Tivic Health Systems - Q2 2024

Transcript

Operator (participant)

Welcome to the Tivic Health Systems second quarter 2024 financial results and shareholder update conference call. All participants will be in listen-only mode. Please note that the conference is being recorded. Statements made during this call contain forward-looking statements about Tivic's business. You should not place undue reliance on forward-looking statements, as these statements are based upon management's current expectations, forecasts, and assumptions, and are subject to significant risk and uncertainties. Forward-looking statements contained in this press release may be identified by the use of words such as anticipate, believe, contemplate, could, estimate, expect, intend, seek, may, might, plan, potential, predict, project, target, aim, should, will, would, or the negative of these words, or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements are based on Tivic Health Systems, Inc's current expectations and are subject to inherent uncertainties, risks, and assumptions that are difficult to predict.

Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation, the future development of ncVNS treatment, Tivic Health's ability to commercialize products arising out of the ncVNS treatment, and Tivic Health's plans to seek regulatory approval for such clinical products. Tivic Health's continued focus on developing ncVNS treatment, including in the epilepsy, post-traumatic stress disorder, and/or ischemic stroke space, expected clinical utility, including which patient populations may be pursued, market and other conditions, supply chain constraints, macroeconomic factors, including inflation, Tivic Health's ability to raise additional capital on favorable terms or at all when needed, Tivic Health's ability to maintain its Nasdaq listing and unexpected costs, charges, or expenses that reduce Tivic Health's capital resources.

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. For a discussion of other risks and uncertainties and other important factors, any of which could cause Tivic Health's actual results to differ from those contained in the forward-looking statements, see 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. Now, let me hand over the call to Jennifer Ernst, Tivic Health's Chief Executive Officer.

Jennifer Ernst (CEO)

Hello, everyone, and thank you for joining us today. I'm Jennifer Ernst, CEO of Tivic, and I'm joined today by our interim CFO, Kimberly Baumbach, and our Chief Scientific Officer, Blake Gurfein. At today's call, the format is going to be a little different than many of our earnings calls. That's because over the past few months, we've made some important progress in our development of a novel vagus nerve stimulation system. Working with the Feinstein Institutes at Northwell Health, a leader in bioelectronic medicine, we have shown a new approach that demonstrated profound biological effects. And this area of development is a critically important part of our strategy to build shareholder value. We also believe that with the recent announcement, we are at a transformational opportunity for Tivic. So with that in mind, I'm beginning the call today with Kim going through our Q2 2024 financial results.

Then Blake and I will provide a much more in-depth discussion on the vagus nerve, why we care about it, the study results, and the potential for this development area inside Tivic. So as we start this call, Kim, I'd like to hand it over to you right now to first go through the Q2 financial results, while Blake and I prepare to give the presentation portion of the call.

Kimberly Bambach (Interim CFO)

Thank you, Jennifer. Financial results for the second quarter and first half reflect our continued progress on operational expense reductions as we focus our resources and efforts towards the next steps in our VNS research. Obviously, our financial results are primarily focused on ClearUP, our first FDA-approved device in market. ClearUP revenues for the three and six months ended June 30 was $140,000 and $474,000, respectively, a decrease of $63,000 or 12% as compared to the first half of 2023, primarily due to a 27% decrease in unit sales, offset by a 20% increase in the per unit average sale price as we repositioned the product in 2023.

Cost of sales for the three and six months ended June 30 was $110,000 and $277,000, respectively, a decrease of $86,000 or 24% compared to the first half of 2023, primarily driven by the decrease in sales volume as well as cost improvements.

Gross profits in the three and six months ended June 30 were $30,000 and $197,000, respectively, compared to $61,000 and $174,000 in 2023, showing margin improvements of 42% for six months ended June 30, compared to 32% in 2023. Total operating expenses in the three and six months ended June 30 were $1.2 million and $2.9 million, respectively, compared to $2.2 million and $4.4 million in 2023, with year-over-year cost reductions of $1.5 million. Cost reductions in the last year include research and development expenses decreasing by $400,000 from reduced headcounts and certain expenses incurred in 2023 related to the ClearUP device.

