PetVivo - Earnings Call - Q3 2025

Transcript

John Dolan (Chief Business Development Officer and General Counsel)

Good afternoon, everyone. Thank you for joining us today to discuss PetVivo's Results For Our Third Fiscal Quarter of 2025, which ended on 31 December 2024. Hosting the call today is our Chief Executive Officer, John Lai, our Chief Financial Officer, Garry Lowenthal, our Commercial and Operations Advisor, Mike Eldred, and myself, John Dolan, PetVivo's Chief Business Development Officer and General Counsel. Following our remarks, we'll open the call to your questions. Before we conclude today's call, I'll provide some important cautions regarding the forward-looking statements made during the call. I'd like to remind everyone that today's call is being recorded, and it will be made available for telecom replay per the instructions in today's press release, which is available in the Investor Relations section of our website.

Now, during the fiscal Q3, we continue to expand our distribution network for our lead animal osteoarthritis medical device, Spryng with OsteoCushion technology. Since its introduction to the market in the fall of 2021, Spryng has been used by more than 800 veterinary clinics across all 50 states. The expansion of our distribution network helped drive a 191% sequential increase in revenues to $583,000, with our nationwide distributor network sales contributing $545,000 of this total. While total revenues increased sequentially, they declined 2% from the same year-ago period. This reflects our continuous endeavors in focusing a greater effort towards the much larger companion animal market. Our team is now focused on expanding both the equine and the small animal markets going forward.

The increased emphasis on the small animal market has involved a realignment and expansion of our sales force, with this resulting in an increased portion of sales related to companion animals in the Q3. Meanwhile, we've been able to maintain our very favorable high gross margins of 89.5%. To further accelerate our growth, we have added a number of territory managers, as well as some highly experienced sales representatives to support our territory managers. These integral sales reps are also supporting our direct sales and marketing to lead veterinary clinics. We have also tremendously enhanced our leadership talent with the appointment of Mike Eldred, an Executive Director, to assist in the company's operations and commercialization. Mr. Eldred was appointed to the board in September 2024.

In his assignment as a Director, Mr. Eldred has been asked to assume the tasks and responsibilities of a Commercial and Operations Advisor, thereby helping to lead the commercialization and operation efforts. For 20 years, Mr. Eldred served as President of North American Operations for Dechra Pharmaceuticals, a publicly traded global specialist in veterinary pharmaceuticals with revenues of nearly $1 billion. He also built Dechra's North American subsidiary from the ground up to become one of the fastest-growing companies in the industry, with more than 250 employees and revenue in excess of $450 million. Mike's experience and strong record of business achievement in pharmaceutical and animal health brings to our company a tremendously valuable resource for achieving our business goals.

Now, before we get into some more of the exciting developments and our outlook for the rest of the year, I would like to turn the call over to our CFO, Garry Lowenthal, to take us through our financial results for the quarter.

Garry Lowenthal (CFO)

Thank you so much, John. Good afternoon, everyone. Thank you for joining us today to discuss our results for our Third Fiscal Quarter of 2025. As John indicated earlier, we saw sequential quarter top-line growth of 191%, with our nationwide distributor network sales increasing 222% sequentially to $545,000. Our fiscal Q3 is typically the largest quarter of the year, with this mostly due to the exposure we receive at major veterinary conferences that occurred during the period. Compared to the year-ago quarter, our total revenues in the fiscal Q3 of 2025 decreased 2% to $583,000, with this largely due to lower direct sales to veterinary clinics as we transitioned to greater use of our expanding distribution network. Sales to distributors were relatively consistent in the quarter during this transitional period, as we pursued the longer-term benefit of more rapid sales growth and market expansion via distributors.

