Tivic Health Systems(TIVC) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue net of returns was $600,000, a decrease of$ 219,000 or 27% compared to $819,000 a year ago [8] - There was a 36% decrease in unit sales, offset by a 13% increase in per unit average sales price [8] - Cost of goods was$ 359,000 compared to $537,000 a year ago, resulting in a gross profit of$ 44,000 compared with $108,000 a year ago [9] - Gross margin was 35% for the third quarter compared to 38% in 2023, but would have been about 52% if one-time charges were excluded [10] - Operating expenses were$ 1.5 million, down from $1.9 million last year, leading to a net loss of$ 1.4 million, down $1.8 million from the same period in 2023 [11] - Cash and cash equivalents totaled$ 2.2 million compared with $3.4 million at December 31, 2023 [12] Business Line Data and Key Metrics Changes - The ClearUP product line faced challenges due to a technical issue in the silicon of the charging circuit, leading to a redesign and the launch of ClearUP 2.0 in January 2024 [12][13] - Following the transition, the ClearUP sales averaged over 70% gross margin, compared to 40%-50% previously and negative gross margin two years ago [15] - The company is focusing on growing sales through distribution partners like McKesson and Cardinal Health, while acknowledging limits to rapid growth in the consumer-facing business [16] Market Data and Key Metrics Changes - The global vagus nerve stimulation (VNS) market is estimated to grow from$ 8.6 billion in 2021 to $21.3 billion in 2030, with a compound annual growth rate of 10% [17] - The company is engaging in a Phase I optimization study for VNS, with enrollment completed and results expected by early Q1 [18] Company Strategy and Development Direction - The company aims to build shareholder value through three strategies: turning the ClearUP product line profitable, leveraging expertise in bioelectronic medicine for new opportunities, and streamlining corporate operations [5][26] - The company is exploring alternative commercialization strategies for ClearUP, including licensing and white labeling, while prioritizing investments in the VNS program [29] - The company is assessing market opportunities for VNS with a growth strategy firm, identifying over 30 potential use cases in various disease areas [20][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching new large markets with their technology and science, indicating an inflection point for the company [25] - The company is focused on operational efficiencies and has achieved a 20% reduction in year-over-year net operating loss [24] - Management highlighted the positive reception from providers and payers regarding the VNS program, indicating strong market interest [23][35] Other Important Information - Lisa Wolf joined as Interim CFO, bringing over 30 years of financial leadership experience [6] - The company is exploring non-dilutive financing options, including grants and public-private collaborations, to fund clinical trials [31] Q&A Session Summary Question: What is the company planning to do with ClearUP if the company is shifting its focus to VNS? - The company will continue to develop ClearUP organically while exploring alternative commercialization strategies [27][28] Question: Do we have the resources to move the VNS programs forward and how do we plan to raise capital? - The company plans to fund the VNS program through moderate expansion of the clinical research team and selective use of an ATM for additional capital [30][32]