PetVivo - Q1 2024
August 10, 2023
Executive Summary
- Revenue doubled year over year to $0.117M, driven by initial distributor sales to MWI and higher direct clinic volume; however operating loss widened due to elevated G&A and sales/marketing investment.
- No formal financial guidance was issued for Q1; management emphasized building momentum via clinical studies and expanding distribution/clinic penetration (Spryng used by “over 450 veterinarian clinics in 47 states”).
- Liquidity and working capital remain tight (cash $0.219M; working capital deficit $0.449M), with subsequent capital raises post-quarter to fund operations and sales expansion.
- Estimates context: S&P Global Wall Street consensus for Q1 FY2024 revenue/EPS was unavailable; result vs estimates cannot be determined.
What Went Well and What Went Wrong
What Went Well
- Revenue growth: Q1 revenue increased to $0.117M from $0.058M, supported by distributor sales to MWI ($0.034M) and clinics ($0.083M), evidencing early channel traction.
- Distribution and clinic adoption: “Spryng™ is currently used by over 450 veterinarian clinics in 47 states in the United States” (CEO).
- Post-quarter financing to support operations and growth: raised an additional $2.325M (convertible notes $0.55M; registered direct $1.775M).
What Went Wrong
- Losses widened: Operating loss was $(2.894)M vs $(1.966)M YoY; net loss per share worsened to $(0.25) vs $(0.20), reflecting higher G&A and sales/marketing to launch Spryng.
- Gross margin still nascent: Gross profit $0.035M; margin ~29.8% vs ~8.9% last year, but scale remains limited and cannot absorb OpEx burden.
- Liquidity constraints and going concern: cash $0.219M, working capital deficit $(0.449)M, and prior-year auditor going concern opinion; near-term funding reliance persists.
Transcript
Operator (participant)
All right. Welcome, everyone, to PetVivo Holdings, Inc. 2024 fiscal year Q1 earnings report. We will now hand over to John Dolan, and take it from there. Thank you.
John Dolan (Chief Business Development Officer and General Counsel)
Thank you, operator. Greetings, and welcome to PetVivo Holdings Q1 of fiscal year 2024 financial results conference call. My name is John Dolan, the Chief Business Development Officer and General PetVivo Holdings. Today's call is being webcast and will be posted on the company's website for playback. Before we begin, I would like to remind everyone that comments made during this conference PetVivo Holdings' executives may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections or future market conditions, is a forward-looking PetVivo Holdings' actual future results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in its SEC filings.
PetVivo Holdings assumes no obligation to update any such forward-looking statements. PetVivo Holdings filed its earnings release and Form 10-Q with the SEC today, which provide a detailed discussion of our financial results. These documents can be found on the SEC website and the investor relations section of our website. I would now like to turn the call over to John Lai, the CEO and President of PetVivo Holdings. Please go ahead, John Lai.
John Lai (CEO and President)
Thank you, John Dolan, and welcome. Also joining me today is Bob Folkes, our Chief Financial Officer. I would like Bob Folkes to begin by discussing some highlights and financial results for the Q1 of fiscal year 2024. John Dolan will provide an update on our on our clinical studies, and I will conclude by sharing some additional thoughts on our business strategy and key focus areas for fiscal 2024 before we open the line up for questions. I will now turn over the call to Bob Folkes.
Bob Folkes (CFO)
Thank you, John Lai, and good afternoon, everyone. Our key highlights for the Q1 of fiscal year 2024 were we reported revenues of $117,000 as compared to $58,000 in the Q1 of fiscal year 2023. Revenues for the Q1 included net revenue of $34,000 from shipments of Spryng to MWI Animal Health, a subsidiary of AmerisourceBergen, who is a leading distributor of animal health products, pursuant to our distribution and sales agreement with MWI Animal Health, dated June 17th, 2022. We also reported revenues of $83,000 on direct sales to veterinary clinics, as compared to $58,000 in the Q1 of fiscal year 2023.
