board does not know of any business to be presented at the Second Sight annual meeting other than as set forth in the notice accompanying this proxy statement/prospectus. If any other matters should properly come before the Second Sight annual meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the judgment of the persons voting the proxies.

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THE MERGER

This section and the section entitled “The Merger Agreement” in this proxy statement/prospectus describe the material aspects of the merger, including the Merger Agreement. While Second Sight and NPM believe that this description covers the material terms of the merger and the Merger Agreement, it may not contain all of the information that is important to you. You should read carefully this entire proxy statement/prospectus for a more complete understanding of the merger and the Merger Agreement, including the Merger Agreement attached as Annex A, the opinion of ThinkEquity attached as Annex B, and the other documents to which you are referred include herein. See the section entitled “Where You Can Find More Information” in this proxy statement/prospectus.

Background of the Merger

The Second Sight Board and management regularly review its operating and strategic plans in an effort to enhance shareholder value. These reviews involve, among other things, discussions of opportunities and risks associated with Second Sight’s product candidates, development programs, company financial and market conditions, as well as consideration of strategic alternatives and options.

In late March 2021, the Second Sight Board initiated discussions to consider investment opportunities with recently raised capital. Although the Orion cortical prosthesis opportunity looked promising, commercial experience with the Argus II retinal prosthesis led the board to expand its investment considerations to include both internal and external opportunities. Since three of Second Sight directors were also directors in Nano Precision Medical, Inc. (NPM), a pre-clinical stage drug implant biopharmaceutical company, it was agreed that non-conflicted director Will McGuire should be introduced to NPM CEO Dr. Adam Mendelsohn to explore potential relationship(s) to the benefit of SSMP shareholders.

On April 1, 2021, Dr. Mendelsohn, CEO of NPM, sent an e-mail correspondence to Mr. McGuire to inquire as to his interest in exploring a potential relationship with NPM whereby NPM leadership could develop some strategic options for Second Sight’s consideration. A brief slide deck proposing potential relationships between SSMP and NPM that could be mutually beneficial to both organizations and an introduction to NPM’s current leadership team was also provided.

On April 6, 2021, Second Sight Chairman, Gregg Williams, sent an email to the board recommending that Mr. McGuire, SSMP path forward committee chair, immediately begin exploring a potential cooperation with NPM as one of the possible paths to advance the development of Second Sight’s product line, by leveraging NPM’s very strong capabilities and by potentially achieving synergies that could hopefully benefit both companies in several valuable ways. While this was purely a concept at the time, Mr. Williams could see a number of ways this cooperation could end up making sense for both companies, including, for example, prime/subcontract arrangement, some form of a JV, a merger, or some combination of these along a program milestone-based timeline.

On April 9, 2021, Dr. Mendelsohn and Don Dwyer, Chief Business Officer of NPM, had a teleconference call with Mr. McGuire to discuss the e-mail and slide deck sent on April 1, 2021. Mr. McGuire was intrigued by the potential for a collaborative relationship and both parties agreed to put a CDA in place to support future confidential discussions. Later that day, a fully executed confidentiality and non-disclosure agreement was executed by the parties.

On April 12, 2021, Mr. Dwyer sent e-mail correspondence to Mr. McGuire as a follow-up to the April 9, 2021, teleconference call regarding a potential agreement with Second Sight whereby NPM would assess the business opportunity for the Orion system and provide strategic options/recommendations for Second Sight moving forward. In addition, NPM also provided a draft press release in hopes that this would capture the spirit of a possible relationship for further discussion.

On April 15, 2021, Mr. McGuire sent Mr. Dwyer an e-mail correspondence that included an attachment of questions for NPM to consider. The list of preliminary questions focused on better understanding the experience of NPM’s leadership team and how the two companies could collaborate.

On April 15, 2021, Mr. McGuire, Mr. Dwyer, and Dr. Mendelsohn continued to explore a potential collaboration focused on developing strategic options for Second Sight with an emphasis on understanding the commercial viability of the Orion cortical visual prosthesis.

On April 16, 2021, Mr. Dwyer sent Mr. McGuire e-mail correspondence including a slide presentation with a potential deal construct and draft terms. Under the proposal, the companies would swap newly issued shares equal to 9.9% of Second Sight equity in

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exchange for a percentage of NPM equity that matched NPM’s proposed valuation. If NPM was asked to provide execution services beyond the initial strategic assessment of Orion, a separate agreement and deal terms would be required.

On April 29, 2021, Mr. McGuire, Dr. Mendelsohn, and Mr. Dwyer had a teleconference to discuss the proposed agreement and terms. Plans were discussed in support of a future Second Sight Board meeting.

On May 1, 2021, Mr. Dwyer provided Mr. McGuire with two slide decks to support discussions. Dr. Mendelsohn and Mr. Dwyer were invited into a portion of the Second Sight board meeting to discuss a potential collaboration whereby NPM would provide an assessment of the Orion opportunity, develop more specific strategic options, and provide a recommendation to the Second Sight Board.

On May 3, 2021, a Second Sight Board meeting was held to discuss general corporate matters, and to invite Dr. Mendelsohn and Mr. Dwyer to discuss NPM. The intended purpose of this discussion was to introduce NPM as a potential business opportunity and to discuss how NPM’s leadership team may be able to help Second Sight develop a path forward for the Orion opportunity. After Dr. Mendelsohn and Mr. Dwyer left the meeting, the Second Sight board discussed the merits of a potential partnership with NPM and agreed that a follow-up meeting be called with Second Sight board members, Mr. McGuire, Mr. Matt Pfeffer, and Ms. Alexandra Larson.

