8-K: Tivic Health Acquires CDMO Assets, Secures $90M+ Financing

Tivic Health Systems, Inc. has acquired manufacturing and development assets from Scorpius Holdings, Inc., forming a new CDMO subsidiary, Velocity Bioworks, backed by over $90 million in debt and convertible preferred equity financing.

Summary

• Tivic Health Systems, Inc. (Tivic) acquired all personal property and assets of Scorpius Holdings, Inc.'s contract development and manufacturing organization (CDMO) business through its new wholly-owned subsidiary, Velocity Bioworks, Inc.
• The acquisition was made for $16,253,147.10 in cash, paid at closing on December 10, 2025.
• Tivic entered into a Securities Purchase Agreement with 3i, LP for a private placement of a senior secured convertible note (the Note) in the principal amount of $16,253,147.10 and a warrant to purchase up to 4,553,213 shares of common stock.
• The gross proceeds from the Note Offering, $16,253,147.10, were used entirely to fund the acquisition of Scorpius's assets.
• The Note matures on the fifth anniversary of the issuance date, bears interest at 5.0% per annum (10% upon default), and is convertible into common stock at $2.2310 per share, subject to adjustments and a floor price of $0.39 for alternative conversions.
• Tivic also entered into a Preferred Securities Purchase Agreement with institutional investors (including 3i, LP) to sell up to 75,000 shares of newly designated Series C Non-Voting Convertible Preferred Stock for a total purchase price of up to $75,000,000.
• The Preferred Offering will occur in tranches: an initial closing of 12,000 shares for $12,000,000 (consummated December 10, 2025), a second tranche of 6,000 shares for $6,000,000, and subsequent tranches up to $57,000,000.
• Preferred Offering Warrants will be issued, exercisable for 50% of the common stock issuable upon full conversion of the Series C Preferred Stock, with an exercise price of $2.2310.
• The Series C Preferred Stock ranks senior to common stock and other preferred stock, accrues cumulative dividends at 6% per annum (payable in cash or PIK), and has a stated value of $1,080 per share.
• Conversions of both the Note and Series C Preferred Stock are subject to a 19.99% exchange cap, requiring stockholder approval to exceed.
• An existing Equity Purchase Agreement with Mast Hill Fund, L.P. for up to $25,000,000 was terminated for convenience.
• An amendment to a previous April 2025 Securities Purchase Agreement with Helena Global Investment Opportunities I Ltd. (now assigned to 3i, LP) extended the termination date to December 9, 2026, and lowered the floor price for conversions to $0.39 per share, also subject to a 19.99% cap and stockholder approval.
• Tivic will hold a special meeting of stockholders to obtain approval for waiving the Exchange Cap for both the Note and Preferred Offerings, and for the lowered floor price in the amended April 2025 agreement.

Sentiment

Score: 7

Explanation: The filing outlines a significant strategic acquisition and a substantial financing package that directly supports the company's stated goals of bringing manufacturing in-house and accelerating drug development. This is a positive step for long-term growth and operational control. However, the complexity of the financing, potential for dilution, and reliance on future stockholder approvals introduce some uncertainty and risk, preventing a higher score.

Positives

• Acquisition of Scorpius's CDMO assets brings manufacturing in-house, securing a U.S.-based site for Entolimod, a lead drug candidate.
• In-house manufacturing is expected to lower development costs and eliminate long outsourcing wait times, enhancing operational efficiency.
• Formation of Velocity Bioworks, a new wholly-owned subsidiary, creates new revenue opportunities by offering CDMO services to third-party biotech companies.
• The acquisition strengthens Tivic's position to accelerate development for other Entolimod and Entolasta indications, including neutropenia and advanced cancer treatments.
• Secured a significant financing package totaling over $90 million, comprising $16.25 million in debt, up to $75 million in preferred convertible equity, and an expected $50 million equity line of credit from an affiliate of 3i, LP.
• The initial tranche of preferred equity ($12,000,000) and the debt financing ($16,253,147.10) have already closed, providing immediate capital.
• The Series C Preferred Stock ranks senior to other equity, offering a preferential position to investors regarding dividends and liquidation.
• The company successfully validated the Entolimod cell line in the acquired facility in Q3 2025, marking a major manufacturing milestone.

Negatives

• The debt financing bears interest at 5.0% per annum, increasing to 10% upon an Event of Default, which is a significant penalty.
• Conversions of both the Note and Series C Preferred Stock are subject to a 19.99% exchange cap, requiring stockholder approval to exceed, which could limit immediate conversion and create uncertainty.
• Failure to obtain stockholder approval for the exchange cap or the lowered floor price could impact the company's ability to fully utilize the financing terms.
• The 'as is, where is' nature of the asset purchase means no representations, warranties, covenants, or indemnities from the seller (3i, LP as collateral agent), potentially exposing Tivic to unknown issues with the acquired assets.
• The company is prohibited from certain variable rate transactions and subsequent equity issuances during a restricted period, limiting financial flexibility.
• The Series C Preferred Stock has cumulative dividends at 6% per annum, which can be paid in kind (PIK), potentially increasing the outstanding stated value and future dilution.
• The company granted security interests in its collateral to secure the obligations under the Note and Note Purchase Agreement.
• The termination of the Mast Hill Equity Purchase Agreement means the company no longer has access to that potential $25,000,000 equity facility.

