Q4 2024 NeuroOne Medical Technologies Corp Earnings Call

Affected by the company's Chief Executive Officer, Dave Rosa and Ron Mcclurg, the Companys Chief Financial Officer.

Chris Volcker, the company's Chief operating officer will also be in attendance.

Speaker Change: Before I turn the call over to Mr. Rosa 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 <unk>.

Speaker Change: Today's call or other specified date.

Speaker Change: 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.

Speaker Change: See neuro 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.

Speaker Change: With that I will turn the call over to Mr. Dave Rosa CEO of Neuro one. Please go ahead Sir.

Speaker Change: Okay.

Speaker Change: Thanks, operator, and good morning to everyone.

Our fiscal full fiscal fourth quarter and through today, we have continued to execute our plan and accomplished key milestones regarding commercialization.

Speaker Change: Development and financial objectives.

Speaker Change: In 2024, our top priorities were to pursue a five 10-K clearance from the FDA to market. Our one hour one RF ablation system and to secure a strategic partnership for distribution.

Speaker Change: There was risk associated with the 500 10-K.

Speaker Change: There were no other devices with such a clearance we successfully achieved this objective as well as securing a strategic partnership to distribute the system.

Speaker Change: We are proud that the one RF ablation system is the first and only FDA cleared system with an intended use for both reporting electrical activity and ablation of nervous tissue utilizing the same device.

Speaker Change: Our recent announcement regarding the extension of the partnership with Zimmer Biomet provides a broad distribution network for both the U S and certain U S geographies.

In addition, neuro <unk> received an upfront license payment of $3 million and the potential to earn an additional milestone payment if certain performance criteria are achieved.

Speaker Change: We expect the expanded partnership to boost neuro, one sales and to drive improved profitability.

Speaker Change: With that confidence we are excited to provide guidance for fiscal year 2025 for revenue of $8 million to $10 million, representing revenue growth of 132% to 190% over 2024.

Speaker Change: We are also protect projecting gross margins for fiscal year 2025 to range between 47% and 51% compared to gross margins of 31% in 2024.

Speaker Change: We are very happy to report to be reporting strong annual revenue growth in fiscal 2024, and expect our revenue growth and margin improvement to accelerate in 2025.

We have also been able to strengthen our balance sheet with a $3 million license payment from Zimmer biomet.

Speaker Change: Along with the improved product gross margins from the expanded Zimmer biomet partnership as well as the $2 $65 million private placement completed in August.

Speaker Change: Regarding the launch of the one RF ablation system, we have been working very closely with the Zimmer biomet team to initiate commercialization activities, including initial product shipments and training of Zimmer Biomet personnel.

Speaker Change: Physician interest has been very strong including during the product exhibition at the American Epilepsy Society meeting last week.

Speaker Change: We are also very happy to report that one RF ablation procedures have now been completed and 12 patients and to date all patients are either seizure free or have had a significant reduction in seizure occurrence and less severe seizures. After the one RF ablation procedure.

Speaker Change: We continue to be overwhelmed with the initial results and have now performed more than 150, RF ablation on 12 patients and five centers during our initial limited launch.

Speaker Change: To date 24 epilepsy centers have requested proposals to acquire the technology, which doubled from last quarter and we continue to receive strong interest from neurosurgeons and neurologists regarding the technology.

Speaker Change: We are also happy to report that the new ICD 10, Pcs code granted by CMS for the one RF ablation procedure became became effective October one 2024 and will allow hospitals to report inpatient procedures that are performed using the one RF ablation system.

This will serve to support accurate data collection and processing of reimbursement claims by hospitals for the procedure.

Speaker Change: Turning to our product development programs I am excited to announce that we are pursuing additional applications for RF ablation outside of the brain.

Speaker Change: Our next FDA submission will target patients with debilitating facial pain also known as trigeminal neuralgia.

Trigeminal nerve is located in the face with one nerve on each side of the face trigeminal Neuralgia is also a chronic pain condition and is characterized by severe sudden and recurrent facial pain with over 150000 patients diagnosed each year in the United States, We expect.

Speaker Change: Spec to submit our 500 10-K application to the FDA in the first half of calendar year 2025, with the potential to contribute to revenue in calendar year 2025 that is not currently factored in to our 2025 revenue plan or revenue guidance.

We remain convinced that the one RF ablation system can serve as a platform technology for additional indications such as RF ablation for lower back pain and knee pain among others.

Speaker Change: We believe that having multiple indications for one RF ablation system provides competitive differentiation compare it to a single function system and will offer added value to hospitals and physicians, which can be a consideration in hospital purchasing decisions.

Speaker Change: I would also like to provide updates on our product development programs.

Speaker Change: In our thin to electrode platform technology for spinal cord stimulation and drug delivery.

