Q1 2024 NeuroOne Medical Technologies Corp Earnings Call

Operator: www. NeurooneMedical.com Good day, ladies and gentlemen, and welcome to the Neuroone Medical Technologies Corporation first quarter of fiscal year 2024 financial results conference. Today's call will be conducted by the company's Chief Financial Officer, Ron McClurg. Before I turn the call over to Mr. McClure...

Okay.

Good day, ladies and gentlemen, and welcome to the Neuro one medical Technologies Corporation first quarter of fiscal year 'twenty 'twenty four financial results conference call.

Today's call will be conducted by the company's Chief Financial Officer, Ron declared.

Before I turn the call over to Mr. Mcclurg I'd like to remind you that this conference call will include forward looking statements within the meaning of U S. Federal Securities laws with respect to future operations financial results events trends and performance, which are based on management's beliefs and assumptions as of today's call.

Operator: I'd like to remind you that this conference call will include forward-looking statements within the meaning of U.S. federal securities laws with respect to future operations, financial results, events, trends, and other issues and performance, which are based on management's beliefs and assumptions as of today's call or other specified dates. Forward-looking statements may involve known and unknown risks, uncertainties, and other factors, which may cause actual results to differ materially from those expressed or implied by such... See NeuroOne's financial results press release and SEC filings for information regarding specific risks and uncertainties that could cause actual results. As required by law, NeuroOne undertakes no obligation to update such forward-looking statements. With that, I will turn the call over to Mr. Ron McClurg, CFO Thank you, Operator.

Or other specified date.

Forward looking statements may involve known and unknown risks uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such statements sooner.

The newer ones financial results press release, and SEC filings for information regarding specific risks and uncertainties that could cause actual results to differ.

Except as required by law neuro, one undertakes no obligation to update such forward looking statements with that I will turn the call over to Mr. Ron Clark CFO of Neuro one. Please go ahead Sir.

Thank you operator.

Ron McClurg: Before I begin, I wanted to mention that Dave Rosa, our CEO, had minor surgery which prevented him from being able to present this afternoon, so I will be handling the call. During the first quarter of fiscal 2024, we continued to make significant progress on our objectives relating to commercialization and product development. First, I would like to remind the audience of our recent milestone achievement of receiving FDA clearance for our 1RF ablation system. The first FDA-cleared system with an intended use for both recording electrical activity and ablation of nervous tissue utilizing the same device.

Before I begin I wanted to mention that Dave Russo our CEO had minor surgery, which prevented him from being able to present. This afternoon. So I will be handling the call.

During the first quarter of fiscal 2024, we continued to make significant progress on our objectives relating to commercialization and product development.

First I would like to remind the audience of our recent milestone achievement of receiving FDA clearance for our one RF ablation system.

First FDA cleared system with an intended use for bolts recording the electrical activity and ablation of nervous tissue utilizing the same device as.

Ron McClurg: As previously noted, we submitted a 510K application to the FDA in June 2023 for the 1RF ablation system, and we received 510K clearance from the FDA in December 2023 for the creation of radiofrequency lesions in nervous tissue for functional neurosurgical procedures. We are very excited to be the first to market this novel technology in the United States and are preparing to initiate a limited commercial launch in the second quarter of calendar 2024. We will remain in discussions with potential strategic partners regarding the licensing of the technology for brain ablation, and we expect to reach a decision in the near future regarding our commercialization strategy. We also remain open to commercializing the vice director if we believe it represents the best option for the company, and we are working in parallel on a plan to launch the technology directly. In addition, our team is exploring other applications for the OneRF system to treat pain.

As previously noted we submitted a 500 10-K application to the FDA in June 2023 for the one RF ablation system and we received a five 10-K clearance from the FDA in December of 2023.

Creation of a radio frequency lesions and nervous tissue for functional neuro surgical procedures.

We are very excited to be the first to market. This novel technology in the United States and are preparing to initiate a limited commercial launch in the second quarter of calendar 2024.

We remain in discussions with potential strategic partners regarding the licensing of the technology for brain ablation procedures, and we expect to reach a decision in the near future regarding our commercialization strategy.

We also remain open to commercializing the bice directly if we believe it represents the best option for the company and we are working in parallel.

On a plan to launch the technology directly.

In addition, our team is exploring other applications for the one RF system to treat pain. We believe that there are additional market opportunities for the one RF system that we may be able to address and we will provide further updates in the future.