R&D in 2024, as you are aware, has focused primarily on completion of the phase I vagus nerve stimulation study and initiation of the phase I optimization study. Sales and marketing expenses decreased by $198,000. The decrease was primarily due to reductions in unprofitable ClearUP advertising spend, as well as reductions in agency and staff costs. General and administrative expenses decreased by $933,000. The overall decreases were primarily attributable to reduced headcount, lower consulting and professional fees expenses. During the three months ended June 30, and the company incurred a net loss of $1.3 million versus $2.1 million in 2023. Net loss for the first half of 2024 of $2.7 million was $1.5 million lower than 2023.

On May 13th, 2024, the company sold an aggregate of 4,710,000 shares of common stock to certain investors in a registered public offering at a combined public offering price of $0.85 per share with accompanying warrants. The company received gross proceeds of approximately $4 million, with net proceeds of approximately $3.3 million, excluding any potential proceeds of the warrants issued in connection with the offering. As of June 30th, 2024, cash and cash equivalents totaled $3.7 million, comparative to December 31st, 2023, where we had cash and equivalents of $3.4 million. Lastly, on June 28, as expected, we received a notification letter from the Nasdaq that the company is not currently in compliance with the $1 per share minimum bid price requirement.

The notification had no immediate effect on the listing of our common stock. Tivic has a period of 180 calendar days from June twenty-seventh to regain compliance with the minimum bid price requirement. If at any time before December 26th, the closing bid price of our common stock closes at or above $1 per share for a minimum of 10 days, the Nasdaq will provide written notification that the company has achieved compliance, and the matter would then be resolved. That concludes the financial update portion of the call today. Please stand by while Jennifer and Blake provide a detailed presentation on the VNS results study and its plausible impact on Tivic.

Jennifer Ernst (CEO)

Hey, thank you, Kim, for taking us through the Q2 financials. Now, what I'm hoping the numbers are starting to tell. The past year and a half, we have focused intensely on improving the economics of our ClearUP product line. We've made significant progress from where we were a couple of years ago, and we still have work to do. Over that period, we've improved the cost of goods, we've reduced overhead and operating expenses, and we've improved the ratio of revenue to marketing expense, increasing the productivity of every single marketing dollar we spent. A lot has changed, though, in the macro environment since we started the company.

Supply chain and shipping costs have increased, the cost of marketing direct to consumers is steadily increasing, and the platforms we use to reach our customers, including Amazon, Meta, and Google, are placing tighter and tighter restrictions on health product marketing due to expansion of HIPAA concerns. Net, we believe there are limits to the profitability that can be achieved with this particular product, particularly in the short term. As such, we will continue to target the improved economics, improving those economics, but we will also be evaluating alternative monetization strategies for the ClearUP product and for the associated intellectual property. With that as background, it's particularly important that, on today's call, we are providing investors transparency about our plans for the future. Really, this is the crux of today's presentation. More than a year ago, we began a program designed to broaden our footprint in bioelectronic medicine.

We've taken a number of both technical and market learnings from the first product, and we are applying them instead to the very high-value medical targets with the goal of generating much stronger shareholder returns. As a result, the progress we've made in vagus nerve stimulation, or VNS, has resulted in a number of recent announcements. We have designed, developed, and tested a new method of non-invasive vagus nerve stimulation that has shown extremely strong clinical results. Just a few months ago, we announced the successful completion of a phase I trial with the Feinstein Institutes at Northwell Health. The Feinstein Institutes of Bioelectronic Medicine is one of the world leaders in this field. It was founded by Kevin Tracey, the father of bioelectronic medicine, and the institute is particularly known for being at the most advanced edges of vagus nerve stimulation.

So this area of bioelectronic medicine, which involves selective activation and engagement of the vagus nerve, is one of the most promising new areas of medicine. But while there are studies ongoing in animal studies, a good number of academic studies, there are also very few companies who are actively positioned to deliver and to capitalize on this space. It is this area of our company that we are focusing on today. So let me start with the next slide to talk about the bioelectronic medicine itself. Bioelectronic medicine is a branch of the global neuromodulation market. It's about treating disease by modulating the electrical signals that manage various biological functions. Okay, to put it more simply, we have on the slide here, restoring healthy function by engaging the body's electrical signals, the same way that pharmaceuticals engage the chemical part.

