Earnings Call Transcript - PETV Q2 2024

Operator, Operator

Welcome, everyone, to the PetVivo Holdings, Inc., 2024 Fiscal Year Second Quarter Earnings Report. This is November 14, 2023, and I will now hand over to Mr. John Dolan to start the call.

John Dolan, Chief Business Development Officer and General Counsel

Thank you, operator. Greetings, and welcome to the PetVivo Holdings second quarter of fiscal year 2024 financial results conference call. I am John Dolan, the Chief Business Development Officer and General Counsel at PetVivo. 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 call by PetVivo's 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 statement. PetVivo's 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 assumes no obligation to update any such forward-looking statements. PetVivo 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 in 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. Please go ahead, John.

John Lai, CEO and President

Thank you, John, and welcome. Also joining me today is Bob Folkes, our Chief Financial Officer. I would like Bob to begin discussing some highlights and financial results for the second quarter of fiscal year 2024. John Dolan will provide an update 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 it over to Bob.

Bob Folkes, Chief Financial Officer

Thank you, John, and good afternoon, everyone. Our key highlights for the second quarter fiscal year 2024 include, we reported revenues of $207,000 as compared to $223,000 in the second quarter of fiscal year 2023. Revenues for the second quarter included net revenue of $143,000 as compared to $118,000 in the second quarter fiscal year 2023 from shipments of Spring 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. We also reported revenues of $64,000 on direct sales to veterinary clinics as compared to $105,000 in the second quarter of fiscal year 2023. Additionally, we raised $2.35 million from the sales of the company's common stock and a convertible note offering in August of 2023, and we raised $1.7 million in October and November of 2023 from the sale of 725,000 shares of the company's common stock pursuant to the ATM sales agreement with ThinkEquity LLC and in a private offering. Finally, we released clinical study results, which demonstrate the benefit and tolerability of an intra-articular injection of Spryng into the stifle joints for dogs with suspected cruciate ligament rupture, similar to an ACL tear in humans. I would like to turn the call over to John Dolan to provide more color on this cruciate ligament study and on our additional clinical studies.

John Dolan, Chief Business Development Officer and General Counsel

Thank you, Bob. As Bob just mentioned, the final results for our clinical study conducted by Ethos Veterinary Health, a nationally renowned operator of 145 world-class specialty veterinary hospitals, were presented at the American College of Veterinary Surgeons Conference on October 12 through the 14th 2023 in Louisville, Kentucky. The study involved evaluating the benefit and tolerability of intra-articular injections of Spryng into the stifle joint of dogs with suspected partial or complete cranial cruciate ligament rupture. An abstract highlighting the results of the first cohort of dogs in this study 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 final results of the Cranial Cruciate Disease study provided by Ethos indicated significant improvement in 39 dogs injected with Spryng. All primary and secondary clinical endpoints related to pain, lameness, and quality of life were achieved. It is our position that this clinical trial demonstrates that Spryng is a reasonable, non-invasive alternative for patients with Cranial Cruciate Disease, CCD, when patient and/or owner factors preclude surgical intervention. We previously indicated in our earnings call in August 2023 that we anticipated three of our Small Animal clinical studies were to be published within the next three or four months. Two of those studies were tolerance studies, also referred to as safety studies. These two tolerance studies have been caught in the review process of two reputable publications longer than anticipated. In view of the company's ongoing release of efficacy studies, we believe it is important to make the data from the tolerance studies available to veterinarians. Therefore, we have decided that white papers on the tolerance studies will be created and publicly made available through electronic and print publications by the company. The results of each of these tolerance studies demonstrated the safety of Spryng. The acquisition of clinical data proving the safety and efficacy of Spryng in a multitude of indications is incredibly important to PetVivo. As previously suggested, the company has three additional Canine Studies and two Equine Studies currently progressing, with results from these studies planned for release in 2024. Furthermore, the company plans to organize and conduct more clinical studies 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 in gaining veterinary acceptance of Spryng. I would like to turn it back over to John Lai.