On May 4, 2021, Mr. McGuire, Mr. Pfeffer, and Ms. Larson met to review an investor deck from NPM and discuss possible deal scenarios. The investor deck was forward to the entire board.

On May 4, 2021, NPM requested access to Second Sight’s confidential data room to gather additional information on the company and a pipeline to the development of a more detailed assessment of the Orion opportunity. Such access was provided on May 27, 2021.

On May 28, 2021, the Second Sight board authorized a committee of the board, including board members independent of NPM and Second Sight officers including Mr. Dunbar, Mr. Randolph, and Dr. Dorn to utilize reasonable resources to explore a proposed transaction with NPM to determine whether such a transaction was in the best interest of Second Sight. For clarity, the “Special Committee” subsequently referenced in this document, refers explicitly to the group of non-conflicted Second Sight directors only which includes Ms. Larson, Mr. Pfeffer and Mr. McGuire.

On June 7, 2021, Dr. Mendelsohn provided Mr. McGuire with a copy of a recent NPM shareholder update which provided recent news both in terms of FDA feedback and a clean GLP Tox study result.

On June 8, 2021, Second Sight board members Mr. McGuire and Mr. Pfeffer joined a conference call with Dr. Mendelsohn and Mr. Dwyer to discuss feedback from the Second Sight Board.

On June 16, 2021, the NPM executive leadership team (Dr. Mendelsohn, Mr. Truc Le, Dr. Lisa Porter, and Mr. Dwyer) met with Second Sight leadership to review information on the Orion as presented by Second Sight leadership (Mr. Scott Dunbar (Acting CEO), Dr. Jessy Dorn (VP Clinical and Scientific Affairs), Mr. Ted Randolph (VP of Operations).

On June 22, 2021, Dr. Dorn and Mr. Dwyer exchanged multiple messages discussing potential experts and third-party companies involved in conducting Patient Preference Information studies to determine which attributes in the Orion program are important to patients, how important and potential trade-offs.

On July 6, 2021, Mr. Williams sent email correspondence to the Second Sight Board and legal counsel (Mr. Aaron Grunfeld) outlining a new potential strategy for Second Sight moving forward. Mr. Williams proposed a broader vision for the company to become the leading medical implant technology company, instead of just the leading visual prosthesis company. To facilitate the process, he recommended that Second Sight engage a third party to identify potential investment or merger/acquisition opportunities on our behalf in which NPM might be one of several available opportunities. He also recommended ThinkEquity lead this strategic process and proposed to discuss this at the following Second Sight Board meeting.

On July 7, 2021, Mr. McGuire contacted Mr. Dwyer to discuss the relative lack of progress in pursuing a strategic relationship with NPM. Mr. McGuire and Mr. Pfeffer indicated they were engaging a third-party banker or investment adviser before moving ahead with a formal relationship with NPM at this time. Mr. McGuire confirmed interest in exploring a potential business relationship and asked NPM to remain patient while this new activity was considered and discussed with the board.

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On August 18, 2021, Second Sight board member Ms. Larson contacted Dr. Mendelsohn to inform him that she was now heading the Special Committee of the board (comprised of the non-conflicted board members which included herself, Mr. McGuire, and Mr. Pfeffer). The Special Committee was charged with the independent exploration, assessment and if appropriate, the recommendation regarding any potential relationship and/or agreement with NPM in the future.

On August 19, 2021, Ms. Larson had a teleconference with Dr. Mendelsohn and Mr. Dwyer to discuss NPM’s technology, development programs, and commercial opportunity. The discussion also included potential options for further collaboration including a potential investment of NPM by Second Sight.

On August 22, 2021, Ms. Larson presented the Special Committee’s work to the Company’s board of directors, recommending a $30 million investment in NPM.

On August 27, 2021, Dr. Mendelsohn provided Ms. Larson with agreements in connection with a potential investment by Second Sight into NPM. Dr. Mendelsohn also provided a set of draft terms for review and consideration by Second Sight. These draft terms included:

1.$30M common stock investment by Second Sight into NPM.
2.$500M pre-money valuation, subject to confirmation by investment bank ThinkEquity.
3.Full ratchet downside protection to the next qualified financing.
4.Observation rights on NPM’s board for one non-conflicted Second Sight director.

On August 27, 2021, Dr. Mendelsohn provided e-mail correspondence to ThinkEquity informing them that NPM’s financial valuation model was now loaded into NPM’s data room and provided a full explanation of the financial model along with key assumptions and supportive information including valuation information from an analog company for the NPM valuation, in addition to the DFC model provided.

On September 2, 2021, Dr. Mendelsohn asked NPM’s law firm, Latham & Watkins, LLP, to draft a preliminary amendment to the 2016 AstraZeneca Share Agreement because AstraZeneca had pro-rata rights to participate in any subsequent capital raise. Dr. Mendelsohn also indicated that Second Sight may also be interested in investing the full $30,000,000 regardless of AstraZeneca’s decision to participate.

On September 8, 2021, Dr. Mendelsohn provided Ms. Larson with example agreement drafts to support the contemplated Second Sight investment into NPM, which included the following documents:

1.Common Stock Purchase Agreement;
2.Amended and Restated Shareholders Agreement;
3.Amended and Restated Investors Rights Agreement;
4.Certificate of Amendment of Articles of Incorporation;
5.Financing – Pro Forma; and
6.Schedule of Exceptions.

