Valion Bio, Inc. Q2 FY2024 earnings call

• ClearUP: Over the past year - and - a - half, focused on improving the economics of ClearUP product line, reducing cost of goods, overhead and operating expenses, and improving the ratio of revenue to marketing expense. However, recognized limits to profitability with ClearUP in short - term and will evaluate alternative monetization strategies for ClearUP and its intellectual property.
• VNS program: Worked with Feinstein Institutes at Northwell Health on noninvasive vagus nerve stimulation. Successfully completed Phase 1 trial, demonstrating profound biological effects on neurological, cardiovascular and autonomic system diseases. Have two noninvasive bioelectronic platforms, with VNS platform in R&D stage. Results in pupil diameter, heart rate variability and brain activity show strong engagement of vagus nerve. Intend to focus resources on noninvasive VNS optimization and market opportunities, reducing development investments in ClearUP.

ClearUP revenues for the three and six months ended June 30, 2024 were $140,000 and $474,000 respectively, a decrease of $63,000 or 12% compared to the first - half of 2023 mainly due to a 27% decrease in unit sales, offset by a 20% increase in the per - unit average sale price. Cost of sales for the three and six months ended June 30, 2024 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 and cost improvements. Gross profits in the three and six months ended June 30, 2024 were $30,000 and $197,000 respectively, compared to $61,000 and $174,000 in 2023, showing margin improvement of 42% for the six months ended June 30, 2024 compared to 32% in 2023. Total operating expenses in the three and six months ended June 30, 2024 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. Net loss for the three months ended June 30, 2024 was $1.3 million versus $2.1 million in 2023, and net loss for the first - half of 2024 was $2.7 million, $1.5 million lower than 2023.

• Not providing forward - looking guidance at this time. - As VNS program progresses to later phases, company may need to expand clinical research team and relevant market expertise, with some expenses potentially offset by non - diluted funding like grants or public - private collaborations, but expect some increase in expenses as approaching Phase 2 and 3 periods.

• Risks related to ncVNS treatment development, including ability to commercialize products, seek regulatory approval, and expected clinical utility. - Supply chain constraints, macroeconomic factors like inflation. - Ability to raise additional capital on favorable terms or at all when needed. - Risk of not maintaining NASDAQ listing. - Unexpected costs, charges or expenses that reduce capital resources.

Q: Are there any further price increases planned for ClearUP?

A: The pricing increase was a significant contributor to improving gross margins, but market research and in - market experience suggest pricing is roughly at the sweet spot to balance sales and profit needs, so no planned pricing increase in the near future.

Q: Does the company have resources to move forward with the VNS program?

A: The research pipeline is important for building shareholder value. As progressing to later phases of VNS program, company will need to at least begin to expand clinical research team and relevant market expertise. Some expenses may be offset with non - diluted funding like grants or public - private collaborations, but expect some increase in expenses as approaching Phase 2 and 3 periods.

Q: What diseases is the company considering targeting based on the VNS study?

A: Internally, there is a prioritized list being worked through, but not ready to communicate publicly yet. Will communicate more about specific indications as the program unfolds.

Q: Are there any patents pending?

A: Yes, have built a robust patent portfolio. Across two platforms, there are 9 issued patents with about 100 independent claims and 10 more patents pending.