VBIO

Business Context and Reporting Period

Company: Tivic Health Systems, Inc. (Note: Request metadata listed "Valion Bio, Inc.", but the filing identifies the registrant as Tivic Health Systems, Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: February 10, 2025 (Event Date: February 11, 2025)
Context: The Company entered into a strategic partnership to acquire an exclusive license for a proprietary drug program and issued equity securities to the licensor.

Key Financial Metrics and Transaction Details

Transaction Consideration: Total license fee of $1,500,000 paid to Statera Biopharma, Inc.

• Cash Consideration: $300,000
• Stock Consideration: $1,200,000 (Issued as 945,785 shares of Common Stock and 359.6691 shares of Series A Preferred Stock)

Assets Acquired:

• Exclusive worldwide license to Entolimod for Acute Radiation Syndrome (ARS).
• Exclusive option to license Entolimod and Entolasta for additional indications (Neutropenia, Lymphocyte Exhaustion, Vaccine Adjuvant).
• Title to 15kg of frozen manufactured Entolimod lots.

Future Obligations (Milestones):

• ARS Development: Up to $1,750,000 (Inventory validation and BLA filing).
• Subsequent Indications: Up to $6,500,000 (Clinical trials and approvals for Neutropenia, Lymphocyte Exhaustion, and Vaccine Adjuvant).
• Royalties: Ongoing royalty payments on net sales for ARS and potential subsequent indications.

Other Costs: $105,000 cash fee paid to financial advisor Craft Capital Management LLC.

Material Changes and Corporate Actions

Equity Issuance: The Company issued unregistered securities to Statera Biopharma, Inc. under a Securities Purchase Agreement. This includes Series A Non-Voting Convertible Preferred Stock, which converts to Common Stock at a ratio of 10,000:1 following stockholder approval.
Board Composition: Statera has the right to nominate one individual to the Company's Board of Directors, subject to Board approval and Nasdaq independence requirements.
Stockholder Action Required: The Company must hold a stockholders' meeting within 120 days to approve the conversion of Series A Preferred Stock into Common Stock. If not approved, meetings must be convened every 90 days thereafter.

Guidance, Risks, and Contingencies

Development Obligations: The Company is obligated to develop and commercialize the licensed products at its own cost and expense. Failure to meet milestones may result in payment obligations or loss of rights.
Buyout Provision: The Company retains the right to buy out all rights to the licensed technology by paying the lesser of remaining milestone payments or a negotiated risk-adjusted net present value of future royalties.
Liquidity and Storage: The Company must negotiate a lease (approx. $1/year) with a Statera affiliate for the storage of the acquired 15kg of Entolimod materials.
Registration Rights: The Company must file a resale registration statement with the SEC within 60 days for the securities issued to Statera.

Investor Verification Checklist

• Cash Position: Verify the Company's current cash balance to confirm the ability to fund the $300,000 upfront cash payment and future development costs.
• Dilution Impact: Calculate the fully diluted share count impact of the 945,785 common shares issued plus the potential conversion of 359.6691 Series A Preferred shares (approx. 3.6 million common shares).
• Stockholder Approval: Monitor the timeline for the required stockholders' meeting (within 120 days) to approve the Preferred Stock conversion.
• Asset Verification: Confirm the physical transfer and quality status of the 15kg Entolimod inventory.
• Future Milestone Funding: Assess the Company's capital raise strategy to fund the potential $8.25 million in future milestone payments.