On September 18, 2021, Dr. Mendelsohn provided Ms. Larson with a draft Press Release entitled “Second Sight Expands Strategic Focus to Improve Shareholder Value and Announces Investment in Leading Drug Implant Company” which would support the proposed Second Sight investment.

From September 20 through 24, 2021, Dr. Mendelson provided ThinkEquity with information needed to support a fairness opinion by ThinkEquity on behalf of Second Sight in support of the proposed investment.

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On September 23, 2021, supporting Second Sight’s due diligence process, Second Sight’s Special Committee members, Mr. McGuire, and Mr. Pfeffer, conducted an informal audit of NPM’s headquarters in Emeryville, CA. Ms. Larson also participated in the audit, remotely. The Special Committee toured the facilities followed by an interactive discussion of NPM’s pipeline and development programs with an emphasis on the lead asset, NPM-119 for the treatment of patients with Type II diabetes.

On September 29, 2021, Mr. Dwyer provided the Special Committee with a slide deck summarizing the value creation activities in NPM since 2017. This summary was updated to include NPM collaborations with two of the top big pharma diabetes companies to explore the feasibility of the NanoPortal implant technology with their proprietary compounds.

On September 30, 2021, Dr. Mendelsohn and Mr. Dwyer had a teleconference with an analyst in ThinkEquity’s research division to discuss the assumptions provided in NPM’s DCF Valuation methodology.

On October 9, 2021, NPM provided the Special Committee with updates on recent developments regarding FDA’s “Proposal to Refuse to Approve a New Drug Application for ITCA 650 (Exenatide in DUROS Device); Opportunity for a Hearing.” This process highlighted the reasons for FDA’s concerns around device performance, how the concerns can be avoided and the significant support in the medical and patient community for a 6-month, subdermal exenatide implant.

On October 13, 2021, Mr. McGuire reported on the work of the Special Committee to the Company’s board of directors. The Committee recommended obtaining an independent valuation of NPM. The Special Committee also recommended a merger with NPM rather than the previously recommended investment. Factors supporting the change from an investment in NPM to a potential merger with NPM included 1) the recognition that NPM Leadership had the skills and experience to lead the combined company; 2) access to the NPM technology and portfolio would provide significant risk diversification and support Second Sight’s mission to become a leading medical implant company and 3) potential synergies in shared functions and services.

On October 28, 2021, the board of directors authorized the Special Committee to retain independent counsel reporting to the Special Committee. The Special Committee retained Venable LLP (“Venable”) as independent counsel.

On October 29, 2021, Mr. Pfeffer had a telephone call with Dr. Mendelsohn in which Mr. Pfeffer informed Dr. Mendelsohn that Second Sight was interested in discussing a reverse merger instead of a financing. Dr. Mendelsohn informed Mr. Pfeffer that NPM was interested in entertaining such a discussion.

On November 5, 2021, Dr. Mendelsohn and Mr. Dwyer met with Mr. Pfeffer and Mr. McGuire to discuss the status of a potential agreement. Second Sight agreed to provide a draft term sheet the following week for NPM’s consideration. The parties agreed that this initial term sheet would exclude a proposed exchange ratio.

On November 17, 2021, Venable provided a draft term sheet to Golenbock Eiseman Assor Bell & Peskoe LLP (“Golenbock”) who was representing NPM, as special counsel. The deal was structured as a reverse merger, whereby Second Sight would exchange the entirety of shares of NPM common stock outstanding at closing for shares of Second Sight common stock. Additionally, the agreement specified the assumption of leadership of the post-merger company by NPM’s current management.

On November 18, 2021, NPM leadership had an interactive teleconference with John Lonergan, an independent consultant hired by Second Sight to provide an assessment of NPM and provide a valuation estimate of the enterprise. Written responses were also provided to address Mr. Lonergan’s questions prior to the teleconference. Mr. Lonergan completed his evaluation and provided a draft valuation report to the Special Committee on November 23, 2021.

On November 18, 2021, NPM informed Second Sight that their accounting firm was unable to perform the audits required to support the potential merger. It was suggested that NPM consider using the Second Sight audit firm as this is permissible and could streamline operations. NPM was subsequently introduced to, and ultimately engaged with, the audit firm BPM.

On November 19, 2021, Golenbock returned a mark-up copy of the initial term sheet back to Venable for further consideration by Second Sight and request a meeting with the parties to discuss the proposed changes and move toward completion and execution of the term sheet. The most significant change was the addition of a loan provision which would bridge NPM with financing until the merger close.

On December 1, 2021, Mr. Pfeffer informed Dr. Mendelsohn that the timeline for the overall project should be acceptable.

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On December 3, 2021, Mr. Pfeffer further communicated that Second Sight remained interested in a potential transaction and saw the value on both sides to proceeding. To that end, Second Sight engaged ThinkEquity to help complete due diligence and assist with certain deal terms and structure.

On December 4, 2021, Dr. Mendelsohn provided Mr. Pfeffer with additional information to support a valuation assessment of NPM. Information was provided on an analog company’s financing history and an updated NPM timeline with analog valuations was included for reference.