Ron McClurg: We believe that there are additional market opportunities for the OneRF system that we may be able to address, and we will provide further updates in the future. I would now like to provide an update regarding the expanded launch of our EVO-SEEG electrode product, with our commercialization partner, Zimmer Biomass. Zimmer continued to strategically open new centers during our first fiscal quarter.

I would now like to provide an update regarding the expanded launch of our Evo S. E. G elect drug product line with our commercialization partner Zimmer Biomet.

Zimmer continued to strategically open new centers during our first fiscal quarter.

Ron McClurg: Customer feedback remains positive regarding device performance, and we are seeing usage picking up in recent months. We completed full salesforce training for Zimmer in January 2024, and we expect to see an increase in Evo SEG sales and revenue as the launch expands. We believe the launch of the OneRF system will also have a positive impact on customer demand for the EVO SEG electrode product. Moving on to our drug delivery program, we have discussed the potential for our SEEG electrode technology to deliver drugs or gene therapies to the brain, as well as record the therapy's impact. During the past quarter, we completed feasibility benchtop tests and an animal study demonstrating the ability to deliver therapy and provide recording capabilities using the SEG drug delivery system.

Customer feedback remains positive regarding device performance and we are seeing usage picking up in recent months.

We completed full sales force training for Zimmer in January 2024, and we expect to see an increase in Evo S. E G sales and revenue as the launch expands we.

We believe the launch of the one RF system will also have a positive impact on customer demand for the Evo S. E G electrode product line.

Moving onto our drug delivery programs, we have discussed the potential for our S. E G electrode technology to deliver drugs or gene therapies to the brain as well as record that therapies impact.

During the past quarter, we completed feasibility bench top testing and an animal study demonstrating the ability to deliver a therapy and provide recording capabilities using the S. E G drug delivery system.

Ron McClurg: We are currently in contract discussions with a biotech company regarding their interest in using our device in upcoming clinical studies, and we have had discussions with other potential partners. We are excited about the prospects of this technology and how it may assist the biopharma industry in its drug or gene therapy delivery development, and also its value clinically in current neurosurgical procedures.

We are currently in contract discussions with a biotech company regarding their interest in using our device in upcoming clinical studies and have had discussions with other potential partners.

We are excited with the prospects of this test technology and how it may assist the biopharma industry and their drug or gene therapy delivery development.

And also its value clinically in current neurosurgical procedures.

Ron McClurg: If we are able to reach an agreement in our current contract negotiation... Technology has the potential to add revenue later in calendar year 2020. Development efforts with our Spinal Cord Stimulation Program to treat chronic back pain continued in our first quarter as members of our Physician Advisory Board successfully placed a 9 millimeter paddle electrode, utilizing a percutaneous placement approach in a cadaver model. Paddle electrodes are similar in concept to cortical or film electrodes. In addition, we completed a preclinical study of the first acute electrophysiology experiment with Neuroone's lead in a sheet model.

If we are able to reach an agreement in our current contract negotiations. The technology has the potential to add revenue later in calendar year 2024.

Development efforts with our spinal cord stimulation program to treat chronic back pain continued in our first quarter as members of our physician Advisory Board successfully placed a nine millimeter paddle electrode utilizing a percutaneous placement approach in it can they ever model paddle electrodes are.

Similar in concept to cortical or film electrodes.

In addition, we completed a preclinical study of the first acute electrophysiology experiment with narrow ones lead in a sheep model.

Spinal cord stimulation and pain management remain a priority given the size of the market opportunity and the potential competitive advantages of our technology.

Ron McClurg: Spinal cord stimulation and pain management remain a priority given the size of the market opportunity and the potential competitive advantages of our technology. I would now like to provide a review of our first quarter fiscal year 2024 financial results. The company had no collaboration revenue in the first quarter of fiscal 24 compared to collaboration revenue of $1,455,000 in the first quarter of fiscal 2023. Collaboration revenue in 2023 was derived from Zimmer Development, and represents the portion of the exclusivity and milestone fee payments that were eligible for revenue recognition during the period. Total operating expenses in the first quarter of fiscal 2024 were $3.7 million, compared to $3.2 million in the first quarter of fiscal 2022. R&D expense in the first quarter of fiscal 2024 was $1.5 million, compared with $1.6 million in the same period of fiscal 2020. SG&A expense in the first quarter of fiscal 24 was $2.2 million compared to $1.7 million in the first quarter of fiscal 2020. The net loss was $3.3 million for the first quarter of fiscal 2024 compared to a net loss of $1.7 million in the first quarter of fiscal 2022.

