Q3 2024 Tivic Health Systems Inc Earnings Call - Pre-Recorded

Welcome to the <unk> systems third quarter, 2024 financial results and operational update conference call.

Operator: Welcome to Tivic Health System's 3rd Quarter 2024 Financial Results and Operational Update Conference Call.

Operator: This call has been pre-recorded and questions you have submitted in advance will be answered following the prepared remarks.

This call has been prerecorded and questions you have submitted in advance will be answered following the prepared remarks.

This call is being webcast and the replay will be available on the IR section of the company's website for three months.

Operator: This call is being webcast and the replay will be available on the IR section of the company's website for three months.

Before we begin let me remind you that during today's call management will be making various forward looking statements.

Operator: Before we begin, let me remind you that during today's call, management will be making 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 by our forward-looking statements. Please read the Safe Harbor Statement contained in the press release we issued earlier today, as well as those contained in Tivic Health's filings with the SEC, including its annual report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 29, 2024, under the heading, Risk Factors, as well as the company's subsequent filings with the SEC.

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 by our forward looking statements.

Please read the Safe Harbor statement contained in the press release, we issued earlier today as well as those contained in <unk> filings with the S. E C.

<unk> annual report on Form 10-K for the year ended December 31st 2023 filed with the SEC on March 29, 2024 under the heading risk factors as well as the Companys subsequent filings with the S E C.

Speaker Change: Now, let me turn the call over to Jennifer Ernst take helps Chief Executive Officer.

Jennifer Ernst: Now let me turn the call over to Jennifer Ernst, Tivic Health's Chief Executive Officer. Thank you to our operator, and of course, thank you to everyone who is listening today on this call, and also those of you that are listening in playback. So as we begin this report on Q3, I'll highlight that I've talked quite a bit about our Vagus Nerve Stimulation Program in the recent call.

Jennifer Ernst: Thank you to our operator and of course, thank you to everyone who is listening today on this call and also those of you that are listening and playback.

Jennifer Ernst: So as we began this report on Q3 highlights and I've talked quite a bit about our vagus nerve stimulation program in the recent calls.

Jennifer Ernst: Today, I'd like to touch a little more broadly on all three legs of our strategy to build shareholder value and to create a growth business.

Jennifer Ernst: Today, I'd like to touch a little more broadly on all three legs of our strategy to build shareholder value and to create a growth business. Now that starts first with turning our clear-up product line into a profitable business line. Second, we're looking at leveraging our expertise in bioelectronic medicine to generate new business opportunities. And that is specifically advancing a novel approach to noninvasive vagus nerve stimulation that we have been making significant progress in the last few quarters. and finally streamlining our corporate operations to manage overhead costs in the public company. We've made significant progress on all three, and the numbers that I'm reporting this quarter will only tell part of the story, but they're absolutely the place to start.

Jennifer Ernst: So that starts first with turning our clearance product line into a profitable business line.

Second we're looking at leveraging our expertise in bio electronic medicine to generate new business opportunities.

Jennifer Ernst: That is specifically advancing a novel approach to noninvasive vagus nerve stimulation that we have been making significant progress in the last few quarters.

Jennifer Ernst: And finally, streamlining our corporate operations to manage overhead costs as a public company.

Jennifer Ernst: We've made significant progress on all three and the numbers that I'm reporting this quarter will only tell part of the story, but they are absolutely the place to start.

Jennifer Ernst: I'd also like to highlight, as we're talking about our numbers, that Lisa Wolf joined us this quarter as our interim CFO. She's taking over the reins from Kimberly Bambach, who continues with us on a consulting basis. Lisa has been part of the Tivic team now for about two years, been part of the team that streamlined our public operating costs, and has been working side-by-side with Kim. So I'm very excited to welcome her to this new role, particularly with more than 30 years of financial leadership experience that encompasses both public and private finance and accounting. The two years she spent with the Tivic team prior to this role, she's bringing to the table both a broad experience base and an up-close understanding of our business.

I'd also like to highlight is we're talking about are numbers that lethal wolf joined us this quarter as our interim CFO she's taking over the reins from Kimberly Bombeck, who continues with us on a consulting basis.