On December 17, 2021, Ms. Larson provided Dr. Mendelsohn with the latest marked-up version of the term sheet. The previous version was dated December 14, 2021. Changes were proposed to the sections addressing Material Adverse Effect, Advance Amount, and Alternative Proposals. The Exchange Rate including number of shares to be issued as the merger consideration remained an open item. On December 20, 2021, a teleconference was held between Second Sight’s Special Committee and Second Sight’s legal counsel, Aaron Grunfeld (“Grunfeld”), NPM, and Golenbock. Prior to the call, Golenbock provided a newly revised version of the term sheet. The previous version was dated December 17, 2021.

On December 21, 2021, Dr. Mendelsohn provided an NPM-119 Technical and Development Update to the Special Committee which included new information included in the NPM Shareholders Meeting held on December 10, 2021.

On December 22, 2021, Ms. Larson provided Dr. Mendelsohn with the latest marked-up version of the term sheet. The previous version was provided on December 20, 2021. That version addressed the Exchange Ratio and proposed valuations of Second Sight at $120 million and NPM at $300 million.

From December 23 through 24, 2021, multiple teleconferences were held between Second Sight’s Special Committee and NPM to negotiate the final open items on the term sheet. The valuations were debated throughout the two-day period. ThinkEquity advised Second Sight during these negotiations. The parties agreed to valuations of Second Sight and NPM at $110M and $375M, respectively. A summary of the final term sheet negotiation steps is included in the table below:

Term Sheet Date

    

Second Sight

    

NPM

    

Notes

Pre-term sheet

Market Cap $(75M)

$

500M

Informal NPM proposal

December 22, 2021

$

120M

$

300M

Formal SSMP proposal

December 23, 2021

$

90M

$

450M

NPM counter

December 23, 2021

$

100M

$

400M

NPM counter

December 24, 2021

$

120M

$

350M

SSMP counter

December 24, 2021

$

110M

$

365M

SSMP counter

December 24, 2021

$

110M

$

375M

Agreed

On December 31, 2021, Mr. Pfeffer provided Dr. Mendelsohn with a fully executed version of the term sheet supporting the proposed merger. On January 4, 2022, Dr. Mendelsohn provided an update to the NPM board with a fully executed version of the term sheet supporting the proposed merger.

On January 6, 2022, Mr. Dwyer provided Second Sight’s Special Committee with a draft activity list/timeline supporting the merger. This initial draft timeline estimated the consummation of the merger in the June-July 2022 timeframe. In addition, Mr. Dwyer had an introductory call with Ed Sedo (Second Sight acting Chief Accounting Officer) to discuss accounting capabilities and initiate discussions on timing and responsibilities regarding the S-4 filing. On this same day, Venable advised NPM to determine the proposed directors of the combined company as soon as possible. This was particularly relevant because the S-4 would also serve as a proxy for the annual shareholders’ meeting and a principal objective of this meeting was re-confirmation of existing members and/or approval of new board members.

On January 8, 2022, Venable provided NPM and Golenbock with an initial draft of the definitive merger agreement.

On January 10, 2022, Mr. Dwyer provided NPM’s due diligence request list to the Second Sight Special Committee. To facilitate the diligence process, NPM separated the requests into a due diligence list (information requested by January 17, 2022) and an enterprise information list (information requested by June 1, 2022).

On January 17, 2022, Golenbock sent a redline version of the draft merger agreement to Second Sight and Venable for consideration. Changes included multiple proposed revisions and additions to the Representation and Warranties section of the draft agreement.

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On January 18, 2022, Mr. Dwyer provided additional due diligence requests to Mr. Dunbar which included Second Sight’s articles of incorporation and bylaws, complete copies of all material insurance policies, and all material self-insurance programs.

On January 20, 2022, the Second Sight board met to discuss the status of the pending merger. In separate correspondence prior to the meeting, NPM indicated that the estimated delivery of NPM’s audited year-end financial statements was March 10, 2022, and the S-4 filing was targeted for mid-March.

On January 21, 2022, Mr. Dunbar provided Mr. Dwyer with two market research reports supporting Second Sight’s Orion market opportunity. These reports were prepared by Fletcher Spaght, Inc. (on potential market size) and RTI, LLC (on potential adoption rate).

On January 21, 2022, Venable sent a newly revised version of the draft merger agreement to Second Sight for further consideration. The main changes included how NPM would propose handling its issued and outstanding options and warrants.

On January 22, 2022, NPM sent a draft “Letter from the (NPM) CEO” to the Special Committee for consideration because portions of this document could be used to support Press Releases.

On January 27, 2022, Golenbock sent Venable a revised merger agreement draft. This draft proposed edits to the draft agreement sections covering Articles of Incorporation and Bylaws, Second Sight Directors, and Available Cash.

On January 29, 2022, NPM engaged CG Capital to facilitate the preparation of a slide deck to support an investor call immediately following the public announcement of the definitive merger agreement.

On January 30, 2022, Venable provided Golenbock and NPM a clean and marked-up merger agreement draft against Golenbock's draft of January 27, 2022. This draft included a provision for a new company name for the combined company post-merger and additional editorial changes and clarifications throughout the document.

On February 2, 2022, NPM proposed executing the merger agreement on or before February 7, 2022, filing a press release on February 7, 2022, after market close, and having an investor call on February 8, 2022, prior to market open. In a subsequent e-mail, Second Sight’s Special Committee supported this proposed timeline.

On February 2, 2022, Mr. Hudders provided a new draft merger agreement to Venable and Second Sight for further consideration. Proposed changes included the current capitalization of Second Sight and the option plan of 35 million which would cover the shares from NPM, and new options for a sufficient period.

