VBIO

Valion Bio, Inc. (VBIO) - 10-Q Summary for Period Ended June 30, 2026

Business Context and Reporting Period

This Quarterly Report on Form 10-Q covers the three and six months ended June 30, 2026. Valion Bio, Inc. (formerly Tivic Health Systems, Inc.) is a late-stage biopharmaceutical company focused on its lead product candidate, Entolimod (a TLR5 agonist), for the treatment of Acute Radiation Syndrome (ARS) and neutropenia. In December 2025, the company vertically integrated by acquiring assets from Scorpius Holdings to form Velocity Bioworks, Inc. (VBI), a Contract Development and Manufacturing Organization (CDMO). The company operates two segments: Biopharma and CDMO. As of August 13, 2026, there were 22,189,739 shares of common stock outstanding.

Key Financial Metrics

Note: The company reported no revenue from continuing operations. Discontinued operations (ClearUP business) generated a net loss of $(23) for the six months ended June 30, 2026.

Material Changes vs. Prior Period

• Expense Surge: Total operating expenses increased by $9.0 million (295%) year-over-year. This is primarily attributed to the integration of the CDMO operations (Velocity Bioworks), which added approximately $6.2 million in expenses for the six-month period.
• Interest Expense: Interest expense increased to $1.3 million for the six months ended June 30, 2026, compared to $0 in the prior year period. This is due to the Senior Secured Convertible Note issued in December 2025 to fund the Scorpius acquisition.
• Liquidity Decline: Cash and cash equivalents decreased from $12.6 million at year-end 2025 to $2.1 million at June 30, 2026, driven by a net cash burn of $10.3 million from operations.
• Inventory: Inventory increased to $750,000, representing the validation and capitalization of Entolimod bulk drug substance acquired from Statera Biopharma.

Guidance, Outlook, Risks, and Unusual Items

• Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern within one year. The company has an accumulated deficit of $66.5 million and expects to incur significant losses as it advances clinical trials and operates the CDMO.
• Nasdaq Compliance: The company received notice of non-compliance with Nasdaq's minimum bid price requirement ($1.00) on March 19, 2026. It has until September 15, 2026, to regain compliance. A reverse stock split (1-for-5 to 1-for-50) is proposed for shareholder vote on August 14, 2026.
• Financing: The company has a $50 million Equity Line of Credit with Tumim Stone Capital, LLC. As of June 30, 2026, $49.9 million remains available. The company also holds a $16.25 million senior secured convertible note.
• Operational Milestones: The company validated Entolimod inventory for distribution and sales in Q1 2026, triggering a $750,000 milestone payment (settled in Series A Preferred Stock in July 2026). It also demonstrated a 200-fold manufacturing scale-up.
• Internal Controls: A material weakness in internal controls over financial reporting was identified as of December 31, 2025, due to the small size of the accounting team. Management is evaluating resources to remediate this.

Investor Verification Checklist

• Cash Runway: Verify the sufficiency of the $2.1 million cash balance against the reported $10.3 million six-month operating burn rate.
• Reverse Stock Split Approval: Confirm the outcome of the shareholder vote on August 14, 2026, regarding the reverse stock split to maintain Nasdaq listing.
• Convertible Note Terms: Review the specific conversion triggers and interest rates (5% standard, 10% on default) of the $16.25 million note held by 3i.
• CDMO Revenue Timeline: Assess the timeline for Velocity Bioworks to generate external revenue to offset its high operating costs.
• Statera Milestone Obligations: Monitor upcoming milestone payments (e.g., BLA filing for ARS) which may require cash or equity settlement.