We added Spencer Breithaupt, a veteran in the animal health industry and former member of the leadership team at MWI Animal Health, to the company's board of directors. We also raised $2.1 million from the sale of the company's common stock in a registered direct offering in April 2023. Also subsequent to June 30th, 2023, the company raised an aggregate of $2,325,000 in net proceeds from two offerings. On July 27th, 2023, the company raised net proceeds of $550,000 in a private offering of convertible notes. On August 9th, 2023, the company raised net proceeds of $1,775,000 from a registered direct offering of its common stock, conducted concurrently with a private offering of warrants.
We continue to invest our resources to expand our sales and marketing efforts and clinical data to gain veterinary acceptance and increase revenues from the sale of Spryng. Now I would like to turn the call over to John Dolan to provide an update on our clinical studies.
John Dolan (Chief Business Development Officer and General Counsel)
Thank you, Bob Folkes. We provided a detailed overview PetVivo Holdings' clinical studies in our last earnings call on June 30th, 2023. To summarize, PetVivo Holdings has a total of eight clinical studies in progress or that have been completed. Six small animal clinical studies, i.e., canine and feline, and two equine clinical studies. We are fortunate to be working with a number of world-renowned research organizations such as Colorado State University, Ethos Veterinary Health, and Inotiv, Inc. We anticipate that three of our small animal clinical studies will publish within the next three months-four months. Furthermore, we are looking forward to the presentation of the final results of our clinical study conducted by Ethos Veterinary Health at the American College of Veterinary Surgeons conference in October of 2023.
This study is related to evaluating the benefit and tolerability of intra-articular injection of Spryng into the stifle joints of dogs with suspected partial or complete cranial cruciate ligament rupture. An abstract was presented at the Veterinary Orthopedic Society conference in March 2023, demonstrating that Spryng is a minimally invasive management option for dogs suffering from cranial cruciate disease. The acquisition of clinical data proving the safety and efficacy of Spryng in a multitude of indications is incredibly important to PetVivo Holdings. The company plans to organize and conduct more clinical studies in addition to the ones in progress, in order to expand our library of data that demonstrates the safety and efficacy of Spryng in a variety of indications... Such a library will assist our sales team to gain veterinarian acceptance of Spryng. I would like to turn it back over to John Lai.
John Lai (CEO and President)
Thank you, John Dolan. I would like to talk more about our business strategy and key focus areas for fiscal 2024. Clinical studies from Ethos and Inotiv, Inc and podium presentations to support the upcoming national trade shows and support the MWI Small Animal sales team. You know, as to date, still the majority of our sales, around 90%, are in the equine space, and we have not really pushed the MWI sales reps, as well as our sales reps, to go after the small animal clinics. With this data that we expect to be receiving over the next three months-four months, it will open up the avenue and give the ammunition that's needed. Now, the podium presentations, and clinical or clinician presentations will be occurring, the first one, at the ACVS in October of 2023. That is a dog study.
Also in November of 2023, the AAEP, we actually have multiple presentations by veterinary doctors at that conference, and that is the biggest conference in the United States for equine vets. The first of the year, I think it's the second week in January of 2024, is the VMX. We will have presentations there. This conference last year, when we had two of the speakers talk about Spryng, we ended up getting 2,700 badges scanned. We feel, you know, we will get very good traction now that we have very important data as well as literature in supporting supporting data for the small animal vets. Then in February, we have the biggest show on the West Coast, it's the Western Veterinary Conference in Las Vegas, and we also have presentations there.
We feel these are really large potential events that will create an adoption of many of the veterinary doctors. We had a nice little surprise about five weeks ago. There was a peer-review article that showed up in Today's Veterinary Practice Journal, and it was the July-August issue, and it was written by Dr. Tammy Grubb. She is recognized nationally and internationally as a expert in canine pain management. She's the president-elect of the International Veterinary Academy of Pain Management. She will be taking charge as the President. She's also an adjunct professor at Washington State University, and she's been using our product, I believe, for about two years. In the article, she made some very important comments that will help us from the standpoint of educating veterinary doctors.
