Tivic Health Systems(US:TIVC)2024-08-14 20:20Product Development and Market Opportunity - Tivic Health's ClearUP product is the first FDA-approved bioelectronic treatment for sinus pain and congestion, with a market opportunity identified for approximately 85 million U.S. adults experiencing related symptoms[98] - A pilot study confirmed a 97% increase in heart rate variability (RMSSD) due to the company's non-invasive cervical vagus nerve stimulation (ncVNS) approach, indicating potential clinical utility in major disease areas[102] - The market for peripheral nerve stimulation in bioelectronic medicine is forecasted to grow at a 35% CAGR from 2019 through 2029, indicating strong growth potential in the sector[96] - The company has entered into a collaboration agreement with Feinstein to advance research on autonomic nervous system function in response to neuromodulation[104] Financial Performance - Revenue for the three months ended June 30, 2024, decreased by $21 thousand, or 13%, compared to the same period in 2023, primarily due to a 12% decrease in the per unit average sales price[119] - For the six months ended June 30, 2024, revenue decreased by $63 thousand, or 12%, compared to the same period in 2023, primarily due to a 27% decrease in unit sales, offset by a 20% increase in the per unit average sales price[119] - Cost of sales for the three months ended June 30, 2024, increased by $10 thousand, or 10%, compared to the same period in 2023, driven by a $20 thousand increase in the inventory reserve for obsolescence[121] - Gross profit for the three months ended June 30, 2024, was $30 thousand, a decrease of $31 thousand compared to $61 thousand for the same period in 2023[117] Expense Management - Research and development expenses for the three months ended June 30, 2024, decreased by $166 thousand compared to the same period in 2023, and for the six months ended June 30, 2024, decreased by $400 thousand[126] - Sales and marketing expenses for the three months ended June 30, 2024, decreased by $245 thousand compared to the same period in 2023, and for the six months ended June 30, 2024, decreased by $198 thousand[127] - General and administrative expenses for the three months ended June 30, 2024, decreased by $539 thousand compared to the same period in 2023, and for the six months ended June 30, 2024, decreased by $933 thousand[128] Cash Flow and Capital Needs - As of June 30, 2024, the company had cash and cash equivalents of $3.7 million and an accumulated deficit of $40.6 million[130] - Net cash used in operating activities for the six months ended June 30, 2024, was $3.0 million, compared to $4.9 million for the same period in 2023[141][142] - The company generated $3.3 million from financing activities during the six months ended June 30, 2024, primarily from the sale of 4,710,000 shares of common stock[144] - The company anticipates needing to raise additional capital to fund operations, including research and development and clinical trials, due to insufficient cash resources[135][138] Operational Changes - The company terminated its Fulfillment Services Agreement with ALOM Technologies to reduce costs and has transitioned to third-party logistics and in-house assembly capabilities[112] - The company expects a reduction of approximately $200,000 in lease expenses over the next year and a half following the termination of a sublease agreement[107] - The company has not entered into any off-balance sheet arrangements and terminated its previous office lease, now renting co-working space for $1,000 a month[154] Challenges and Risks - The Nasdaq notified the company of non-compliance with the minimum bid price requirement due to the closing bid price being below $1.00 for 33 consecutive business days, with a compliance period until December 26, 2024[109] - The company faces challenges from global supply chain shortages and inflation, which could increase component costs and affect gross margins[147][153] - The ongoing geopolitical tensions and economic uncertainties may negatively impact the company's ability to forecast revenues and secure additional funding[145][151] Research Outcomes - A study on postoperative pain following sinus surgeries showed no statistically significant differences between the active microcurrent device and a sham device, leading the company to halt further research in this area[114] - The company plans to increase research and development investments in its vagus nerve platform and clinical applications in 2024[132] - The company has incurred an accumulated deficit of $40.6 million through June 30, 2024, and expects to incur additional losses as it expands research and development activities[135] Accounting and Compliance - Recent accounting pronouncements are detailed in Note 2 of the condensed financial statements[158] - There are no applicable quantitative and qualitative disclosures about market risk[158]