Jennifer Ernst: Lisa has been part of the terrific team now for about two years and part of the team that streamlined our public operating cost that's been working side by side with Kim So I'm very excited to welcome her to this new role.

Jennifer Ernst: Particularly with more than 30 years of financial leadership experience that encompasses both public and private finance and accounting.

Jennifer Ernst: For two years, she spent with the terrific team prior to this role she is bringing to the table both a broad experience base and an up close understanding of our business.

Jennifer Ernst: At least that's exceeds Kimberly bond back who continues to work with the company as an adviser with a focus on special transaction.

Jennifer Ernst: Lisa succeeds Kimberly Bambach, who continues to work with the company as an advisor with a focus on special transactions. And since both Kimberly and Lisa have worked together for some time now, I'm very encouraged by the financial team that we are putting together. Both have made substantial contributions to the improvement of the company. And Lisa, while you are listening here, I want to thank you for preparing the numbers today that I'll be going over. So for today's call, I'll be taking you through the numbers. All of the references will be comparing the third quarter ended September 30th, 2024 to the third quarter ended September 30th, 2023, or for the same nine month period comparison.

Jennifer Ernst: So it's both Kimberly and Lisa have worked together for some that some time now I'm very encouraged by the financial team that we're putting together well if they've made substantial contribution to the improvement of the company.

Jennifer Ernst: And at least while you are listening here I want to thank you for preparing the numbers today that I'll be going over.

Jennifer Ernst: So for today's call I'll be taking you through the numbers all of the references will be comparing the third quarter ended September 32024 for the third quarter ended September 32023 or for the same nine month period comparison, unless I, specifically identify otherwise.

Jennifer Ernst: Unless I specifically identify otherwise. Taking a look at our profit and loss statements, revenue net of returns was $600,000, a decrease of $219,000 or 27% compared with $819,000 a year ago. We saw a 36% decrease in unit sales, but this was offset by a 13% increase in per unit average sales price. I'll spend a little bit more time talking about the unit sales as we get into the narrative section. Cost of goods, $359,000 compared to $537,000 a year ago. And our gross profit for the third quarter was $44,000, compared with $108,000 a year ago. This is particularly due to some significant costs we incurred as we redesigned and reengineered our supply chain.

Jennifer Ernst: Taking a look at our profit and loss statement revenue net of returns was 600000, a decrease of 219000 or 27% compared with 819000 a year ago.

Jennifer Ernst: We saw a 36% decrease in unit sales, but this was offset by a 13% increase in per unit average sales price I'll spend a little bit more time talking about the unit sales as we get into the narrative section.

Jennifer Ernst: Cost of goods 359000, compared to 537000 a year ago.

Jennifer Ernst: Gross profit for the third quarter was 44000, compared with 108000 a year ago.

Jennifer Ernst: This is particularly due to some significant costs, we incurred as we redesigned and reengineered our supply chain I'll speak a little bit more about that in a moment.

Jennifer Ernst: I'll speak a little bit more about that in a moment. The gross margin was 35% for the third quarter, compared to 38% in 2023. But if we backed out the one-time charges associated with moving our logistic site, the gross margin would have been about 52%. Again, continuing our improvements in the gross profit. Another area in which we made good progress was on our operating expense. So the third quarter of this year, operating expense was $1.5 million. This compared with $1.9 million last year. And that translated to a net loss of the third quarter of $1.4 million, down $1.8 million for the same period in 2023.

The gross margin was 35% for the third quarter compared to 38% in 2023, but if we backed out the one time charges associated with moving our logistics site.

Jennifer Ernst: The gross margin would've been about 52% again, continuing our improvement in the gross profit.

Another area in which we made good progress with all of our operating expense for the third quarter of this year operating expense was $1 5 million, that's compared with $1 9 million last year.

Jennifer Ernst: And that translated to and that loss for the third quarter of $1 4 million down 1.8 million for the same period in 2023.

Jennifer Ernst: Turning to the balance sheet at September 30 of 2024 cash and cash equivalents totaled $2 2 million compared with $3 4 million at December 31, 2023.

Jennifer Ernst: Returning to the balance sheet at September 30, 2024, cash and cash equivalents totaled at $2.2 million, compared with $3.4 million at December 31, 2023.