I would now like to provide a review of our first quarter fiscal year 'twenty 'twenty four financial results.

Product revenue was 978000 in the first quarter of fiscal 2024 compared to product revenue of 115000 in the first quarter of fiscal 2023.

The company had no collaboration revenue in the first quarter of fiscal 'twenty four compared to collaboration revenue of <unk>.

1.455 million in the first quarter of fiscal 2023.

Collaboration revenue in 2023 was derived from the Zimmer development agreement and represents the portion of the exclusivity and milestone payments that were eligible for revenue recognition during the period.

Total operating expenses in the first quarter of fiscal 2024 were $3 7 million compared to $3 2 million in the first quarter of fiscal 2023.

R&D expense in the first quarter of fiscal 'twenty, four was $1 5 million compared with $1 6 million in the same period of fiscal 2023.

SG&A expense in the first quarter of fiscal 'twenty, four was $2 2 million compared to $1 7 million in the first quarter of fiscal 2023.

The net loss was $3 3 million for the first quarter of fiscal 2024 compared to a net loss of $1 7 million in the first quarter of fiscal 2023.

Ron McClurg: In December of 2023, the company sold common stock under the ATM offering at an average price of $1.45 per share and received net proceeds of $1.2 million. As of December 31st, 2023, the company had cash, cash equivalents, and short-term investments of $2.7 million compared to $5.3 million as of September 30th, 2023, our previous fiscal year. The company had working capital of $3.7 million as of December 31st, 2023, compared to working capital of $5.5 million as of September 30th, 2020. The company had no debt outstanding as of December 31st, 2023.

In December of 2023, the company sold common stock under the ATM offering at an average price of $1 45 per share and received net proceeds of 1.2 million.

As of December 31, 2023, the company had cash cash equivalents and short term investments of $2 7 million compared to $5 3 million as of September 30th 2023, our previous fiscal year end.

The company had working capital of $3 7 million as of December 31st 2023, compared to working capital of $5 5 million as of September 32023.

The company had no debt outstanding as of December 31st 2023.

Operator: Subsequent to the end of the first quarter in January of 2024, the company sold additional common stock under the ATM offering at an average price of $1.46 per share and received net proceeds of $1.54 million. Operator, at this time, I think we can open up for questions. Absolutely. Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.

Subsequent to the end of the first quarter in January of 'twenty 'twenty four the company sold additional common stock under the ATM offering at an average price of $1 46 per share and received net proceeds of 1.54 million.

Operator at this time I think we can open up for questions.

Absolutely. Thank you.

This time, we will be conducting a question and answer session.

If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment. Please while we poll for questions. Once again. Please press star one if you have a question.

Operator: One moment, please, while we poll for questions. Once again, please press star one if you have a question or comment. The first question comes from Alex Nolik with Craig Hallam.

Our comment.

The first question comes from Alex Nowak with Craig Hallum. Please proceed.

Alex Nolik: Please proceed. Hey, good afternoon. This is Connor on behalf of Alex.

Hey, good afternoon. This is connor on for Alex Thanks for taking my questions could you maybe speak on the the RF generator parts I know last quarter. You mentioned that was one of the hold ups in getting some of these systems place any update on that would be great.

Ron McClurg: Thanks for taking my question. Could you maybe speak on the RF generator parts? I know last quarter you mentioned that was one of the hold-ups in getting some of these systems in place. Any update on that would be great. One of the things we may have mentioned in the past was that there were some long lead time components and that was the gating factor for us in terms of when we could launch a limited release of the device, and we've got those components on order. We are expecting to receive our first units of the hardware, the RF generator itself, by the end of March, and so we're looking at beginning a very limited launch of the product in the second calendar quarter Gotcha. And then maybe can you speak on any initial impact on Evo SEEG sales following the one RF approval? I know you mentioned a step up, and then maybe when can we start seeing XMR fully launch Evo, or are there any barriers preventing this full launch?

Oh, one of the I think what we May have mentioned in the past was that.

There was some long lead time components and that was.

The gating factor for us in terms of when we could launch a limited release of the of the device.