On February 4, 2022, the Special Committee, through a Unanimous Written Consent recommended that the Second Sight Board approve the merger with NPM. The Second Sight board held a special meeting on February 4, 2022, to authorize Scott Dunbar, Acting CEO, to sign the Merger Agreement and SAFE Agreement with NPM. Mr. Dunbar signed agreements on the same day. On February 7, 2022, Second Sight announced the merger agreement with NPM to create a leading therapeutic implant company.

On February 8, 2022, an investor call was conducted by Second Sight board member Mr. McGuire and NPM CEO Dr. Mendelsohn to discuss the definitive merger agreement and provide additional information about the state of the business at both NPM and Second Sight. Questions were also taken and addressed following the formal presentation.

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Second Sight Reasons for the Merger

In the course of reaching its decision to approve the merger, the Second Sight Board formed a committee (the “Special Committee”) of directors independent of NPM. The Special Committee consulted with financial and tax advisors and independent legal counsel, reviewed a significant amount of information and considered a number of factors, including, among others:

the diversification of product offerings afforded by combining NPM’s product candidates with Second Sight’s product candidates;
the larger potential market for NPM’s product candidates;
the experience of NPM’s management team;
Second Sight’s detailed knowledge or NPM’s business through common leadership;
the potential increased shareholder value due to the combined company’s more diversified offerings;
the fact that the proposed merger may enable shareholders of Second Sight and NPM to increase the value of their current shareholding; and
the likelihood that the merger will be consummated on a timely basis.
the terms and conditions of the Merger Agreement, including, the following:
the determination that the expected relative percentage ownership of Second Sight’s shareholders and NPM’s shareholders in the combined company was appropriate based, in the judgment of the Special Committee, on the Special Committee’s assessment of the approximate valuations of Second Sight and NPM;
the expectation that the merger will be treated as a reorganization for U.S. federal income tax purposes;
the limited number and nature of the conditions of the obligation of Second Sight to consummate the merger;
the rights of Second Sight under the Merger Agreement to consider certain unsolicited acquisition proposals under certain circumstances should Second Sight receive a superior offer;
the conclusion of the Special Committee that the potential termination fee of $1,000,000, or in the case involving a breach due to an alternative proposal where the termination fee is $5,000,000, payable by Second Sight or NPM to the other party, and the circumstances when such fee may be payable, were reasonable; and
the belief that the other terms of the Merger Agreement, including the parties’ representations, warranties and covenants, and the conditions to their respective obligations, were reasonable considering the entire transaction.

The Special Committee also considered a number of uncertainties and risks in its deliberations concerning the merger and the other transactions contemplated by the Merger Agreement, including the following:

the possibility that the merger might not be completed and the potential adverse effect of the public announcement of the failure of the merger on the reputation of Second Sight and a potential negative effect on Second Sight’s share price in the event the merger is not completed;
the termination fee of $1,000,000 or in some situations a termination fee of $5,000,000 by Second Sight to NPM upon the occurrence of certain events, and the potential effect of such termination fee in deterring other potential parties from proposing an alternative transaction that may be more advantageous to Second Sight’s shareholders;
the risk that the merger might not be consummated in a timely manner or at all;

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the expenses to be incurred in connection with the merger and related administrative challenges associated with combining the companies;
the diversion of Second Sight’s cash from Second Sight’s product development to NPM product development
the fact that the representations and warranties in the Merger Agreement do not survive the closing of the merger and the potential risk of liabilities that may arise post-closing; and
various other risks associated with the combined organization and the merger, including the risks described in the section entitled “Risk Factors” in this proxy statement/prospectus.

NPM Reasons for the Merger

In the course of reaching its decision to approve the merger, NPM’s board of directors consulted with NPM’s senior management, financial and tax advisors and legal counsel, reviewed a significant amount of information and considered a number of factors, including, among others:

the potential increased access to sources of capital and a broader range of investors to support the development of its therapeutic candidates following consummation of the merger compared to if NPM continued to operate as a privately held company;
the potential to provide its current shareholders with greater liquidity by owning stock in a public company;
the board’s belief that no alternatives to the merger were reasonably likely to create greater value for NPM’s shareholders, after reviewing the various financing and other strategic options to enhance shareholder value that were considered by NPM’s board of directors;
Second Sight and NPM believe the combined company’s cash and cash equivalents at the closing of the merger will be sufficient to enable NPM to advance it’s lead asset NPM-119 (exenatide implant) into clinical development and to fund the combined company into 2024;
the business, history and credibility of Second Sight and its affiliates, including the commercial failure of its previously approved visual prosthetic device, the Argus II, and Second Sight’s subsequent decision to discontinue marketing and sales of this product;
the expectation that the merger with Second Sight would be a more time- and cost-effective means to access capital than other options considered by NPM’s board of directors, including additional private financings or an initial public offering;
the terms and conditions of the Merger Agreement, including, the following:
the determination that the expected relative percentage ownership of Second Sight’ shareholders and NPM’s shareholders in the combined company was appropriate based, in the judgment of the NPM’s board of directors, on the board of directors’ assessment of the approximate valuations of Second Sight (including the value of the net cash Second Sight is expected to provide to the combined company) and NPM (including the value of the net cash NPM is expected to provide to the combined company);
the expectation that the merger will be treated as a reorganization for U.S. federal income tax purposes;
the limited number and nature of the conditions of the obligation of Second Sight to consummate the merger;
the rights of NPM under the Merger Agreement to consider certain unsolicited acquisition proposals under certain circumstances should NPM receive a superior offer (as defined in the section entitled “The Merger Agreement—No Solicitation” below);

