Tivic Health Systems, Inc. (NASDAQ:TIVC) Q2 2025 Earnings Call Transcript August 14, 2025
Operator: Welcome to Tivic Health Systems Second Quarter 2025 Financial Results and Operational Update Conference Call. This call has been prerecorded. This call is being webcast, and the replay will be available on the IR section of the company’s website for 3 months. Before we begin, let me remind you that during today’s call, management will make various forward-looking statements. Investors are cautioned that these forward-looking statements are based on current expectations and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those indicated in our forward-looking statements. Please read the safe harbor statement contained in the press release that Tivic Health issued today as well as the risk factors contained in Tivic Health’s filings with the SEC, including its annual report on Form 10-K of the year-end December 31, 2024, and the Form 10-Q to be filed with the SEC today as well as other company’s SEC filings.
On today’s call, we have Tivic Health’s Chief Executive Officer, Jennifer Ernst; and Chief Financial Officer, Lisa Wolf. Now let me turn the call over to Jennifer Ernst.
Jennifer Ernst: Thank you, and welcome to those of you who are joining us today. Before we cover the financial portion of the earnings call, I want to lay the groundwork for those who may have just begun to follow Tivic. Over the course of the last 6 months, we have reshaped the company by expanding Tivic into the biopharmaceutical sector. We’ve also been advancing ongoing work with our next-generation of vagus nerve stimulation devices. This combination of assets makes Tivic unique in having the ability to treat disease by addressing both the body’s biochemical and bioelectronic systems that regulate immune responses. We believe we now have quite a robust set of opportunities in the pipeline and ones that are able to generate a significant return on investment.
In this context, our expansion into drug development with our exclusive licensing of Statera Biopharma’s portfolio, a portfolio of TLR5 agonist assets, provides Tivic a late-stage, highly derisked Phase III drug candidate and multiple additional indications. Specifically, Entolimod, the first commercial opportunity of the TLR5 portfolio was developed as a military countermeasure to lethal levels of ionizing radiation. Most governments maintain a national stockpile of emergency use quantities of treatments for ARS to be accessed in the instance of a nuclear event. Now in addition to that, in addition to the strategic national stockpile, U.S. defense agencies maintain ARS treatments to protect active duty personnel. This includes, for example, the nearly 0.25 million military and civilians deployed overseas.
Because of the volume and because of these stockpile opportunities, a single contract for ARS has the potential to total several hundred million dollars. During the second quarter and in recent weeks, we have made additional progress in validating the U.S. government’s interest in Entolimod for ARS. Most recently, we met with key decision-makers at the Military Health System Research Symposium, MHSRS, as it’s known in the industry. And these meetings reinforced our belief that both avenues present opportunities for us to generate significant sales of Entolimod and to create value for our shareholders, which takes us to the regulatory front. We previously met with senior officials at the FDA in the form of an educational meeting. In parallel at that point, and as we’ve continued, we’ve also discussed the potential for an emergency use authorization for Entolimod for ARS, which may enable earlier approval of this potentially life-saving drug.
Q&A Session
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The FDA has already granted Entolimod a Fast Track designation for ARS and an orphan drug designation for pediatric ARS. We are now in the process of planning a Type B meeting this year to confirm the final clinical manufacturing and validation requirements for our planned BLA. We will be further discussing these accelerated path with the FDA as we move towards the filing process. In addition, we are in the process of transferring 2 existing INDs to Tivic from Statera. Completion of this transfer will enable us a full formal engagement with the FDA under the 2 fronts of the INDs. In May, we began work with Scorpius BioManufacturing on the GMP manufacturing validation of Entolimod for acute radiation syndrome. This is the next step in our process towards preparing a biologic licensing application.
Once the first lot of GMP materials has been manufactured at Scorpius, we will begin bioequivalence and biostability testing. And the latter of those 2 can take approximately a year. So as a whole, the second quarter began an aggressive push on the ARS indication for Entolimod. As I mentioned, though, this exclusive licensing agreement is helping us build a pipeline. Entolimod and its derivative Entolasta for which — both of which we have a worldwide exclusive license also has the potential to treat radiation and chemotherapy side effects that are caused by cancer treatments, specifically neutropenia and GI tract damage. According to various market research firms, neutropenia drugs represent anywhere from $19 billion to $24 billion market over the next few years.
And the lion’s share of that market is being addressed by colony stimulating factors such as the G-CSF drugs. Because Entolimod works upstream in the immune system, it engages not only the G-CSF pathway, but a much wider range of mechanisms, potentially yielding a wider range of benefits. So neutropenia itself is a condition characterized by abnormally low number of neutrophils or white blood cells that reduces the body’s ability to combat infections. Entolimod has been shown to prevent cell death after apoptosis, such as that seen during radiation treatment and thereby promoting cell preservation. Now at this time, we are in the early stages of investigating potential research sites for future clinical trial program for Entolimod for neutropenia.
We have a great deal of flexibility on the timing of any trials. So while we may or may not commence trials this year, we are working to secure the right advisers and research partners. We believe this is now becoming an important part of our strategic pipeline. Our belief is that Entolimod could be a very significant opportunity in the oncology market as it is potentially the only therapy that can both prevent and treat radiation-related damage to both human hematopoietic and gastrointestinal cells and to do so with a single dose. The licenses we acquired align very well with our internal developments in vagus nerve stimulation. Together, they create a robust pipeline focused on various forms of immune dysregulation. So I’ll note that we’ve been investing in bioelectronics because we believe this is one of the most compelling new areas of immune system regulation.