Risks

• Regulatory Approval Risk: The company's lead drug candidate, Entolimod, is in late-stage development for acute radiation syndrome and requires a Biologics License Application (BLA) with the U.S. Food & Drug Administration, with no guarantee of approval.
• Stockholder Approval Risk: The issuance of shares exceeding 19.99% of outstanding common stock (Exchange Cap) requires stockholder approval. Failure to obtain this approval could limit the company's ability to fully convert the notes and preferred stock, potentially triggering redemption obligations or other adverse terms.
• Market Volatility and Dilution: The conversion prices for the Note and Preferred Stock are subject to adjustments based on VWAP, and the alternative conversion price has a floor of $0.39. Significant drops in stock price could lead to substantial dilution for existing shareholders if conversions occur at lower prices.
• Integration Risk: Integrating the acquired CDMO assets and establishing Velocity Bioworks as a functional, revenue-generating subsidiary carries operational and financial risks.
• Competition in CDMO Market: Velocity Bioworks will operate in a competitive contract development and manufacturing market, and its ability to secure third-party clients and generate meaningful revenue is not guaranteed.
• Financial Covenants and Events of Default: The Note contains customary events of default, including key person departure events and failure to meet financial obligations. An event of default could lead to accelerated redemption at a premium (110% or 105% depending on the event) or conversion at unfavorable prices.
• Liquidity Risk: While significant financing was secured, the company's need for additional working capital is mentioned as a forward-looking risk.
• Reliance on Key Personnel: The Note includes a 'Key Person Event' clause tied to the CEO, Jennifer Ernst, indicating a reliance on her continued service.
• Unregistered Securities: The securities issued are unregistered and subject to resale restrictions, which could affect their liquidity for investors.

Future Outlook

Tivic intends to expand its business operations to provide CDMO services to other clients through Velocity Bioworks, aiming to generate meaningful revenue. The company plans to accelerate the commercialization of Entolimod towards a Biologics License Application (BLA) with the U.S. Food & Drug Administration and speed up development across its oncology portfolio, including neutropenia and advanced cancer treatments. A special meeting of stockholders will be held to obtain approval for waiving the Exchange Cap and the lowered floor price for conversions. The company will also file a registration statement within 15 days to register the shares issuable upon conversion of the Note and exercise of the Warrants, targeting effectiveness within 45 to 60 calendar days.

Management Comments

• "Tivic has entered a new era. With the licensing earlier this year of a Phase III biologic asset and our strategic expansion into biologics, the next logical step is bringing development and manufacturing capabilities in-house."
• "This allows us to lower development costs and eliminate long wait times often associated with outsourcing. It also unlocks the potential for meaningful revenue through the launch of Velocity Bioworksour new CDMO built for fast, high-quality biologic production that can serve both us and third-party biotech companies."
• "More importantly, it positions Entolimod for rapid advancement toward a BLA and accelerates development across our oncology portfolio."

Industry Context

The acquisition of CDMO assets and the formation of Velocity Bioworks positions Tivic Health to become a more vertically integrated therapeutics company, reducing reliance on external manufacturers for its biologics pipeline, particularly for Entolimod. This move is consistent with a strategy to gain greater control over the manufacturing process, potentially improving efficiency, cost-effectiveness, and speed to market, which are critical factors in the highly regulated and capital-intensive biopharmaceutical industry. The expansion into offering CDMO services to third parties also diversifies Tivic's revenue streams, a common strategy for companies with underutilized manufacturing capacity or specialized expertise.

Comparison to Industry Standards

• CDMO Integration: Bringing manufacturing in-house is a strategic move that can offer greater control and potentially lower costs compared to outsourcing, a common practice among larger pharmaceutical companies. For a company like Tivic, moving a late-stage asset like Entolimod towards BLA, this integration could be crucial for supply chain security and quality control.
• Financing Structure: The combination of secured debt, convertible preferred equity, and an equity line of credit is a flexible financing approach often seen in biotech, allowing for staged capital deployment and aligning investor interests with company growth. The 5% interest rate on the secured note is reasonable for a company at this stage, though the 10% default rate is a significant penalty.
• Conversion Price and Floor Price: The initial conversion price of $2.2310 and a variable conversion price with a floor of $0.39 for the preferred stock and notes indicate a significant potential for dilution if the stock price declines, which is not uncommon in early to mid-stage biotech financing but warrants careful monitoring.
• Exchange Cap: The 19.99% exchange cap requiring stockholder approval is a standard Nasdaq listing rule to prevent excessive dilution without shareholder consent. The need for repeated meetings if approval is not obtained initially highlights a potential hurdle.
• Royalty Agreement: A 5% royalty on gross revenue for 10 years from the new CDMO subsidiary (Velocity Bioworks) is a notable component, providing a long-term revenue share to the investors in addition to equity upside. This is a less common but not unheard-of feature in complex financing deals, especially when investors are providing significant capital and strategic support for a new business line.