Our gross profit for the quarter totaled $522,000, or 89.5% of revenues, with this compared to $533,000, with the same 89.5% of revenues in the same year-ago period. Our operating expenses for the nine months ending 31 December, 2024 decreased by $2 million, or a 23% decrease from the same 9 month period ending 31 December, 2023. The expense reduction was due to a strategic company-wide cost reduction and restructuring program that decreased general and administrative expenses by $1 million, and a reduction of sales and marketing expenses by $1.2 million versus the same nine months a year ago. The decreases were particularly offset by an increase in research and development of $220,000 due to the performance of our clinical trials to support the underlying science behind our Spryng product.

For the 9 months ending, our net loss totaled $6 million, or $0.30 per basic and diluted share, which was $2.3 million less than the net loss of $8.3 million, or $0.64 per basic and diluted share for the same nine-month period a year ago. Turning to our balance sheet, our cash and cash equivalents totaled $29,000 at December 31. To improve our cash position from the end of the quarter, we completed capital raises with net proceeds of approximately $1.1 million. We expect these funds to keep the company on track to execute our growth strategies over the next few months. As a result of this recent raise, our cash and cash equivalents currently total approximately $418,000.

Our net cash used in operating activities for the nine months ending 31 December, 2024 decreased by 31%, or a $1.8 million decrease compared to the same nine months ending December 31, 2023, which demonstrates how we have become more cost-efficient and cost-wise with our cash spending and our company-wide cost-cutting program. This completes our financial summary for the quarter. I'd now like to turn the call back to our Chief Business Development Officer, John Dolan.

John Dolan (Chief Business Development Officer and General Counsel)

Thank you, Garry. A key aspect of our strategy to drive greater adoption of Spryng is to expand the awareness of its effectiveness and benefits among key decision-makers, and to do this on an increasingly greater scale. To support this effort, we participated in two major veterinary conferences last quarter, along with several smaller industry events. In October, we exhibited at the American Association of Equine Practitioners' Convention Surgery Summit, where we demonstrated Spryng to leading veterinary surgeons. Furthermore, in December, we participated in the American College of Veterinary Surgeons' Summit, where Spryng was displayed to the equine veterinary community. Both events were great opportunities to demonstrate the advantages of Spryng and the beneficial results we have seen when administered to horses and companion animals, both anecdotally and in numerous clinical studies.

In January, we also presented Spryng to a large number of veterinarian practitioners at the Veterinary Meeting and Expo Conference, or VMX. VMX is the largest veterinary conference in the U.S. and hosts many of the industry's top professionals. During this Q3, third fiscal quarter, we continued the accumulation of data for our canine elbow study being conducted by Orthobiologic Innovations, a leader in R&D for regenerative and sports medicine. The study is being led by prominent veterinarians, Sherman and Deborah Canapp, and we expect it to be fully completed within the next few quarters. In addition to pursuing new clinical trials for Spryng, the experts at Orthobiologic Innovations are also supporting our product development and marketing.

Studies like the canine elbow study, as well as our completed studies related to the management of stifle, cranial cruciate ligament disease, and hip osteoarthritis, play a crucial role in our distribution strategy, as large national and international distributors often require university or independently conducted research before adding a new product like ours to their catalog. All of our existing and new distributors have been leveraging these existing studies in the commercialization of Spryng, and additional studies will further support their promotion and the veterinarian training involved following Spryng. With our already completed clinical studies, we believe we have sufficient data to secure large corporate clients who have extensive veterinary clinic networks nationwide. We estimate about 75% of veterinary clinics are owned by such major corporate groups, and we anticipate engaging several of them regarding the use of Spryng in the upcoming quarters.

Now, I would like to turn the call over to our Commercial and Operations Advisor, Mike Eldred, to talk more about a few recent exciting company events and our advances by our sales and marketing teams.

Mike Eldred (Commercial and Operations Advisor and Executive Director)

Thank you, John. Good afternoon to everyone. As John Dolan mentioned, I have been in the animal health industry for about 30 years and spent the last 20 years heading up the North American business for one of the fastest-growing global animal health companies. It's been a pleasure to be part of the PetVivo team and to serve on the board of directors. One thing I noticed immediately was the need to improve communication, teamwork, and develop a clear strategy for the commercial team, which is to be the leader in veterinary medical devices and regenerative medicine. We recently streamlined the organization and implemented new roles and responsibilities for many employees. April Boyce has taken on all sales and marketing activities. Brian Monego is now responsible for all distributor relationships and veterinary corporate accounts and is helping to expand the business internationally.