The field grew out of the neuromodulation industry, and so has relied historically on implanted devices. We're all familiar with things like pacemakers, spinal implants, deep brain stimulators. Now, Tivic has focused on non-invasive bioelectronic medicine. We could go to the next slide. We currently have two non-invasive bioelectronic platforms, each designed to deliver therapeutic benefits via electrical signals without requiring surgically implanted technology. Our first platform, the one on the left, is our commercial one. This is a handheld design that interfaces non-invasively with the trigeminal, sympathetic, and other facial and cranial nerve structures. That platform is the basis for our existing product. It's currently marketed with FDA approval as ClearUP Sinus Pain Relief for the treatment of various sinus and allergy conditions.

A couple of years ago, though, Blake and I saw an opportunity to apply the expertise we'd developed in low current, non-invasive neurostimulation to much higher value opportunities, and that was when we turned our attention first to the vagus nerve. What started as an internal series of experiments has now led to a potential breakthrough in the field. Also, the result is a second platform, one that is currently in our R&D stage, directed to non-invasive vagus nerve stimulation. It was only a few months ago that we announced that we had successfully completed a phase I study with the Feinstein Institutes for Medical Research. Now, in that study, we demonstrated a profound effect on biological functions that are related to neurological, cardiovascular, and autonomic system diseases.

If we can go to the next slide, let me say a little bit more about the vagus nerve, about how it's possible to see that broad of an effect, and why we believe that the vagus nerve is such an opportunity for us. Why, in fact, it's considered an extremely high-value target in medicine generally. As you can see in the diagram, the vagus nerve runs from the brain stem to the gut. It touches every major organ in between. I've heard it aptly described as the information superhighway of the body. The signals are going back and forth from the organs to the brain. Different signals are being sent back from the brain to the organs, to the peripheral systems. All of this results in a holistic system that monitors and manages everything from digestion and heart rate to breathing, inflammation, and our brain activity.

Since the vagus nerve regulates so many organs and neurologic systems, it has also been shown to be an active player in many chronic diseases. Modulating or tuning the activity in this nerve pathway is a significant interest in medicine and even more recently, in general wellness. With that, I have a couple of slides here to give you a sense of the overall VNS landscape. We can go to the first, the next slide. Let me start with this slide to show the implanted technologies. I have a couple slides here that are meant to give you a sense of the overall landscape. If we can go to the slide on VNS and the implanted technology, let me start here by talking a little bit about implanted technologies.

Now, vagus nerve stimulation, or VNS, has already been established as a valid, clinically important medical treatment using implanted devices. Most medically approved devices for vagus nerve stimulation are, in fact, implanted. And when I say implanted, I'd like you to think, think of an electrical device that looks like a pacemaker, surgically implanted in the upper chest with wires that run up inside the neck and then are attached near or directly to the vagus nerve. Look at the next slide. LivaNova is one of the commercial leaders in this category. They have approved offerings in treatment of epilepsy and depression. With small penetration rates, LivaNova has made over $1 billion each of the last 2 years. Now, VNS is also currently being investigated to treat inflammatory diseases such as rheumatoid arthritis and multiple sclerosis.

Two companies on the bottom of this slide, Galvani and SetPoint Medical, both pre-commercial implanted devices, have secured over $1 billion in funding between the two of them. I share this not to scare investors, but because it represents the market potential for solutions in this space. One particularly interesting approved device is from MicroTransponder in the upper right corner. This implant is used for approximately a six-week course of treatment during stroke rehabilitation, but for a limited use time zone, implanting a device. These implanted VNS devices are rigorously tested. They're obviously tested for the efficacy and for the safety of the device itself. But the companies developing them also have to prove the safety of the surgical procedures that are used to implant them, as well as the long-term biological compatibility of the device. This drives costs.

These require FDA approval, certainly a PMA, and they can command high premiums and create barriers to entry. But the invasive nature of the technology intrinsically increases risk, drives up the cost of clinical trials, and it limits the space of adoption. A non-invasive approach, such as ours, should be able to get to market at far lower costs, given an intrinsically lower risk. And as we hear from Blake, the work we've done with the Feinstein Institute has shown biological effects from our approach that are on par with implanted devices. Now, if we go to the next slide, I should also comment on a more recently emergent section of non-invasive VNS, and this is the wellness category. There's a second sector of VNS that's recently proliferated in the marketing of vagus nerve stimulators as wellness devices.