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the conclusion of NPM’s board of directors that the potential termination fee of $1,000,000, or in the case involving a breach due to an alternative proposal where the termination fee is $5,000,000, payable by Second Sight or NPM to the other party, and the circumstances when such fee may be payable, were reasonable; and
the belief that the other terms of the Merger Agreement, including the parties’ representations, warranties and covenants, and the conditions to their respective obligations, were reasonable considering the entire transaction.
the fact that shares of Second Sights’ common stock issued to NPM’s shareholders will be registered on a Form S-4 registration statement and listed on the Nasdaq Capital Market and accordingly will become freely tradable for NPM’s shareholders who are not affiliates of NPM and who are not parties to lock-up agreements;
the ability to obtain a Nasdaq listing and the fact that Second Sight will change its name to Vivani Medical, Inc. upon the closing of the merger;
the ability to obtain funding under the terms of the SAFE agreement; and
the likelihood that the merger will be consummated on a timely basis.

NPM’s board of directors also considered a number of uncertainties and risks in its deliberations concerning the merger and the other transactions contemplated by the Merger Agreement, including the following:

the possibility that the merger might not be completed and the potential adverse effect of the public announcement of the merger on the reputation of NPM and the ability of NPM to obtain financing in the future in the event the merger is not completed;
the number of shares of Second Sight’s common stock to be issued to NPM’s shareholders in the merger is not subject to adjustment based on trading prices, and thus the relative percentage ownership of Second Sight’s shareholders and NPM’s shareholders in the combined company immediately following the completion of the merger is not subject to market volatility;
the termination fee of $5,000,000 by NPM to Second Sight upon the occurrence of certain events, and the potential effect of such termination fee in deterring other potential acquirers from proposing an alternative transaction that may be more advantageous to NPM’s shareholders;
the risk that the merger might not be consummated in a timely manner or at all;
the expenses to be incurred in connection with the merger and related administrative challenges associated with combining the companies;
the additional expenses and obligations to which NPM’s business will be subject following the merger that NPM has not previously been subject to, and the operational changes to NPM’s business, in each case that may result from being a public company;
the fact that the representations and warranties in the Merger Agreement do not survive the closing of the merger and the potential risk of liabilities that may arise post-closing; and
various other risks associated with the combined company and the merger, including the risks described in the section entitled “Risk Factors” in this proxy statement/prospectus.

Opinion of the Second Sight Financial Advisor

Introduction

On December 3, 2021, Second Sight retained ThinkEquity as its financial advisor in connection with the Merger and the other transactions contemplated by the Merger Agreement, which are, collectively, referred to as the “Transaction” throughout this section.

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In connection with this engagement, Second Sight requested that ThinkEquity evaluate the fairness, from a financial point of view, to Second Sight of the consideration paid by Second Sight in connection with the Merger. On April 28, 2022, ThinkEquity rendered to the Second Sight Board its written opinion that, as of such date and based upon and subject to the assumptions made and limitations upon the review undertaken by ThinkEquity in preparing its opinion, the consideration to be paid by Second Sight in connection with the Merger is fair from a financial point of view to Second Sight. In providing its opinion, ThinkEquity noted that (i) certain shareholders and board members of Second Sight are shareholders and board members of NPM; (ii) entities controlled and beneficially owned by Second Sight’s Chairman of the Board own an aggregate of approximately 25.1% of Second Sight’s outstanding common shares (which could increase to 35.1% after giving effect to options or warrants owned); and (iii) a family relationship exists between a board member of Second Sight and the chief executive officer of NPM.

The full text of the ThinkEquity’s written opinion, dated April 28, 2022, which describes the assumptions made and limitations upon the review undertaken by ThinkEquity in preparing its opinion, is attached to this proxy statement/prospectus as Annex B and is incorporated by reference in its entirety into this proxy statement/prospectus. The summary of the written opinion of ThinkEquity set forth below is qualified in its entirety by the full text of the written opinion attached as Annex B. ThinkEquity’s financial advisory services and opinion were provided for the information and assistance of the Second Sight Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Transaction and the ThinkEquity opinion addressed only the fairness, from a financial point of view, as of the date thereof, to Second Sight of the consideration paid by Second Sight in connection with the Merger. The ThinkEquity opinion did not address any other term or aspect of the Merger Agreement or the Transaction and does not constitute a recommendation to any shareholder of Second Sight as to whether or how such holder should vote with respect to the Merger or otherwise act with respect to the Transaction or any other matter.

The full text of ThinkEquity’ written opinion should be read carefully in its entirety for a description of the assumptions made and limitations upon the review undertaken by ThinkEquity in preparing its opinion.

In connection with rendering the opinion described above and performing its related financial analyses, ThinkEquity, among other things:

reviewed the financial statements of NPM and projected financial information prepared by NPM relating to the revenue potential, earnings and cash flows of its lead product candidate (the “Product Candidate”);
reviewed certain development timeline projections for the Product Candidate by NPM;
reviewed certain interactions between NPM and the U.S. Food and Drug Administration regarding the Product Candidate;
conducted discussions with Second Sight and NPM senior management concerning information described in the three foregoing clauses, as well as the prospects for the Product Candidate and NPM generally;
reviewed the Merger Agreement as well as previous financing transactions of NPM;
analyzed certain financial, stock market and other publicly available information relating to the businesses of other companies whose products and product candidates ThinkEquity considered relevant in evaluating those of NPM; and
conducted such other analyses and considered such other information and financial, economic and market criteria as ThinkEquity deemed appropriate in arriving at its Opinion.