Jennifer Ernst: So with that as the backdrop I'd actually like to take a deeper look at the three areas I mentioned at the start of the call. So let's start first with the commercial clear out product line.

Jennifer Ernst: So with that as a backdrop, I'd actually like to take a deeper look at the three areas I mentioned at the start of the call. So let's start first with the commercial clear-up product line. One item I'd like to share as context is that last year we discovered a technical issue in the silicon that was part of the clear-up charging circuit. Any of you that read the reviews from earlier in the year may have noticed some of the complaints from customers on this. So, though it's an intermittent problem, the diagnosis of the specifics led us to a product redesign, and we had to deliver a new version.

Jennifer Ernst: One item I'd like to share as context is that last year, we discovered a technical issue in the silicon that was part of it there are charging circuit and have you have to read the reviews from earlier in the year may have noticed some of the complaints from customers on that.

Jennifer Ernst: So it's an intermittent problem the diagnosis of the specifics, let us to a product redesign and we have to deliver a new version.

Jennifer Ernst: I'm proud to say the team did deliver a new version in January of 2024 as Clear Up 2.0. That led us into working through inventory swaps with our channel partners. We reduced our marketing spend until new versions were shipping to customers, and we began a process to rebuild the reviews. In Q1 and Q2, we also undertook a restructuring of our supply chain and distribution to improve profitability. So this work, completed in Q3, unfortunately it also resulted in the convergence of various expenses that were associated with the relaunch of the product, the inventory swaps, the supply chain redesign.

Jennifer Ernst: I have to say the team did deliver a new version in January of 2024.

Jennifer Ernst: It's clear up to point out.

Jennifer Ernst: With that let us into working through inventories thought swaps with our channel partners, we reduced our marketing spend until new versions, we're shipping to customers and we began a process to rebuild their reviews.

Jennifer Ernst: In Q1, and Q2, we also undertook a restructuring of our supply chain and distribution to improve profitability.

Jennifer Ernst: So this work completed in Q3.

Jennifer Ernst: Unfortunately, it also resulted in the convergence of.

Jennifer Ernst: The expenses that were associated with the relaunch of the product the inventory swaps.

Apply chain redesign, we incurred a significant amount of expense in July for inventory disposal for removal of inventory from one three PL and restocking at another.

Jennifer Ernst: We incurred a significant amount of expense in July for inventory disposal, for removal of inventory from one 3PL and restocking in another, and with other expenses that were associated with this overall transition. However, what is important, in the months following that transition, we averaged over 70% gross margin on our clear up sales. This compares to just the 40-50% reported previously and the negative gross margin of just two years ago. I am very proud of being able to move this product line forward in the gross profit and gross profitability. We also undertook, at the beginning of the year and through this quarter, a realignment of our marketing spend.

Jennifer Ernst: The other expenses that were associated with this overall transition.

Jennifer Ernst: However, what is important in the months fall away in that transition.

Jennifer Ernst: We averaged over 70% gross margin on a clear up sales.

Jennifer Ernst: This compares to just the 40% 50% reported previously and the negative gross margin in just two years ago.

Jennifer Ernst: I am very proud of being able to move this product line forward.

Jennifer Ernst: The gross profit and gross profitability.

Jennifer Ernst: We also undertook at the beginning of the year and through this quarter a realignment of our marketing spend we're now achieving solid return on our advertising, resulting in significant increases in our per unit profitability.

Jennifer Ernst: We are now achieving solid return on our advertising, resulting in significant increases in our per-unit profitability. Now we can focus on growing sales, in part through the distribution partners that we signed earlier this year. That included McKesson, Cardinal Health, and a continuing sale through their affiliate of RGH.

Jennifer Ernst: Now we can focus on growing sales in part through the distribution partners that we signed earlier. This year that included Mckesson Cardinal health and are continuing to sell through their affiliate of our G. H.

Jennifer Ernst: I did note last quarter, though that we do believe there are limits to how quickly we can grow the consumer facing business, particularly in this market that is dominated by the over the counter products.

Jennifer Ernst: I did note last quarter, though, that we do believe there are limits to how quickly we can grow the consumer-facing business, particularly in this market that is dominated by the over-the-counter product.

Jennifer Ernst: Which brings me now for the second leg of our strategy.