Wellness means they do not require clinical data as long as they don't make medical claims. These are sold almost exclusively for stress in the U.S. Without clinical studies, they cannot be approved for any specific medical indication, and I have even heard among medical device manufacturers, some calls for the FDA to begin providing stronger oversight of these devices, given the potential risks that can be associated with an unregulated VNS. Now, if we go to the next slide, I'm showing a few of the companies here, but should you do a search for vagus nerve stimulation, I can almost guarantee you will start to see some of these names popping up in your social media feeds.

So while these are not approved for any particular indication and do not have rigorous clinical data necessarily behind them for the general application of stress, this does lead us to a third category. This is the area of medical-grade, non-invasive VNS. So if we can go to the next slide. Sitting between the implanted VNS and the non-invasive wellness, I think we have a few people on the call who, actually, who are familiar with some of the companies in this space. There are significant opportunities available in medical-grade, non-invasive VNS. Still, the rigorous clinical testing, FDA regulation, and approved for specific medical indication, much like their implanted cousins. But like the wellness devices, they're also non-invasive, have a much lower risk at the clinical stage. Medical-grade, non-invasive devices must be proven to be safe and effective for specific indications. They go through the rigorous trials.

So think of these as the evidence-based portion of non-invasive VNS. Using a non-invasive approach, though, can be expected to markedly reduce the time and risks, and therefore the costs that are associated both with clinical evaluation and with product development. Now, for investors, that means non-invasive products should be able to get to market more quickly, at lower costs than their implanted cousins, and in some cases, we expect we may even be able to secure a first-mover advantage for new indications. This is the arena in which we intend to play. This is an area, medical-grade, non-invasive devices, is an area where significant white space exists. There's differentiation opportunity based on the indication, on the form factor, based on the scale of your efficacy data, and on a host of other factors.

And this is a space with opportunity to create highly differentiated products that can command a premium and secure high barriers to entry. With all of that as background, I'd like now to turn the presentation over to Blake Gurfein, our Chief Scientific Officer. Blake is a neuroimmunologist by background, an assistant professor at UCSF in the Department of Neurosurgery, and he is leading this research and development program at Tivic. I've invited him today to share with investors more details about our recent study results, as well as the import of what we demonstrated. And with that, Blake, I'll turn it over to you for the next slide.

Blake Gurfein (Chief Scientific Officer)

Thank you, Jennifer. I'll now walk you through the key results from our collaborative study with the Feinstein Institute, which is considered, as Jennifer mentioned, one of the leading research organizations on the topics of vagus nerve stimulation and bioelectronic medicine. In our study, we applied non-invasive cervical VNS to 20 healthy subjects for a period of 20 minutes, and then we evaluated the biological effects of the intervention on pupillometry, which is an indicator of autonomic nervous system activity, cardiovascular function, and brain activity. We were pleased to announce recently that we saw meaningful changes in all three measures, which are correlated to treatment opportunities in neurology, psychiatry, cardiovascular disease, and autonomic nervous system diseases. Next slide. The first slide I'm showing you is a measure of pupil diameter.

We care about pupil diameter because measuring changes in the pupil gives us a strong indication of whether we're engaging the vagus nerve and actually influencing the autonomic nervous system. Here, we measured pupil diameter in subjects before, during, and after the non-invasive intervention, and observed sustained reductions in pupil diameter during stimulation. On average, there was a 9.5% reduction in pupil diameter, and this is considered strong evidence of vagus nerve engagement and activation of parasympathetic tone. Next slide. We also used electrocardiography to quantify another key measure of parasympathetic tone called heart rate variability, or HRV. Here, I'm showing a figure of the before and after measures of a type of HRV called RMSSD, or the root mean squared of successive differences. Importantly, this is an accepted proxy of vagus nerve activity.

Compared with before stimulation, after our non-invasive cervical VNS, study subjects showed a 2x increase in RMSSD after stimulation, and 60% of the subjects who were the high responders had close to a 3x increase in this widely used measure. To provide some additional context, increasing RMSSD may have clinical value in treating arrhythmias, and higher RMSSD is associated with lower morbidity and mortality in patients with cardiovascular disease. Additionally, the size of the effect that we observed and the responder rate is comparable to some of the published data on implanted vagus nerve stimulation devices, whereas other non-invasive approaches have shown much more inconsistent results in the published literature. Lastly, I'd like to highlight that the study subjects in our trial were healthy and young. The magnitude of the treatment effects are expected to be meaningfully larger in older patients and those that have chronic diseases.