ThinkEquity assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial and other information supplied to, discussed with, or reviewed by it for purposes of the opinion and, further relied upon the assurances of Second Sight management that they are not aware of any facts or circumstances that would make such information inaccurate or misleading. In addition, ThinkEquity did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise) of NPM. ThinkEquity relied upon, without independent verification, the assessments of NPM as to the status of its intellectual property portfolio as it relates to its ability to commercialize and competitively protect the Product Candidate, and ThinkEquity assumed that there would be no developments with respect to any such matters that would adversely affect its analysis and opinion. ThinkEquity assumed, that management’s expectations relating to (i) the costs associated with the development of the Product Candidate, including but not limited to the number and size of clinical trials that will be required in order to receive regulatory approval for sales of the Product Candidate, (ii) the probability of the successful receipt of regulatory approvals

94

for the Product Candidate, and (iii) the commercial market opportunity for the Product Candidate, have been reasonably developed, in good faith, on bases reflecting the best currently available estimates and judgments of NPM. With respect to the financial forecasts by NPM regarding the Product Candidate, ThinkEquity assumed, at Second Sight’s direction, that they have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of NPM as to the future performance of the Product, and ThinkEquity used the low case of the three sets of projected revenues for purposes of its analyses and opinion. The opinion was limited to and addressed only the fairness, from a financial point of view, as of the date thereof, to Second Sight of the consideration to be paid by Second Sight in connection with the Merger.

Summary of Financial Analyses

The following is a summary of the material financial analyses prepared by ThinkEquity and reviewed with the Second Sight Board in connection with the rendering by ThinkEquity of its opinion on April 28, 2022. The summary set forth below does not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, ThinkEquity, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by ThinkEquity. ThinkEquity may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarized below should not be taken to be the view of ThinkEquity as to the actual value of Second Sight. Some of the summaries of the financial analyses set forth below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses performed by ThinkEquity. Considering the data in the tables below without considering all financial analyses or factors or the full narrative description of such analyses or factors, including the methodologies and assumptions underlying such analyses or factors, could create a misleading or incomplete view of the processes underlying ThinkEquity’s financial analyses and its opinion. In performing its analyses, ThinkEquity made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Second Sight or any other parties to the Transaction. None of Second Sight, NPM, Merger Sub, ThinkEquity or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of Second Sight or NPM do not purport to be appraisals or reflect the prices at which these companies may actually be sold. Accordingly, the assumptions and estimates used in, and the results derived from, the financial analyses are inherently subject to substantial uncertainty. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before April 28, 2022 and is not necessarily indicative of current market conditions.

Selected M&A Transactions Reviewed

ThinkEquity reviewed the target companies involved in three selected merger and acquisition transactions listed in the below table that may serve as proximate comparisons. Relevant valuation information of the target companies, including financial forecasts and product milestones, is limited at the time of most transactions.

The selected transactions indicated enterprise values ranging from $532 million to $2.73 billion.

Multiples Analysis of Selected Precedent Pharmaceuticals Transactions

(Amounts listed in USD. Numbers in millions, except per share data)

Pre-Synergies:

Transaction Value /

Offer Price

Consideration

Offer Value

Earnings Per Share

Offer

Synergies

Date

Value of

Transaction

LTM

LTM

LTM

Book

Announced

as a % of

Target

    

Acquiror

    

Announced

    

Equity(1)

    

Value(2)

    

% Cash

    

% Stock

    

Sales

    

EBITDA

    

EBIT

    

Value

    

CY+1

    

CY+2

    

Synergies

    

Target Sales

Emisphere Technologies, Inc.

Novo Nordisk A/S

Nov-6-2020

1,338.1

1,338.1

100.0

%

NA

1,281.8x

(215.6)x

(215.2)x

(8.6)x

NA

NA

0.0

0.0

%

Dicerna Pharmaceuticals, Inc.

Novo Nordisk A/S

Nov-18-2021

2,945.5

2,734.4

100.0

%

NA

14.18

(23.4)

(22.5)

27.4

-23.45

-21.57

0.0

0.0

%

BioDelivery Sciences International, Inc.

Collegium Pharmaceutical, Inc.

Feb-14-2022

575.5

532.0

100.0

%

NA

3.19

11.9

14.3

3.1

15.34

9.18

0.0

100.0

%

(1)Financial data from S&P Cap IQ, Google Finance, Company Reports and ThinkEquity estimates.
(2)Calculated as Market Value of Equity plus total debt, non-controlling interest and preferred stock, less cash & equivalents.

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(3)Adjusted EBITDA = Target’s LTM EBITDA + announced annual synergies.

Selected Public Companies Reviewed

ThinkEquity compared certain financial performance metrics of NPM to corresponding data and ratios from ten publicly traded companies.

Although none of these selected public companies are directly comparable to NPM, ThinkEquity reviewed these companies based on their relative similarity, primarily in terms of business model and primary customer end markets, to that of NPM’s existing business and future new initiative growth opportunities.