And we've got those.

<unk> on order, we are expecting to receive our first units of the hardware. The RF generator itself by the end of March and so we're looking at a bigger.

Beginning in a very limited.

Launch of the product in the second calendar quarter of this year.

Gotcha, and then maybe can you speak on any initial impact on Evo S. E. T sales following the one arf approval I know you mentioned a step up and then maybe when can we start seeing a zimmer to fully start launching evo or is there any barriers preventing this full launch.

Ron McClurg: There are no barriers at this time that are preventing the full launch, other than when we initiated the limited launch; we only trained a portion of their sales force. So, as I mentioned during the call, in January, so just last month, we attended their national sales meeting and trained their full distribution network, including distributors and direct employees. And one of the things that, you know, is kind of gating the rollout is their approval by the Value Analysis Committee at each of the hospitals. So that is underway right now. They've got a targeted launch. They're trying to do this in a methodical manner and continue to add new accounts as we go forward. Great, and then one more here. Could you speak about the progress on, maybe, a potential partnership? Could this be within the year time span less or more?

There are no barriers at this time that are preventing the full watch there other than.

When we initiated the limited launch we only trained a portion of their sales force. So as I mentioned during the call.

In January so just last month, we attended their national sales meeting and trained their full distribution network.

Adding distributors and direct employees and one one of the things that are you know.

It's kind of gating the rollout is there.

Approval by the value analysis committees at each of the hospitals. So that is underway right now they've got a targeted launch they're trying to do this in a methodical manner and continue to add new accounts as we go forward.

Great and then one more here could you speak towards the progress on maybe a potential partnership could this be a within the year time span less or more I know you mentioned direct as well.

Ron McClurg: I know you mentioned direct as well. Well, we are in discussions right now with a couple of potential strategic partners, and, you know, if those come to fruition, we will then distribute the RF Applications, the one RF ablation system through that distributor. If we do not get terms that are favorable or acceptable to the company, we are prepared to go and start distribution on our own. And that's what I meant when I said, we kind of have a dual path right now that we are operating under so that we don't delay, regardless of which direction. We do want to decide...

While we are we are in discussions right now.

With a couple of strategic potential strategic partners.

And you know we would.

If those come to fruition, we will then distribute the RF.

Oblations.

But the one hour ablation system through that distributor if we do not get terms that are favorable or accept the bulk of the company.

We are prepared to go and start distribution on our own and that's what I meant when I said, we are kind of they have a dual paths right now that we were operating under so that we don't delay regardless of which direction. We go.

We don't want today for digestion.

Yes, we do want to make that decision before we.

Ron McClurg: Yes, we do want to make that decision before we proceed with the limited launch, so we should have that decision made here in the near term. Gotcha. Great. Thank you. Thank you, Connor. Okay, we have no further questions in queue. I will now turn the call back over to management for any closing remarks. Yes, thank you, operator. I would just like to say that the company is making great progress toward our goals for fiscal 2022. We're excited by the FDA clearance of the 1RF ablation system and pleased with the expansion of Zimmer Biomed's launch of the Evo SEG electrode and the related increase in revenue. We continue to make progress on our drug delivery program and our spinal cord stimulation program intended to treat chronic back pain. Altogether, we believe Neuroone has the potential to generate revenue in 2024 beyond just SEGC, with contributions coming from the OneRF commercial launch and potential drug delivery partners.

Proceed with the limited launch so we should have that decision made here in the in the near term.

Gotcha, great. Thank you.

Thank you Connor.

Okay. We have no further questions in queue I will now turn the call back over to management.

For any closing remarks.

Okay.

Yes, thank you operator.

I'd just like to say that the company is making great progress toward our goals for fiscal 2024.

We're excited by the FDA clearance of the one RF ablation system and pleased with the expansion of Zimmer Biomet launch of the Evo S E G electrodes and the related increase in revenue.

We continue to make progress on our drug delivery program and our spinal cord stimulation program intended to treat chronic back pain altogether.

Altogether, we believe neuro one has the potential to add revenue in 2024 beyond just S. E T sales with contributions coming from the one hour after commercial launch and potential drug delivery partnerships. We hope you will continue to follow our exciting progress. Thank you.

Ron McClurg: We hope you will continue to follow our exciting progress. Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

This concludes today's conference and you may disconnect your lines at this time.

Are you for your participation.