John Lai, CEO and President

Thank you, John. We have recently witnessed a very positive response from veterinary doctors, specifically in the Small Animal sector. I was at the US Vet Show last week in New York City, and I would have to say, over 70% of the vets we spoke to, when they saw the Spryng Shirt, made comments about the product. That really sets us up nicely with having the MWI representatives. The positive results that we got from Ethos, which we presented about six weeks ago really solidify the argument or the proposition made in the Tammy Grub article, which is a peer-reviewed article on Spryng being a first-use product. The other part of that article was that Spryng would be an excellent alternative for dogs that have a negative reaction to NSAIDs, the gold-standard therapy. About 5% of the dogs out of 83 million would have an issue taking NSAIDs. This data allows us to start marketing to small animal vets. We are also gathering key opinion leaders in the marketplace who are discussing Spryng at various conferences. That was one of our goals when we first went on NASDAQ, to emphasize the importance of podium presentations at these coming conferences because it's the KOLs, the key opinion leaders, who advocate for Spryng. We are starting to gain scientific data to support the first-use thesis, which gives better opportunities for veterinary doctors to adopt the product. We aspire for the vets to think about it in terms of first-use rather than as a last resort or a last-use. We are very excited about the American Association of Equine Practitioners Conference in San Diego this year, which starts November 30 and ends December 2. It's the largest equine conference of the year, and we will have two of our veterinary doctors presenting. Dr. Tom Yarbrough will discuss navigating the new classes of joint therapies, while Dr. Joe Manning will present on achievements in intra-articular therapies and novel collagen hydrogel microparticles. We expect that to be a significant conference that will add many more equine practitioners and clinics to our network. We also plan to present clinical data from Ethos and Innovex at various trade shows coming up in the small animal sector. In January, we have VMX, the largest conference for small animals in the United States, and then the WBC Western Veterinary Conference in February in Las Vegas. These three major shows, along with the data and the white papers for cats and dogs that will be published soon, will provide our sales team with considerable leverage to engage small animal veterinary doctors. From the New York show, I was pleased to see that over 70% of the vets have heard about Spryng and are interested when contacted by our sales representatives. Finally, we are focused on increasing social media awareness targeting small animals. Millennial and Gen Z pet owners currently represent 55% of pet ownership, and they're motivated to spend to improve quality of life and healthcare outcomes for their pets. With the distribution channels we have in place and the widespread clinics, we feel we can use this approach to drive social media impact and convey to pet owners how we can provide a more efficient cost structure that ultimately leads to better healthcare outcomes while reducing costs related to osteoarthritis and other health issues, all without the side effects found in other products.

Operator, Operator

With pleasure. Yes. Any questions? Thank you.

John Lai, CEO and President

Since I don't see any questions, this is John Lai. I'll give a quick overview of the general market for the pet industry. Recent numbers indicate that stocks in the pet industry are being affected by changes since COVID. Sorry, I think I do see a question. So I'll answer that question before discussing the industry.

Operator, Operator

Wonderful. From an anonymous attendee, what's happening with the drastic stock drop?

John Lai, CEO and President

The pet industry has become out of favor because pre-COVID, pet ownership was at 68%. After COVID, it rose to 71%, but has now dropped to 66%. In the last 60 days, microcap stocks in the pet industry have seen an average decline of 35%. The difference lies in companies that are implementing me-too products. For example, Blue Diamond experienced a significant drop in food sales. As consumers are cutting expenditures in the pet industry, we find ourselves grouped with them. Stocks that were once COVID-related have suffered drops of 80% to 90%. In our case, we have a disruptive product that is saving consumers money while providing better medical outcomes. A lot of our studies support that argument, as well as Dr. Tammy Grubb's peer-reviewed article promoting our products as first-use alternatives to NSAIDs, which has substantial market potential.

Operator, Operator

Thank you. Any other questions? Feel free to use the chat or raise your hand if you want to do so. If there’s nothing else, could we confirm the information and contact details where attendees can inquire or obtain more information?

John Dolan, Chief Business Development Officer and General Counsel

Operator, I see one more item in the chat. I think it's directly to John. So you don’t see a near-term rebound, is that the aspect?

John Lai, CEO and President

As you know, around year-end, when there is this type of drop in the market, it's likely due to tax loss selling. Historically, we tend to see tax loss selling, especially at the institutional level. Given the recent drops, it's likely experiencing tax loss selling that should end relatively soon. Coupled with our accumulating clinical data and numerous major shows coming up, such as the AAEP at the end of November and then three significant small animal shows in January and February, we have several positive catalysts ahead. Our management team and salespeople are enthusiastic due to the data we now have for small animals. The equine space has approximately eight million horses in the United States, and for dogs, there are about 83 million. Importantly, 5% of those dogs are good candidates for our product, showcasing our market size. Additionally, we also have 60 million cats. The cat safety study will also be published soon in white paper form, expanding our potential market further.

Operator, Operator

If there are no more questions, I think we can conclude the call.

John Lai, CEO and President

Yes, the email address for inquiries is info1@petvivo.com. Many shareholders know me directly, so feel free to reach out. Thank you for attending the call. This concludes the formal Q&A presentation.

Operator, Operator

Goodbye.