We've recently expanded our distribution partnerships with the addition of Vedco and Clipper Distributing. Josh Williams is now responsible for all manufacturing and R&D activities. Dr. Kirsty Husby has recently joined the team and is responsible for veterinary technical and professional services for the equine products. Marie Bartling has joined as a full-time employee and will be responsible for developing and driving our clinical studies and developing technical data to support all employees and customers. As you may have seen, we issued a very exciting press release this morning. We're extremely excited about our partnership with VetStem Precise PRP is a first-in-class off-the-shelf platelet-rich plasma PRP designed for the use by veterinarians. It is also the first blood-derived product to be reviewed and approved for safety by the Center for Veterinary Medicine.

Unlike the current PRP mechanical kits on the market, Precise PRP does not require a blood draw or the need and time for centrifugation, making it the first off-the-shelf PRP that is easy, convenient, and affordable for veterinarians to use. An additional key benefit is the uniformity and consistency that Precise PRP guarantees. Each vial contains a consistent dose of 4 billion platelets at a concentration of 500,000 platelets per microliter. Finally, Precise PRP is a perfect fit with PetVivo's flagship product, Spryng with OsteoCushion technology, which is a veterinary-administered injectable medical device designed to manage joint-related issues, including osteoarthritis in dogs and cats and horses. Adding a new innovative product for the PetVivo sales reps will allow them to work closer with the veterinarians to address and provide solutions for their everyday challenges.

Now, I would like to turn the call over to CEO John Lai to talk more about the quarter and our outlook for the rest of the year.

John Lai (CEO and President)

Thank you, Mike. During the last fiscal quarter, market awareness of Spryng was greatly elevated when one of our advisory board members, Dr. Tracy Turner, was placed in as president of the American Association of Equine Practitioners. This is actually the largest organization in the world related to equine practitioners. Tracy is widely recognized for his pioneering in the use of thermography as a diagnostic aid in horse lameness and the benefits of horse and welfare regulations. He has been a strong supporter of Spryng and has mentioned our product in multiple conferences, and we believe with his appointment we are seeing the elevation on the equine side. Also, Dr. Tammy Grubb, she's a professor at Washington State University, has been placed in as president of the International Academy of Veterinary Pain Management, which is the largest organization for canine pain management.

She actually did a peer-review article indicating different new therapies for last year that have come into the market, and she made comments that Spryng should be looked at by veterinary doctors as first use versus a much later stage use. We also have changed our name of our subsidiary, PetVivo, to PetVivo Animal Health. This change will assist veterinarians and pet owners in recognizing PetVivo's mission in bringing innovative products, next-generation disruptive products to enhance the life of our pets and as well as equine, as well as improving the quality of life and enjoyment of the pet owners. We talked about the partnership with VetSTEM and Precise PRP as a product added to our portfolio. We feel this will continue to add other products into the PetVivo Animal Health subsidiary.

We're excited to launch this product, and we're looking for really good traction as we hit the marketplace. Also, last month, as Mike mentioned, we added two new partnerships with Vetco and Clipper Distributing. Both are leaders in logistics solutions, product supply to veterinarians. Vetco and Clipper Distributing are the largest national veterinary product distributors, such as MWI Animal Health, Covetrus, Patterson Veterinary, Midwest Veterinary Supply, Pet Animal Supplies. With the added distribution, we're able to get a lot more traction within the marketplace as these reps are very excited to learn about Spryng with OsteoCushion technology as well as Precise PRP. We look forward to building on these advances, and we continue to strengthen our market presence and drive greater value for our stakeholders. Now, with that, I would like to open the call to your questions.

Operator, would you please explain to the listeners how they may prompt in to ask questions?

Operator (participant)

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