Jennifer Ernst: which brings me now to the second leg of our strategy. creating new product opportunities to drive shareholder value based on advanced research in vagus nerve stimulation. I've spent time over the last couple of quarters highlighting the importance of the vagus nerve. It is the largest autonomic nerve in the body. It runs from the brain stem to the stomach and touches every major organ in between. Last quarter, we reported phase 1 trial results on a new form of vagus nerve stimulation, some of the industry-leading data in the field. Polaris Market Research estimates the Global Vagus Nerve Stimulation, or VNS, market will grow from 8.6 billion in 2021 to 21.3 billion in 2030, a compound annual growth rate of 10%.

Jennifer Ernst: <unk>, new product opportunities to drive shareholder value based on advanced research and the vagus nerve stimulation.

Jennifer Ernst: Sometime over the last couple of quarters, highlighting the importance of the Vegas or it is the largest autonomic nerve in the body. It runs from the brain stem to the stomach in touch with every major Oregon in between.

Jennifer Ernst: Last quarter, we reported phase one trial result on a new form of vagus nerve stimulation some of the industry leading data in the field.

Jennifer Ernst: Polaris market research estimates the global vagus nerve stimulation or VNS market will grow from $8 6 billion in 2021 to 'twenty 1.3 billion and 2030.

Jennifer Ernst: Compound annual growth rate of 10%.

Speaker Change: We completed a trial at the Feinstein Institute for medical research at North Wall and in that trial, we demonstrated profound effect on the neurologic cardiac and autonomic nervous system.

Jennifer Ernst: We completed a trial at the Feinstein Institutes for Medical Research at Northwell Health and in that trial we demonstrated profound effects on the neurologic, cardiac, and autonomic nervous system. showing, again, some of the strongest data in the field. In Q3, we engaged the same institution to help optimize the treatment parameters and test several key variables that will be important as we move forward in the clinical design. In October, we announced that we started enrolling patients in a Phase I optimization study. This study is being led by Dr. Theodore Asano. is a Ph.D. and associate professor at the Institute of Bioelectronic Medicine and leads the Neural and Data Science Lab at the Feinstein Institutes of Mental Health.

Speaker Change: So and again some of the strongest data in the field.

In Q3, we engaged the same institution to help optimize the treatment parameters and test several key variables that will import will be important as we move forward in the clinical Dubai.

Speaker Change: In October we announced that we started enrolling patients in a phase one optimization study.

Speaker Change: This study is being led by a doctor Theodore as panels.

Speaker Change: The ph D and associate Professor at the Institute of Bio electronic Medicine and law.

Speaker Change: The neuro and data science lab, a defined institutes of health.

Speaker Change: We announced yesterday that we have completed enrollment in the optimization study and expect to complete the study by early Q1. The result of the second trial will also inform the phase two study designs that are slated to begin in the first half of 2025.

Jennifer Ernst: We announced yesterday that we have completed enrollment in the optimization study and expect to complete the study by early Q1. The results of this second trial will also inform the phase two study designs that are slated to begin in the first half of 2025. We are making very rapid progress on our vagus nerve stimulation program. Based on the successful results in the Phase 1 trial, we have retained a leading growth strategy firm called Fletcher State, or FSI, to assess the market opportunity, the very particular and specific market opportunity for our approach to vagus nerve stimulation.

Speaker Change: We're making very rapid progress on our vagus nerve stimulation program.

Speaker Change: Now based on the successful results from the Phase one trial, we have retained a leading growth strategy firm called Fletcher state or F. F O I.

Speaker Change: To assess the market opportunity very particular and specific market opportunities for our approach to vagus nerve stimulation.

Jennifer Ernst: They are looking at both the market, the competitive landscape, the likelihood of adoption for bioelectronic medicine across various disease arenas. This work with FSI is key to accelerating our commercial development strategy for our non-invasive VNS. So to report today, FSI has already completed a comprehensive market assessment. Drawing from the clinical outcomes of our Phase 1 trial, we worked with FSI and Tivic to work together. We identified 30-plus potential use cases for the Tivic device. These use cases are in the areas of neurologic, cardiac, psychiatric, and autonomic nervous system diseases. FSI helped us narrow these down to a list of the top 10 for a deeper dive and are currently interviewing payers and providers for the top two.

