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Date
Aug. 14, 2025 at 4:30 p.m. ET
Call participants
Chief Executive Officer — Jennifer Ernst
Chief Financial Officer — Lisa Wolf
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Takeaways
Revenue-- Revenue net of returns was $86,000, reflecting intentional reductions in ClearUp marketing and unit sales.
Gross margin-- Gross margin increased to 63%, up from 21% a year ago, due to decreased product support and fulfillment costs.
Operating expenses-- Operating expenses were $2.0 million, up from $1.3 million in the prior-year period, primarily from research and biologics investment, offset by reduced sales and marketing costs for ClearUp.
Net loss-- Net loss was $1.9 million, compared with $1.3 million in the prior-year period.
Cash and equivalents-- Cash and cash equivalents totaled $1.2 million as of June 30, 2025, with no debt reported.
Post-quarter financing-- Raised $900,000 in gross proceeds through an equity line of credit and Series B preferred stock sale after the quarter ended.
Additional liquidity-- $7 million in remaining planned preferred stock tranches under the purchase agreement as of June 30, 2025.
Strategic shift-- Management will exit the consumer health technology business and focus exclusively on prescription-based therapeutics.
Pipeline asset acquisition-- Exclusive license obtained for Sotero Biopharma's TLR5 agonist portfolio, including late-stage entolimod and Entelaspa candidates.
Regulatory progress-- Entolimod has fast track designation for ARS and orphan drug status for pediatric ARS; a type B FDA meeting is planned to advance a BLA filing.
Manufacturing milestone-- Initiated GMP manufacturing validation for entolimod with Scorpius Biomanufacturing, moving toward key biologics license application steps.
Clinical development-- Completed all study visits in an optimization study for the noninvasive cervical vagus nerve stimulation (NCVNS) device, with results expected later this year.
Leadership and talent actions-- Lisa Wolf confirmed as CFO; key hires from Statera joined for regulatory, clinical, and business development; chief scientific officer transitioned to consultancy role.
Summary
Tivic Health Systems(TIVC -0.28%) reported a quarter defined by a strategic transition from consumer devices to biopharmaceutical and bioelectronic prescription therapeutics. The company secured an exclusive license for Sotero Biopharma's TLR5 agonist platform, including entolimod, which management described as a potential growth engine with large-scale U.S. government contract opportunities for ARS. Entolimod holds FDA fast track and orphan drug designations, and regulatory and manufacturing milestones are underway. The company strengthened its cash position through equity and preferred stock sales after quarter-end, with additional financing available to fund development through key validation points. Leadership realigned the workforce to support the new strategy, filling executive roles and integrating clinical and regulatory specialists. A full exit from the consumer health device sector is planned by year-end through divestiture or similar transactions, as management cited underperformance in ClearUp sales and a need to concentrate resources.
CEO Jennifer Ernst stated, "a single contract for ARS has the potential to total several hundred million dollars," highlighting the scale of the entolimod opportunity.
Management confirmed ongoing discussions with the FDA on "potential for an emergency use authorization for entelimod for ARS," which may accelerate approval timelines.
The stepwise exit from ClearUp represents a decisive organizational pivot, with the consumer segment deprioritized and resources allocated to high-value pipeline assets.
Industry glossary
TLR5 agonist: A class of compounds that activate toll-like receptor 5, implicated in immune response modulation for oncologic and radiation indications.
ARS (Acute Radiation Syndrome): Life-threatening condition caused by exposure to high levels of ionizing radiation, targeted by specialized therapies like entolimod.
GMP (Good Manufacturing Practice): Regulatory framework ensuring the quality and safety of manufactured pharmaceutical and biologic products.
BLA (Biologic License Application): FDA submission process seeking approval to market a biologic drug product in the U.S.
IND (Investigational New Drug): Regulatory application allowing clinical investigation of a new pharmaceutical compound.
NCVNS (Noninvasive Cervical Vagus Nerve Stimulation): Device therapy delivering neuromodulation to the vagus nerve without surgical implantation.
Full Conference Call Transcript
Jennifer Ernst: Devices. This combination of assets makes Tivic Health Systems, Inc. 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 Sotero Biopharma's portfolio, a portfolio of TLR5 agonist assets, provides Tivic Health Systems, Inc. a late-stage highly derisked phase three drug candidate and multiple additional indications. Specifically, entalimod, 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 quarter 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 entalimod 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 entelimod for ARS, which may enable earlier approval of this potentially life-saving drug.
The FDA has already granted entolimod a fast track designation for ARS, 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 plan BLA. We will be further discussing these accelerated paths with the FDA as we move towards the filing process. In addition, we are in the process of transferring two existing INDs to Tivic Health Systems, Inc. from Satera. Completion of this transfer will enable us by full formal engagement with the FDA under the two 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 slot of GMP materials has been manufactured at Scorpius, we will begin bioequivalence and biostability testing. And the latter of those two 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 Entelaspa, for which both of which we have a worldwide exclusive license, also have 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. 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.
Neutropenia itself is a condition characterized by an abnormally low number of neutrophils or white blood cells that reduces the body's ability to combat infections. Entalimod has been shown to prevent cell death or 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 intelimod 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. 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 non-invasive 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, 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 Health Systems, Inc. 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. Well, ClearAve demonstrated the company's ability to successfully advance a 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 Health Systems, Inc. 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. Thank you, Jennifer.
Lisa Wolf: For ease of listening, all of the financial metrics I will be reporting compare the second quarter ended 06/30/2025 to the prior year quarter ended 06/30/2024 and the six months ended 06/30/2025, to the six months ended 06/30/2024 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 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 six-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 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 2025 were $3.5 million compared to $3 million for 2024. The increases were primarily due to increased research and investments in our biologics program, offset by reductions in sales and marketing costs for ClearUp. Net loss was $1.9 million for 2025, compared with $1.3 million for 2024. Net loss for 2025 was $3.4 million compared with $2.7 million for 2024. At 06/30/2025, cash and cash equivalents totaled $1.2 million compared with $2 million at 12/31/2024.
Subsequent to the quarter's end, we raised gross proceeds of $900,000 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. And one of those changes included having Lisa join us now as our CFO from her previous role as interim CFO. Lisa, let me congratulate you on that move. We also made important investments in talent to advance the Intellimog program. To support our clinical work and create a government relations capacity, we hired key team members from Staterra, 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. I'm looking forward to working with these new team members and to their contribution 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 Health Systems, Inc., completing the cell line verification, completing our first batch of GMP materials, validating bioequivalents, which we can commence working on upon receipt of those materials, reporting on 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.