Management Changes

Corporate Governance

Legal Proceedings

• No actions, suits, inquiries, notices of violation, proceedings, or investigations pending or threatened against the Company or any Subsidiary that would adversely affect the legality, validity, or enforceability of any Transaction Documents or Securities, or that could result in a Material Adverse Effect, other than those disclosed in SEC Documents.

Related Party Transactions

• 3i, LP is the lead investor in the $16,253,147.10 debt financing and a participant in the up to $75,000,000 preferred convertible equity offering.
• 3i, LP acted as the collateral agent for Scorpius Holdings, Inc., from whom Tivic acquired assets.
• 3i, LP was assigned the April 2025 Securities Purchase Agreement from Helena Global Investment Opportunities I Ltd.
• An affiliate of 3i, LP is expected to provide a $50,000,000 equity line of credit to the company.
• A Royalty Agreement will be entered into with the Purchasers (including 3i, LP) for 5% of gross revenue of Velocity Bioworks, Inc. for 10 years.

Stakeholder Impact

• Shareholders: Potential for significant dilution from the conversion of notes and preferred stock, especially if stock price declines. Voting rights on the Exchange Cap and floor price adjustments are critical. Potential for increased value if the strategic acquisition and new CDMO business are successful.
• Employees: 45 new employees hired in connection with the Scorpius asset acquisition, receiving inducement option grants, indicating workforce expansion and retention incentives.
• Customers (of Velocity Bioworks): Will benefit from a new CDMO provider focused on speed, value, and high-quality production, potentially increasing options for biotech companies.
• Creditors (3i, LP): Hold a senior secured convertible note and preferred equity, with preferential rights and security interests in company assets, providing strong protection for their investment.
• Company Management: CEO Jennifer Ernst's role is highlighted as critical ('Key Person Event' clause), indicating her importance to the company's operations and strategic direction.

Next Steps

• Tivic to expand Velocity Bioworks operations to provide CDMO services to other clients.
• Tivic to pursue Biologics License Application (BLA) for Entolimod with the U.S. Food & Drug Administration.
• Tivic to accelerate development for other Entolimod and Entolasta indications (neutropenia, advanced cancer treatments).
• Tivic to hold a special meeting of stockholders as soon as practicable, but no later than 90 days after December 9, 2025, to obtain approval for a waiver of the Exchange Cap and the lowered floor price.
• Tivic to file a registration statement within 15 days to register the shares issuable upon conversion of the Note and exercise of the Warrants, aiming for effectiveness within 45 calendar days (or 60 days if SEC review occurs).
• Second Tranche Closing of Preferred Offering to occur after satisfaction of conditions, including registration statement effectiveness and qualification procedures for acquired facilities.
• Subsequent Tranche Closings of Preferred Offering to occur upon satisfaction of conditions, including volume and price thresholds.
• Company to enter into a Royalty Agreement and ELOC Agreements with Purchasers/affiliates.

Key Dates

Recommendation

The strategic acquisition of CDMO assets and the substantial financing package are positive developments that could significantly enhance Tivic Health's operational capabilities and accelerate its drug development pipeline. The formation of Velocity Bioworks also presents a new revenue stream. However, the financing involves considerable potential for dilution, especially given the variable conversion prices and the need for stockholder approval for the Exchange Cap. The 'as is' nature of the asset purchase and the competitive CDMO market introduce execution risks. While the long-term strategic vision is compelling, the immediate financial implications and execution challenges suggest a 'hold' recommendation, advising investors to monitor the company's progress in integrating the acquisition, securing stockholder approvals, and demonstrating revenue generation from Velocity Bioworks before making further investment decisions.

Keywords

Tivic Health Systems, Velocity Bioworks, Scorpius Holdings, CDMO, Contract Development and Manufacturing Organization, Biologics, Entolimod, Acute Radiation Syndrome, Neutropenia, Oncology, TLR5 agonist, SEC Filing, 8-K, Debt Financing, Convertible Note, Preferred Stock, Warrants, Capital Raise, Stockholder Approval, Dilution, Biologics License Application (BLA), Manufacturing Assets, Private Placement, Nasdaq