Speaker Change: They are looking at both the market the competitive landscape the likelihood of adoption for bio electronic medicine.

Speaker Change: Cross various disease arena.

Speaker Change: This work with FSA is key to accelerating our commercial development strategy for our non invasive VNS.

So to report today <unk> has already completed a comprehensive market assessment.

Speaker Change: Brian from the clinical outcomes of our phase one trial, we worked with F. O scientific work together, we identified 30, plus potentially use cases for the terrific device. These use cases are in the areas of neurologic cardiac psychiatric and autonomic nervous system diseases.

Speaker Change: S. S. I helped us narrow this down to a list of the top 10 for a deeper dive and are currently interviewing payors and providers.

Speaker Change: The top two.

Speaker Change: Interviewing clinical key opinion leaders and payers is important in defining our product development pipeline for this program.

Jennifer Ernst: Interviewing clinical key opinion leaders and payers is important in defining our product development pipeline for this program. This is helping us develop our clinical study plans, it's identifying the reinforcement pathways, and helps sharpen and hone our go-to-market strategy. As we downselect the key target therapy decisions, we are looking at three levers of success. patient adoption, the likelihood for provider recommendations, and payer reimbursement. we're keenly aware that these three factors. are critical in the success of a new product launch on VMS. This approach, by moving forward with both with the FSI and the clinical work in concert with each other, this approach is allowing us to take both commercial and clinical validation to move forward in lockstep.

Speaker Change: This is helping us develop our clinical study plans, it's identifying the reimbursement pathways and pulp.

Speaker Change: Pulps, sharpen and hone our go to market strategy.

Speaker Change: As we down select the key target therapy decisions when youre looking at three levers and fix that.

Speaker Change: Patient adoption well.

Speaker Change: The likelihood for provide a recommendation.

Speaker Change: And payer reimbursement.

Speaker Change: We're keenly aware that these three factors.

Speaker Change: Are critical in the success of our new product launch on VNS.

Speaker Change: This approach by moving forward with both with the F. S. I on the clinical work in concert with each other.

This approach is allowing us to take both commercial and clinical validation to move forward in lock step.

Speaker Change: So I haven't yet disclosed to you exactly which ones are going to be tackling, but I do look forward to discussing with you in the near future. The work that is converging between our clinical program outcome.

Jennifer Ernst: So, I haven't yet disclosed to you exactly which ones we're going to be tackling, but I do look forward to discussing with you in the near future the work that is converging between our clinical program outcome as we report out on the Phase 1a trial and with the FSI work that is now coming together. We have identified several multi-billion-dollar segments in which our VNS approach offers solutions for high-value, unmet needs with extremely high likelihood of adoption. The reception among the provider population and among the payer reimbursement interviews has been extremely encouraging. They have been strongly, strongly positive.

Speaker Change: As we report out on the phase one <unk> trial and with the F. S. I work that is now coming together.

Speaker Change: We have identified several multibillion dollar segments in which RV enough approach offer solutions for high value unmet needs with extremely high likelihood of adoption the reception among the provider population and among the payer reimbursement interviews has been extremely encouraging.

Speaker Change: Its been strongly strongly positive.

Jennifer Ernst: We are very excited about what we are seeing as the opportunity now for our Vegas NERV program.

Speaker Change: We are very excited about what we are seeing is the opportunity now for our vagus nerve program.

Speaker Change: So now as I move into the third leg of our strategy. We do continue to operate with a continuous eye on let me call it surgically, reducing our operating costs.

Jennifer Ernst: So now, as I move into the third leg of our strategy, we do continue to operate with a continuous eye on, let me call it, surgically reducing our operating cost. For example, this quarter we terminated our office lease, relocated to a smaller site, brought up a small-volume manufacturing site in-house to continue to be able to produce product. contributing to a durable 20% reduction in year-over-year net operating loss. So, as we continue to move forward, this really is an exciting time, and I think we're moving into that inflection point zone. The data we've already collected show, with a high degree of confidence, that we can reach some very new, large markets with our technology, with our science.

For example, this quarter, we terminated our office lease.

Relocated into a smaller site brought up a small volume manufacturing site and help to continue to be able to produce product.