Next slide. Finally, we used electroencephalography to measure brain activity in study participants. What I'm now showing is an analysis of brain activity across five different frequency bands, where red indicates increased activity in that frequency and blue indicates a decrease. First, let's focus on the figure in the upper left corner. This is the theta band. We found that study subjects had a 24% mean increase in frontal theta activity, which is associated with calm, awake states, learning, and memory. Clinically, increased frontal theta is expected to be useful in anxiety, post-traumatic stress disorder, and other psychiatric and neurological disorders that have unmet treatment needs. Second, if we look at the lower right figure, we saw a striking 66% reduction in frontal gamma activity, which is associated with reduced arousal and anxiety.

We also saw a 62% reduction in temporal gamma activity, which is associated with reduced risk in epileptic seizures. Next slide. Together, our novel non-invasive vagus nerve stimulation approach uses a new electrode configuration, a specific set of stimulation frequencies, and a low current amplitude. Through our work with the Feinstein Institute, we've observed a very large, rapid effect in important biological measures. While implanted technologies have been clinically proven and have also validated the commercial viability of VNS, they're not always appropriate for the clinical scenario. The key takeaway here is that there's a sizable technical and commercial gap in medical-grade, non-invasive VNS devices, and Tivic Health is now positioned to capitalize on that gap.

Jennifer Ernst (CEO)

I hope it goes without saying, and thank you, Blake, for sharing that, but I think both of us are quite excited about the potential for this work. So I'd like to tell you how we see this program unfolding. If you look at this next slide, it really is a catalyst-rich timeline for Tivic. We started with clinical feasibility. That was demonstrated first internally and through our phase I study at the Feinstein Institute. Now, with clinical feasibility demonstrated and patent filings underway, we are moving into optimization and into validation of market opportunities. Industry experts outside the company will be working alongside our team to validate the precise applications that have the highest likelihood to yield strong commercial results. And I anticipate over the next several quarters, we will be sharing continuous progress on these activities. So let's summarize.

This quarter is the start of a potentially transformational period for Tivic. We announced the results of our successful phase I trials of a new approach to non-invasive vagus nerve stimulation. We're partnering with the Feinstein Institutes for Medical Research, one of the leaders in the field, for optimization. We are continuing to build our intellectual property portfolio in an area of significant potential value to the company and to our investors. Over the last 18 months, we've improved gross margins of our ClearUP product. We've increased the revenue produced per marketing dollar spent. We've aggressively reduced operating expenses. Just this quarter, we've relocated manufacturing and driven down costs of fulfillment with a new third-party logistics provider. Over time, we've evaluated and performed due diligence on potential licensing and acquisition candidates, while simultaneously building our organic growth options.

In the organic growth options, we have demonstrated industry-leading clinical results in a new high-value medical target of VNS. Now, I will draw a contrast with some other companies in our space. We are directly making this investment rather than relying solely on investigator-led research, meaning we have very strong working relationships with our partners, access to the data for clinical filings, and meaningful ways that we can shape our development programs and our intellectual property in real time. I really can't underscore strongly enough that the results we've shown and our investment in research that enables and is directed to creating breakthrough products, these are both highly differentiated, and they create significant new opportunities for generating shareholder value. We're not done yet, but I am sure as hell proud of what we have accomplished with a small and very dedicated team.

With appropriate investor support, we believe that we are well positioned to capitalize on these opportunities. So with that, I'd like to turn to the Q&A portion of the call. Thank you to the investors that did send some questions in advance. I'll do my best to address as many as I can here, but let me start first with a couple that pertain to the ClearUP product. I was asked, "The gross profit and gross margin were up significantly in the past year, while expenses and net loss were reduced. Do you see this as a trend as scalable and continuing going forward?" So yes, at a macro level, we've made a number of durable improvements to the business, including some of the transitions I mentioned just this quarter. We have achieved marked improvement, ones that are generally going to stay with us.

And as I said earlier, it doesn't mean we're done. Customer acquisition cost is now a focus and one where partnerships and some of the alternative monetization strategies I mentioned earlier could play a role. I was also asked along this vein that last year we announced pricing increases to ClearUP that negatively impacted volume as we were going direct to consumers, and do we foresee any further price increases? The pricing increase itself was based on the sophisticated marketing, segmentation, and pricing research we conducted with Intellego. The increase was a significant contributor to improving gross margins and improving our overall business. Now, that said, both our market research and our in-market experience suggest we've got the pricing roughly at the sweet spot now to balance sales and profit needs.