(Amounts listed in USD. Numbers in millions, except per share data)

Enterprise Value as a Multiple of:

Price as a Multiple of:

Sales

EBITDA

EBIT

Projected
EPS

Company

    

Stock
Price(1)

    

Market
Value
of Equity

    

Enterprise
Value(2)

    

LTM

    

CY+1

    

CY+2

    

LTM

    

CY+1

    

CY+2

    

LTM

    

CY+1
EPS

    

CY+2
EPS

    

Growth

    

PEG
Ratio

Heron Therapeutics, Inc.

4.74

484.8

486.7

5.64x

3.97x

2.38x

NM

NM

NM

NM

NM

NM

0.0

%  

NM

Rani Therapeutics Holdings, Inc(3)

11.97

588.4

470.9

174.42

NM

NM

NM

NM

NM

NM

NM

NM

0.0

%  

NM

Entera Bio Ltd.

2.57

74.0

49.4

86.58

129.93

97.27

NM

NM

NM

NM

NM

NM

0.0

%  

NM

Evelo Biosciences, Inc.

2.37

127.2

115.0

NM

NM

NM

NM

NM

NM

NM

NM

NM

0.0

%  

NM

MannKind Corporation

3.23

814.8

993.4

13.17

13.33

7.15

NM

NM

NM

NM

NM

NM

0.0

%  

NM

Applied Molecular Transport Inc.

4.35

168.1

48.1

NM

NM

NM

NM

NM

NM

NM

NM

NM

0.0

%  

NM

Protagonist Therapeutics, Inc.

9.08

440.9

119.8

4.38

4.56

8.06

NM

NM

NM

NM

NM

NM

0.0

%  

NM

Pulmatrix, Inc.

5.32

17.6

(32.9)

(6.36)

(7.69)

(7.61)

NM

NM

NM

NM

NM

NM

0.0

%  

NM

Oramed Pharmaceuticals Inc.

5.57

214.8

65.3

24.08

23.44

4.00

NM

NM

NM

NM

NM

NM

0.0

%  

NM

PLx Pharma Inc.

3.22

88.7

35.7

4.35

1.30

0.57

NM

NM

NM

NM

NM

NM

0.0

%  

NM

High

174.42x

129.93x

97.27x

0.0x

0.0x

0.0x

0.0x

0.0x

0.0x

0.0

%  

0.0x

Average

38.28

24.12

15.97

NM

NM

NM

NM

NM

NM

0.0

%  

NM

Median

9.40

4.56

4.00

NM

NM

NM

NM

NM

NM

0.0

%  

NM

Low

-6.36

-7.69

-7.61

0.0

0.0

0.0

0.0

0.0

0.0

0.0

%  

0.0

(1)Financial data provided by S&P Cap IQ, Google Finance, Company Reports and ThinkEquity estimates, as of 4/28/2022
(2)Calculated as Market Value of Equity plus total debt, non-controlling interest and preferred stock, less cash & equivalents.
(3)Includes number of shares outstanding + shares held by non-controlling interest holders without accounting for dilutive securities

Discounted Cash Flow Analysis

ThinkEquity prepared a discounted cash flows analysis of the projected free cash flows of NPM for the fiscal years ending December 31, 2023 through December 31, 2028 based primarily upon NPM’s internal financial projections (the “Projections”). The discounted cash flow analysis was used to determine the net present value of projected free cash flows utilizing an appropriate cost of capital for the discount rate, which reflects the relative risk associated with these cash flows as well as the rates of return that security holders could expect to realize on alternative investment opportunities with risk profiles similar to NPM. ThinkEquity used a discount rate of 15% to discount the projected unlevered free cash flows based exclusively on the risk-adjusted revenue of the Product Candidate for the treatment of Type 2 diabetes and the estimated terminal value. ThinkEquity believed that this discount rate is consistent with the rate of return that shareholders could expect to realize on alternative investment opportunities with similar risk profiles to NPM.

Based on these assumptions the discounted cash flow analysis indicated an estimated enterprise value for NPM of $403 million.

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Discounted Cash Flow Analysis for NPM

USD in millions

Historical year ending 12/31/

Projected Year Ending 12/31/

2028-2043

    

2019

    

2020

    

2021

    

2022

    

2023

    

2024

    

2025

    

2026

    

2027

    

2028

    

CAGR

Sales

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

15.0

22.0

%

Cost of goods sold

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

2.0

Gross Profit

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

13.0

R&D and G&A

8.0

8.0

12.0

14.0

20.0

23.0

23.0

23.0

38.0

104.0

EBITDA

(8.0)

(8.0)

(12.0)

(14.0)

(20.0)

(23.0)

(23.0)

(23.0)

(38.0)

(91.0)

Less: Depreciation

0.0

0.0

0.0

0.0

1.0

1.0

1.0

1.0

1.0

1.0

2031-2046

Less: Amortization

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

CAGR

EBIT

(8.0)

(8.0)

(12.0)

(14.0)

(19.0)

(22.0)

(22.0)

(22.0)

(37.0)

(90.0)

10.5

%

Less: Taxes @ 38.0%

3.0

3.0

4.6

5.3

7.2

8.4

8.4

8.4

14.1

34.2

Tax-effected EBIT

(5.0)

(5.0)

(7.4)

(8.7)

(11.8)

(13.6)

(13.6)

(13.6)

(22.9)

(55.8)

Plus: Depreciation and amortization

0.0

0.0

0.0

(1.0)

(1.0)

(1.0)

(1.0)

(1.0)

(1.0)

Less: Capital expenditures

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Less: Additions to intangibles

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

(Increase)/decrease in working capital

0.0