Speaker Change: Contributing to a durable 20% reduction in year over year net operating loss.

Speaker Change: So as we continue to move forward. This really is an exciting time and I think we're moving into that inflection point.

Speaker Change: The data we've already collected show up with a high degree of confidence that we can reach some very new large markets with our technology with our science.

Jennifer Ernst: We've done the work on the roadmap, and we are beginning to lay out the strategic and commercial plans in a new area. We are continuing to see improvements in the clear-up business. and we are continuing to explore additional strategic alternatives, strategic opportunities for the company. which may eventually include acquisitions, transactions that align with our growth strategy or that complement our existing product offerings and generally will serve the interests of the company to grow shareholder value. So overall, as I said, three legs of the strategy, while we continue to assess all alternatives for creating shareholder value, we are focused primarily on the three legs of improving the product performance and the pipeline of clear-up.

We've done the work on the roadmap and we are beginning to lay out the strategic and commercial plans in a new area.

Speaker Change: We are continuing to see improvement in the Colorado business.

Speaker Change: And we are continuing to explore additional strategic alternatives strategic opportunities for the company.

Which may eventually include acquisition transactions that align with our growth strategy or they complement our existing product offerings and generally will serve the interests of the company to grow shareholder value.

Speaker Change: So overall as I said three legs of our strategy, while we continue to assess all alternatives or are all alternatives for creating shareholder value. We are focused primarily on the three legs of improving the product performance and the pipeline of Clearone.

Speaker Change: Moving forward, our VNS program to address the extraordinarily high value opportunity.

Jennifer Ernst: Moving forward, our VNS program to address extraordinarily high-value opportunities and continuing to focus on operational efficiencies as a public operating company.

Speaker Change: Continuing to focus on operational efficiency as a public operating company.

Okay. Let me take a couple of the questions that we received in advance of this call.

Jennifer Ernst: Okay, let me now take a couple of the questions that we received in advance of this call.

Speaker Change: What is the company planning to do with clearer if the company is shifting its focus to Vienna.

Jennifer Ernst: What is the company planning to do with ClearUp if the company is shifting its focus to Vienna? So at this time, we are continuing to develop and allow clear up to grow organically while we continue to work on improving the economics. We also are exploring the alternate commercialization and monetization strategies that might include licensing white labeling other alternatives that would allow the product to achieve a much greater scale. We can't have any guarantees, of course, that we'll be successful in those efforts, but we will be exploring ways to create alternative monetization opportunities for the Clear Up product line.

Speaker Change: So at this time, we are continuing to develop and allow clear up to grow organically.

Speaker Change: While we continue to work on improving the economics. We also are exploring the alternate commercialization of the monetization strategies that might include licensing white labeling other alternatives that would allow the product to achieve much greater scale.

Speaker Change: We can never any guarantees of course that will be successful in those efforts, but we will be exploring ways to create alternative monetization opportunities for.

Speaker Change: For the <unk> product line.

Speaker Change: Particularly though I should note that the strength of the clinical results in Vienna, we have down prioritized product improvements or other development investments of any significance in clear up.

Jennifer Ernst: Particularly, though, I should note that the strength of the clinical results in VNS, we have down-prioritized product improvements or other development investments of any significance in CLEAR-UP. And we'll allow the product line to grow organically, explore alternative monetization strategies, and focus our investment resources instead on increasing our likelihood to win in the new markets with our non-invasive VNS approaches. We genuinely believe that it is the clinical pipeline and the advancement of that pipeline that is going to drive shareholder value.

Speaker Change: Yeah, well a lot of the product line to grow organically explore alternative monetization strategies and focus our investment resources instead on increasing our likelihood to win in the new markets with our non invasive VNS approaches are.

We generally believe that it is the clinical pipeline in the advancement of our pipeline that is going to drive shareholder value.

Speaker Change: Now with all the cut with the company, having made some cut back spending and some downsizing do we have the resources to move the BNS programs forward and how do we plan to raise capital.

Jennifer Ernst: Now with the company having made some cutbacks, done some downsizing, do we have the resources to move the BNS programs forward and how do we plan to raise capital? So our research pipeline is obviously a very important part of the strategy to build the shareholder value. As we progress into phase two, phase three trials, those are important. Those are very significant inflection point opportunities. We will, of course, need to at least moderately expand their clinical research team. We will need to fund those trials. Some of those expenses may be able to be offset with non-diluted financing.