One of the biggest key takeaways was she stated that Spryng, with OsteoCushion Technology, is a frontline use product. The second takeaway was that dogs that have an adverse reaction to NSAIDs, which there is 83 million dogs in the United States, and approximately 5% of those dogs cannot take NSAIDs, that Spryng would make a very good alternative. If we look at it from an economic standpoint, Spryng is one of the lowest cost options if your dog can't take NSAIDs, and the one with the potential for the least amount of adverse events or side effects. I wanna address the front use product. In past calls, I talked about how when a small animal doctor or a dog, canine veterinary doctor orders our product, they have a tendency to use it as a last resort product. They've tried everything else.
It's not functioning, or they're not getting any types of results that would be beneficial, and they're pretty much ready to put the dog down. Then they order our product, they try it, and then they see that it's doing extremely well. The dog's gained tremendous mobility and so on. In the mindset of the veterinary doctors, this is a less used product that's creating amazing results. It takes a while for them to learn, and we're in the position to really, with all this data, all this outside peer review articles and so on, it will make it where they're comfortable in using it as first use. The general pattern is six months, they use it as a last resort item, then they start feeling comfortable for the next 90 days, injecting couple of other joints.
After one year, they start going, "I'm very comfortable with this." At a year and 1/4 years to a year and 1/2 years, they actually start writing in the checkup exits, saying, "Hey, this dog is likely to get hip dysplasia at age seven. It's something you should keep an eye on, and at the first signs, let's talk about the use of Spryng." It becomes a much earlier use product, and by Dr. Tammy Grubb making the statement that we should look at this as a frontline first-use product is very meaningful. I'm not saying it's gonna replace NSAIDs, but, you know, it, it is a possibility of using it in conjunction, as well as also we have seen in the real-world application, once Spryng is introduced, the need for NSAIDs is greatly reduced or eliminated.
Just to give you a clue how big the NSAID market is, in the United States, it's $385 million in the last reported year. I just saw the numbers come out. I believe it was Grand View Research for 2021. Moving on from there, we're anticipating we're gonna get other types of articles that will come out, or journal articles. Then, you know, going forward with MWI Animal Health, having all this data will help us work with MWI Animal Health to increase veterinary acceptance in the small animal side. On the last call, we talked about the turnover at MWI Animal Health, and that's looking like we're smoothing that out and things are back in line. We're also gonna be using a lot of increased social media focus.
What I mean by that is we're gonna be putting up a lot of actual real-world cases using Pinterest, Instagram, and so on, because we find the amount of veterinary techs as well as the consumers, they're reaching out to their vets. We've been really focusing on that because now we did a news release, we're in 47 states, and we're starting to pick up good-sized clinics in major cities. We're very comfortable now having the consumer reach out to their vets, and then their vets are looking around their current area, and they're finding other vets using the product. That will really help us. Actually, we have been getting very good results recently with our social media. I would now like to open the lineup for questions. Operator?
Operator (participant)
Thank you, John Lai. For anyone who's joined in on a desktop from an email, I will unmute you should you raise your hand to ask a question. Once I unmute you, you will receive a prompt to accept that, and feel free to fire away. If you're on a phone, the basic notifications would be star nine to raise or lower your hand, and then star six to mute or unmute. We have our first question. Ms. Marla Ribble, I will unmute you, and feel free to ask your question.
Marla Ribble (Founder)
I don't know if anyone can hear me.
John Lai (CEO and President)
I can hear you, but there's a feedback.
Marla Ribble (Founder)
Is that better?
John Lai (CEO and President)
Yes, much better.
Marla Ribble (Founder)
Oh, perfect. I'm just curious, like, I know in the beginning of everything, and I'm new to this world, so thank you for, for putting up with my greenness. Just we keep talking about a timeframe, they're gonna start injecting smaller animals and blah, blah, blah. Just when is that exact timeframe, is my... I'm just not clear on?
