ElectroCore Update: Truvaga Product Review and Earnings Update

Please view the disclaimer at the bottom of this post

First, I’d like to start off this post by discussing that my Fund and I own ElectroCore stock ($ECOR). ElectroCore is the parent company that owns the Truvaga brand and sells the Truvaga devices.

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I would also like to clarify that I am not a Doctor, Medical Professional, or an expert in Vagus Nerve Stimulation (VNS). The effects I describe here could be placebo and it is not an official medical study.

You can click the following link to go to view my initial post on ElectroCore:

ElectroCore ($ECOR): Amazing Product meets Amazing Management

Truvaga Overview

I figured now was a great time to do a review since Truvaga is having their Black Friday sale (https://www.truvaga.com/product/truvaga-plus/). The device I will be reviewing is their Truvaga Plus model which I believe could be a huge driving force for the company going forward.

Truvaga is currently sold and marketed as a general wellness device designed to stimulate the vagus nerve, aiming to reduce stress, enhance sleep, and improve mental clarity. Unlike gammaCore (the company’s prescription device) it is not FDA approved to treat a specific illness and it is not covered by insurance.

Truvaga is essentially the same exact device and technology as gammaCore except I believe it is 20v for Truvaga vs 24v for gammaCore. The difference in the way these devices operate, as the CEO of ElectroCore describes it, is that when you go to the store you can buy 200mgs of ibuprofen and take as much as you feel you need vs if you sprain your ankle and go to the doctor you get a prescription that is 800mgs and it is covered by insurance. In this scenario Truvaga is the 200mgs of ibuprofen that you can buy over the counter and take it whenever you need it (or however much you need it) but it is not prescribed or covered by insurance.

It is also NOT a tens device which provides a square wave that doesn’t penetrate as deeply whereas Truvaga/gammaCore provide a modified sine wave that goes much deeper to target stimulation of the vagus nerve.

Product Review

It has been a month since I first did a write-up on ElectroCore and one of my readers liked the device so much they actually bought it for me and my fiancee. So, to that end I thought it was to appropriate to write-up a product review.

First my fiancee was able to find her vagus nerve extremely easily but I had a bit of a harder time. It took me about 4 days of use to consistently hit the vagus nerve. I reached out to customer support after the second day of inconsistent use and they were fantastic to use (most individuals usually feel a tingling sensation and a pull at the side of their lip, that’s how you know you’re hitting the nerve).

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Lets go with the things that we noticed after using the device for 30 days:

I would also like to clarify, again, that I am not a Doctor, Medical Professional, or an expert in Vagus Nerve Stimulation (VNS). The effects I describe here could be placebo and it is not an official medical study:

• The number one thing that I noticed is hugely reduced “brain fog” especially if I am tired. There have been two days in the past month where I have gotten sub 4 hours of sleep, and while I still felt tired, I was able to focus incredibly well and still accomplish a lot. This lines up with the sleep deprivation studies done by the Air Force (https://www.tac-stim.com/) and independent studies that describe the improvement in focusing (https://www.nature.com/articles/s41598-024-68015-4.pdf).

• My fiancee is currently studying for the national Veterinarian exam (NAVLE) and was extremely anxious about studying causing her to procrastinate. It has been a noticeable difference in how motivated she has been in studying and how productive her sessions have been. Now every study session she uses the device for 4min-6min.

• My fiancee has been experiencing backpain which was drastically reduced upon using the device. This could be due to the impact on reduced inflammation that VNS provides. Could also just be placebo.

• When upset or angry there is a quick return to normalcy. So it drastically reduced our mood swings while not making us feel like we are “numb” or something to that effect. When used before stressful situations such as a meeting/event it was able to cause a calming effect. Although you still feel emotional swings like you normally would, it is quick to move back to normal levels.

• It helped reduced my OCD symptoms which have already been drastically reduced but I still felt a difference in my ability to stop compulsions. This is most likely for the same reason that VNS impacts depression (https://pmc.ncbi.nlm.nih.gov/articles/PMC2990624/) and PTSD (along with other severe anxiety disorders) (https://www.sciencedirect.com/science/article/pii/S2666915321001165?via%3Dihub).

Overall Rating: I would give this device a 9/10 and my fiancee gave it an 8/10. We both said that once she graduates I’ll probably get a separate device for myself and we both could see ourselves getting this as a gift for friends and family. We didn’t notice any negative except my fiancee’s neck would get a bit sore so she turned down the amount and that fixed the issue. There were a few times I would use this more than the recommended 2min twice a day (never more than 6min at once and never more than 10min a day). The website says you can use the device up to 24 times in a day but it recommends twice a day. The app is super easy to use.