Speaker Change: So our research pipeline with holiday play a very important part of the strategy to build the shareholder value.

Speaker Change: As we progress into phase two phase III trials. Those are important those are very significant inflection point opportunities.

Speaker Change: We will of course need to at least moderate expand their clinical research team, we will need to fund those trials.

Speaker Change: Some of those expenses may be able to be offset with non dilutive financing that would highlight several areas. We're looking at there are opportunities for ground for public private collaboration.

Jennifer Ernst: I would highlight that several areas we're looking at, there are opportunities for grants, for public-private collaborations. Additionally, we have been able to make selective use of an ATM that is in place, that is allowing us to generate additional capital for the company on terms that are much more investor-friendly than, for example, our prior capital rates. So, in aggregate, we believe we will have the opportunity to fund the VNS program. Some capital, obviously, is necessary to be moving forward on a clinical type.

Speaker Change: Additionally, we have been able to make the electric selective use of an ATM that is in place that is allowing us to generate additional capital for the company on terms that are much more investor friendly than for example, our prior capital raise.

Speaker Change: So in aggregate, we believe we will have the opportunity to fund the V announced program of some of the capital obviously is necessary to be moving forward on our clinical pipeline.

Jennifer Ernst: Does the company know what diseases we're considering, targeting based on the DNS study results? I mentioned earlier in my comments that the four areas of disease, although very broad, are neurologic, psychiatric, cardiac, and autonomic nervous system. So, internally, yes, as we're working with Fletcher State, we are starting to see some convergence around a couple of key areas.

Speaker Change: Does the company know what diseases, we're considering targeting based on the VNS study results.

Speaker Change: Well I mentioned earlier in my comments.

The four areas of disease, although very broad neurologic.

Speaker Change: Hatrick cardiac.

Speaker Change: And autonomic nervous system so.

Speaker Change: So internally, we're working with Fletcher state, we are starting to see some convergence around a couple of key areas.

Speaker Change: Before making that public, though we do want to see the results from the Feinstein Institute on the clinical testing, we're doing now the ones that we've just finished the goldman on as well as completely in the market validation work with Fletcher space.

Jennifer Ernst: Before making that public, though, we do want to see the results from the Feinstein Institute on this clinical testing we're doing now, the one that we've just finished enrollment on, as well as completing the market validation work with Fletcher State. With those two pieces of the arsenal, I would expect by end of year sometime or into the first quarter of next year to be able to share more specific commercial strategies around our VNS program. I am very excited, though, by the level of interest that we are seeing in even the payer community and definitely in the provider community as we have showcased and done this work with Fletcher State.

Speaker Change: With those two pieces of the Arsenal I would expect by end of year or some time more into the first quarter of next year to be able to share more specific commercial strategy around our VNS program.

Speaker Change: I am very excited though by the level of the level of interest that we're seeing.

Speaker Change: And even the payer community and definitely in the provider community as we have showcased and done this work with Fletcher state.

Speaker Change: So right now.

Jennifer Ernst: So right now, I'd like to say thank you to everyone that is taking the time to learn about the company today. We will continue to keep you appraised through press releases, through the various communication mechanisms, obviously through our filing, but these opportunities to talk with you in person and to share sort of my perspective on the company and the tremendous opportunity that we are facing with the DNS work particularly, it is a great opportunity for me to be able to connect with you. So I want to thank you all for taking the time with us and I look forward very much to speaking with you in the next call in the new year.

Speaker Change: I'd like to say, thank you to everyone that is taking the time to learn about the company today, we will continue to keep you appraised through press releases through the various like them that various communication mechanisms, obviously through our filing.

Speaker Change: But these opportunities to talk with you in person and to share sort of my perspective on the company and the tremendous opportunity that we're facing.

Speaker Change: With the VNS work, particularly.

It is a great opportunity for me to be able to connect with you. So I want to thank you all for taking the time with us and I look forward very much to speaking with you in the next call in the new year.

Speaker Change: Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.

Operator: Thank you everyone.

Operator: This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.