Our novel noninvasive approach utilizes electrical signals to target immune responses that are implicated in cardiac, neurologic and autoimmune conditions. In late June, we announced that we have completed all of the study visits in an optimization study for patent-pending noninvasive cervical vagus nerve stimulation device. Because of the greater understanding gained from this trial, including initial findings that reinforce for us the importance of personalization to drive the therapeutic efficacy, we’re more confident than ever that our NcVNS device has the potential to deliver clinical outcomes similar to or better than those of the surgically implanted vagus nerve devices. The Feinstein Institute, which is a leader in the study of vagus nerve stimulation, is working with us now to prepare a report on the optimization trial findings.
And I definitely look forward from seeing the previews to reporting those trial results later this year. As I’ve just described, Tivic now has a very compelling and unique clinical pipeline. Our therapeutics marshal the immune system to treat underserved medical conditions through biologic and bioelectronic therapies. With this robust and compelling pipeline as backdrop, we have determined that it is in the best interest of shareholders to exit the Consumer Health Tech business by year-end and whether through a strategic transaction, spin-off or a full divestiture. While ClearUP demonstrated the company’s ability to successfully advance the treatment through the FDA and launch a regulated product, ClearUP sales simply have not met our expectations.
We believe it is now in the best interest of shareholders in order to build value to focus Tivic’s resources solely on our prescription-based therapeutic pipeline. This refocusing is evident in our financial results as we down prioritize marketing and sales of ClearUP. And at this point, I’d like to ask Lisa Wolf to review the financial results for the quarter.
Lisa G. Wolf: Thank you, Jennifer. For ease of listening, all of the financial metrics I will be reporting compare the second quarter ended June 30, 2025, to the prior year quarter ended June 30, 2024, and the 6 months ended June 30, 2025, to the 6 months ended June 30, 2024, unless otherwise stated. Financial results for the second quarter and the first half of the year reflect our transition as a company with our focus towards the biopharmaceutical market and away from the consumer device market. Revenue net of returns totaled $86,000 for the quarter compared to $140,000 in the year ago quarter. Revenue net of returns totaled $156,000 for the first half of 2025 compared to $474,000 for the first half of 2024. The decline was due to decreased unit sales of ClearUP, which were a result of reductions in our overall marketing expenditures.
We have intentionally reduced our advertising expenses in order to focus our capital resources into the advancement of our TLR5 program. Cost of sales decreased to $32,000 from $110,000 in the year ago quarter and to $52,000 from $277,000 for the 6-month period. The decreases were primarily due to the decreases in unit sales and the restructuring of our supply chain with new partners that was completed in August 2024. Gross margins have increased to 63% for the second quarter compared to 21% a year ago and increased to 67% from 42% for the first half of 2025 compared to 2024. The increases were due to reductions of our product support and fulfillment costs. Operating expenses were $2 million for the second quarter of 2025 compared with $1.3 million for the same period in 2024.
Operating expenses for the first half of 2025 were $3.5 million compared to $3 million for the first half of 2025. The increases were primarily due to increased research and development investments in our biologics programs, offset by reductions in sales and marketing costs for ClearUP. Net loss was $1.9 million for the second quarter of 2025 compared with $1.3 million for the second quarter of 2024. Net loss for the first half of 2025 was $3.4 million compared with $2.7 million for the first half of 2024. At June 30, 2025, cash and cash equivalents totaled $1.2 million compared with $2 million at December 31, 2024. Subsequent to the quarter’s end, we raised gross proceeds of $0.9 million through utilization of our equity line of credit and the sale of Series B preferred stock pursuant to our preferred purchase agreement.
The company has no debt on its balance sheet. We believe these funds, along with the $7 million in remaining planned tranches of our preferred purchase agreement will allow us to make meaningful progress toward GMP manufacturing validation for Entolimod, which is a key value inflection point for the company and will provide a strong signal of our potential to achieve commercialization. With that, I’ll turn the call back over to Jennifer.
Jennifer Ernst: Thank you, Lisa. Let me finish my prepared remarks by highlighting a few other areas of important progress that we achieved during the quarter. We made important adjustments to our staff to align the team more closely with our newly defined focus. One of those changes included having Lisa join us now as our CFO from her previous role as Interim CFO. And Lisa, let me congratulate you on that move. We also made important investments in talent to advance the Entolimod program. To support our clinical work and create a government relations capacity, we hired key team members from Statera that include a Head of Regulatory and Quality, Clinical Operations and a new business development lead. We’re very pleased to have this infusion of talent, and I’m looking forward to working with these new team members and to their contributions in advancing our clinical and commercial opportunities.
Blake Gurfein stepped down as our Chief Scientific Officer, but stays on as a consultant to support advancing our VNS program as we continue to refine the focus of that program. Looking ahead, our next milestones include completing the transfer of existing INDs from Statera to Tivic, completing the cell line verification, completing our first batch of GMP materials, validating bioequivalence, which we can commence working on upon receipt of those materials, reporting out the study results of our VNS trial and meeting with the FDA for the previously mentioned Type B meeting on Entolimod. We will, of course, be providing updates to our shareholders as each of those milestones are completed. I look forward to reporting to you as we move the company increasingly into these new clinical areas and delivering what we expect will be life-changing treatments for patients in need and strong value creation for shareholders.
And with that, I’d like to say thank you for the time you’ve taken today and have a very good rest of the day.
Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time, and thank you for your participation.