Other subtle benefits to Vagus Nerve Stimulation (studies could use implanted or transdermal devices)

Other reasons I feel compelled to keep using the device is that there is a ton of evidence based science that shows VNS helps with thing that I would not be able to actively notice. It’s ability to improve learning/memory (https://www.sciencedirect.com/science/article/abs/pii/S0165032723008625 and https://www.nature.com/articles/s42003-021-02145-7) by encouraging microglia to increase neural activity (by reducing inflammation). There is a very strong likelihood it helps with athletic performance due to it’s ability to help in repairing muscle and reducing inflammation (https://pmc.ncbi.nlm.nih.gov/articles/PMC10726880/). Also prevention of diseases/injuries like:

• Alzheimers (https://www.frontiersin.org/journals/human-neuroscience/articles/10.3389/fnhum.2022.866434/full)

• Parkinsons (https://www.nature.com/articles/s41531-021-00190-x)

• Obesity (https://pmc.ncbi.nlm.nih.gov/articles/PMC5063945/)

• Addiction (https://pmc.ncbi.nlm.nih.gov/articles/PMC10699253/)

• Concussions (https://pmc.ncbi.nlm.nih.gov/articles/PMC4568744/)

• Strokes (https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(21)00475-X/abstract)

• Headaches/Migraines (gammaCore is currently FDA approved for treatment and prevention of Cluster Headaches and Migraines)

The best part about Vagus Nerve Stimulation is that it can essentially be used in conjuction with other treatments for almost all of this.

Truvaga Going Forward

Obviously sales are skyrocketing for Truvaga (100%+) and gammaCore (which is still growing at 50%-70%) could see a similar thing in 2-3 years if they get approved indications for Parkinsons, PTSD, and strokes.

The biggest thing stopping Truvaga from continuing to expand is the education of consumers on how great Vagus Nerve Stimulation is and how low the risks/side effects are (the average person most likely thinks this is just snakeoil). This is very obviously the biggest pain point and Dan (CEO of electrocore) is aware of this.

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At a dinner at LD Micro, I told Dan I felt like the company needed to do more to get out the benefits of Vagus Nerve Stimulation on the Truvaga website. In just a couple of weeks that change has already been made and the following now pops up on the Truvaga website (https://www.truvaga.com/vagus-nerve-science/):

Working with trusted sources such as physicians/dieticians/therapists/etc. is most likely a great way to begin to get this device out there and build both education along with trust. I would love to see a build out in that direction as well.

The company got huge surprising news when it was announced that Womens World and Mens Health released massive statements lauding the device. This could have a huge impact going into the Holiday season. Truvaga and TAC-STIM are barely priced into the stock price at all because frankly, no one has any idea what the overall business impact will be. It will obviously be lumpier but the TAM is much larger and who knows what the CAC is to educate individuals on this science. Over the next year or two as we figure out the velocity of those two devices, we will receive much more clarity and the stock price will reflect those changes.

ElectroCore Earnings Summary

Below I summarized my initial summary of Earnings and a call I had with Dan $ECOR:

• First number that jumped out to me was net loss (compensating for stock options) was $2.8m which is nearly half the loss from last year and we’re really starting to see the operating leverage take hold and hopefully turn profitable in a couple quarters.

• Revenue growth continues to stay extremely strong with 63% growth of Truvaga and gammaCore compared with Q3 2023 (79% growth when comparing ytd). Truvaga continued to accelerate at 147% growth compared to Q3 last year. gammaCore is moving at 75% growth in the VA as well. (just insane numbers)

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• Overall growth seems slow at first glance (45% compared to Q3) but is mainly due to the lumpiness of TAC-STIM which investors should look at as an unpredictable bonus to the underlying business growth. Overall 2024 has been a slow year for TAC-STIM and I’m sure investors will be questioning into that on the call but really it’s out of their control. Obviously I hope we see more TAC-STIM sales but it’s just a cherry on top to an incredible underlying business.

• Struggles in getting their foot in the door into Kaiser has been both management caused (due to poor incentive structure for sales, which has been addressed) and just part of the process of building up momentum again.

• Expect probably somewhere between 50%-75% growth in the VA next year for gammaCore.

• Growth could increase based on indications but that is not currently modeled and we are more likely to see the sales impacts of new indications (PTSD, Addiction, Parkinson’s, etc.) hit sometime after 2026 since it takes about 6 months after trial for a label expansion then sales are always slower getting off the ground than the company likes.

• Military is working on a streamlined method of pushing TAC-STIM which will make their sales much more consistent but takes about 2 years so this won't hit until about 2027. In the meantime expect sales to be very lumpy.

• This is their first time really spending money on Google Ads and they didn't realize they were competing against the Political Cycle so this caused marketing costs to be slightly elevated on Truvaga Plus spending.

• Truvaga should be able to hold the mid 80% margins.

• Truvaga sales are hard to predict especially with this being their first holiday cycle with Truvaga Plus and the unexpected announcements from Men’s Health and Women’s World lauding the device.

Disclaimer: The author of this idea and his Fund have a position in securities discussed at the time of posting and may trade in and out of this position without informing the reader.

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