John Lai (CEO and President)
Right now, veterinary doctors can buy the product, okay, for dogs and cats. We haven't pushed on that side because we talked about all these clinical datas and presentations on the small animals in September, October, coming out, so we feel that's a big catalyst. In the meantime, we're seeing a lot of great results occurring in the dogs and the cat side, and in many of the larger cities, we have multiple clinics using our product. Does that help answer the question?
Marla Ribble (Founder)
It does. Then, I know you keep saying, like, referring to smaller animals, but isn't the long-term intention to be on bigger animals as well, or?
John Lai (CEO and President)
No, we started off on the equine because that's an easy market for us because the veterinary doctors see the results right away. While when you're dealing with small animals, they like to have the clinical data to support whatever statements we can make. Plus, when they inject a dog, they may not see that dog for a year or six months to a year for the next checkup, before they realize how well the dog is doing. It's a much longer time adoption for small animals, but the market is significantly larger. There is about 10 million horses in the United States, 83 million dogs in the United States, and about 60 million cats in the United States.
Marla Ribble (Founder)
Okay. Awesome. Thank you.
John Lai (CEO and President)
Okay.
Operator (participant)
Wonderful. Just as a reminder, if you want to raise or lower your hand, please press star nine or star six to unmute or mute yourself. On a desktop, I will give you permission to ask a question, so just look out for that alert or prompt to then take action. I have a raised hand from a phone number ending in 4735. Please go ahead.
John Lai (CEO and President)
Hello?
Speaker 5
Hello, can you hear me okay?
John Lai (CEO and President)
Yep.
Speaker 5
Oh, hi, John Lai. This is John Lindeman at Diana.
John Lai (CEO and President)
Hi.
Speaker 5
I've got a, I've got a question. You had referred to, something that I'm not familiar with, 'cause I'm relatively new to this field. It was called NSAID or NSAID?
John Lai (CEO and President)
NSAID.
Speaker 5
What was-
John Lai (CEO and President)
Yeah.
Speaker 5
Can you spell that?
John Lai (CEO and President)
gold standard treatment that veterinary doctor gives. It's a basically an anti-inflammatory, so...
Speaker 5
Okay.
John Lai (CEO and President)
with humans, it's like...
Speaker 5
Advil.
John Lai (CEO and President)
Naproxen or something.
Speaker 5
Advil.
John Lai (CEO and President)
Advil. Yeah. Thank you. Yeah.
Speaker 5
Okay, got it. How do you spell that?
John Lai (CEO and President)
The NSAID?
Speaker 5
Yeah. How do you spell it?
John Lai (CEO and President)
Oh, NSAID.
Speaker 5
Okay, great. Yeah, thanks. I appreciate that. You referred to it more than once, so I thought, "What is that?
John Lai (CEO and President)
Okay, no problem.
Speaker 5
Do you have an update on human trials?
John Lai (CEO and President)
No, we stated that, you know, on the human side, we've done the necessary reviews of what the outside experts are telling us from a timetable, and then we would eventually, you know, hopefully, soon, announce our advisory team, that's experts in this area, to give recommendations, the path to go. The human trials, if you look at the OA market, for humans, on a global basis, about $240 billion a year, as an addressable market. To go through the human side, it's significantly more expensive, obviously. We would not raise money PetVivo Holdings. We would always raise it within the subsidiary, so it PetVivo Holdings' share structure or expenses.
Actually, when we do raise money on that side, the overall operating expenses PetVivo Holdings, the parent itself, would actually reduce a little.
Speaker 5
Okay. That, that sounds great. Thank you.
John Lai (CEO and President)
Yep.
Operator (participant)
Excellent. any further questions, please feel free to raise your hand, or press star nine if you're calling in, and we'll open the floor for you. No further questions. Thank you. This concludes our conference today. Thank you for your participation. You can find any information on the company site.