So I'm not expecting a planned pricing increase for the product in the near future. What is the company planning to do with ClearUP as the company is turning towards VNS? Well, frankly, we hear from our customers that ClearUP is an amazing product. You can see from the reviews, particularly those on our website, that it can be life-changing. And while we work on continuing to improve the economics of the product line, we have begun to explore alternative monetization strategies, which could include licensing, white labeling, international distribution agreements, or other alternatives that would provide much-needed scale or create alternative cash options for the company. So we can't offer any guarantees that any specific effort in these areas will be successful. But what I can say, though, is you can count on us to continue the blocking and tackling.

It's blocking and tackling that's involved in getting the business metrics in alignment and finding these opportunities for new cash flow. I should note, though, that with the strength of our clinical results in VNS, we have down prioritized product improvements or other development investments in ClearUP. We intend to focus our resources instead on increasing our likelihood to win in new markets with our non-invasive VNS approaches. Along those lines, I was asked, as the company has obviously made operational cutbacks, that's obvious from the numbers that you're showing, do you have resources to move forward with the VNS program?

The research pipeline is an important part of our strategy to build shareholder value, and as we progress past this optimization phase and into phase II and phase III trials, the company will need to at least begin to expand its clinical research team, as well as the relevant market expertise. Some of these expenses may be able to be offset with non-dilutive funding in the form of grants or public-private collaborations, but we do expect to see some increase in our expenses as we approach those phase II and phase III periods. Does the company know what diseases we're considering targeting based on the VNS study? Internally, we have a prioritized list we are working through, but at this point, we're not ready to communicate any of that publicly yet.

This is both for developing intellectual property protection as well as not wanting to cue off competitors prematurely. So at this time, I'm not making any public statements about the specific indications we will be going after, but rest assured that is the type of information we'll be communicating more about as the program unfolds. Question about, are there any patents pending, any risk of expiration of patents? Candidly, when I wasn't sure when I first saw this question, if it was about ClearUP or about our VNS program. But regardless, the answer is yes, we have patents. We have built a robust patent portfolio. And across the two platforms, we have nine issued patents with about 100 independent claims and 10 more patents pending that are in the pipeline.

All of these are fresh patents, patent issue dates dating, I think, in 2020, with the most recent ones issued in 2024. And we expect to see more new patent issuances. So this is one of the, one of the really cool things about devices. Unlike pharmaceuticals, where it can take years to get to market and your patents can get close to expiration, with the type of devices we're developing, we, we expect to be able to get them to market so much faster, which allows for us to have significant patent lifetime left after commercialization. So at this point, these are very newly issued patents. There's nothing that would drive an expiration of a patent, except being successful over time. So, finally, we've received a number of questions about forward-looking guidance. We are not, at this time, giving forward guidance.

Questions about mergers, which, of course, we will not comment on until such time as we would enter a definitive agreement. Share price. Unfortunately, as a company, we don't set the share price. That's set in the public market. We don't control it. And several similar, similar items that were asked about around executive compensation, which is reflected in our financial filings, and no to the one investor about that sent a request whether our performance appraisals are public. No. So there's a lot of items that we just don't comment on or either wouldn't until they are definitive items, particularly the questions that came in about mergers. So what I can tell you, though, the team and I are focused on the areas we control.

Right now, that means prioritizing our time and dollars to navigate this potentially transformational period in the company's evolution. As I noted earlier, we've made significant improvements in the economic profile of the ClearUP product line. Still have more to do. We've dramatically reduced and restructured our operating overhead, and we've delivered the first phase of an R&D program with the potential to generate significantly higher profit and shareholder value. I'd like to thank all of the shareholders and investors that have remained in our corner as we turn this corner. Genuinely, on behalf of our current and future customers, we thank you. We value you more than you could ever imagine. It's the investment you've made that will enable us to deliver life-changing opportunities. So with that, that is what we'd like to cover today, and I want to thank you for taking time with us.

I look forward to speaking with you as we make progress through the remainder of this year.

Operator (participant)

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.