Speaker Change: With regard to our percutaneous paddle lead program for use in spinal cord stimulation, we have successfully optimized the percutaneous delivery of our paddle lead system by incorporating <unk> capabilities for reliable deployment.

Preclinical studies performed by renowned pain specialists have confirm that our electrode can be implanted percutaneous Lee and less than five minutes.

Speaker Change: They also noted that our percutaneous paddle electrode has the benefits of being up to 20 times thinner, while providing broad therapeutic coverage similar to what is provided by traditional electrodes, but without requiring more invasive invasive surgical implant techniques.

Speaker Change: Based on the strong feedback from our advisory Board.

We initiated discussions with potential strategic partners under actively exploring partnerships for this technology.

Speaker Change: This technology is another Great example of our novel thin film technology that can be applied for multiple indications, including not only back and neck pain, but also for other potential peripheral pain applications.

We are also making significant progress with our <unk> based drug delivery program, which leverages, the small size and easy implantation of our commercially available <unk> devices.

Speaker Change: We are confident that we can deliver a smaller device than competitors, while providing a larger internal diameter that does not require the use of real time, MRI replacement, which is very costly and time consuming.

Going forward, we will be preparing a 510 application for <unk> based drug delivery as well as developing a miniaturized device for use in preclinical research.

Speaker Change: We believe that neuro ones SCG based drug delivery technology with multi functionality is uniquely capable to provide physicians and researchers with neurological reporting data before during and after directly delivering in the brain a therapeutic agent such as gene therapies.

Speaker Change: Stem cell therapies, and other biopharmaceutical therapies for the treatment of neurological disorders.

Speaker Change: Finally, we intend to continue active actively monitoring the closing bid price for our common stock.

Speaker Change: Now in January 7th 2025, and we will consider all available options to resolve the deficiency and regained compliance with nasdaq's minimum bid price requirement.

Speaker Change: I would now like to turn the call over to Ron Mcclurg to provide a review of our fiscal fourth quarter and full fiscal year 2024 financial results.

Thanks, Dave.

Ron McClurg: Product revenue was <unk> 3 million in the fourth quarter of fiscal 2024 compared to <unk> 7 million in the prior year fourth quarter.

Ron McClurg: The reduction in product revenue in the fourth quarter of fiscal 2024 was due to the companys cancellation of a Zimmer biomet purchase order in order to transition our manufacturing to the new one RF product line.

Ron McClurg: Product revenue increased 77% to $3 5 million in fiscal year 'twenty four.

Ron McClurg: Compared to 2 million in fiscal year 2023.

Ron McClurg: The company also had collaboration revenue of $1 5 million in fiscal 2023, which was derived from the Zimmer development agreement and represents the portion of the exclusivity and milestone fee payments that were eligible for revenue recognition during fiscal year 2023.

Ron McClurg: Our total operating expenses decreased 12% to $3 million in the fourth quarter and fiscal year 2024, compared to $3 4 million in the prior year fourth quarter.

Ron McClurg: Total operating expenses decreased 6% to $13 million in the full fiscal year 2024, compared to $13 9 million in fiscal year 2023.

Ron McClurg: R&D expense increased decreased excuse me, 39% to $1 1 million in the fourth quarter of fiscal 'twenty, four compared to $1 8 million in the prior year fourth quarter.

R&D expense decreased by 27% to $5 1 million for the full fiscal year 2024.

Ron McClurg: Compared to $6 9 million in fiscal year 2023.

Ron McClurg: Selling general and administrative expense or SG&A was $1 8 million in the fourth quarter of fiscal 2024 compared to $1 6 million in the prior year fourth quarter.

Ron McClurg: SG&A expense was $7 9 million in fiscal year 2024, compared to $6 9 million for the full fiscal year 2023.

Ron McClurg: Our net loss was $3 3 million for the fourth quarter and fiscal 'twenty four compared to a net loss of $3 1 million in the same period prior year fourth quarter.

Ron McClurg: Our net loss for the full fiscal year 2024 was $12 3 million compared to a net loss of $11 9 million in fiscal 2023.

Ron McClurg: In the fourth quarter of fiscal 2024, the company completed a $2 $65 million private placement of its common stock and entered into a $3 million and by secured credit facility agreement.

Ron McClurg: As of September 32024, the company had cash and cash equivalents of $1 5 million compared to $5 3 million as of September 32023.

Ron McClurg: The company had working capital of $2 4 million as of September 30th.

Ron McClurg: <unk> 24, compared to working capital of $5 5 million as of September 32023.

Company had no debt outstanding as of September 32024.

Ron McClurg: Following receipt of the $3 million payment from Zimmer Biomet in November of 2024, the company terminated the $3 million standby secured credit facility agreement.

Ron McClurg: Dave mentioned before we are providing full fiscal year 2025 financial guidance. The company expects product revenue for fiscal year, 2025% range between $8 million and $10 million, representing an increase of between 132% and 190% when compared to the <unk>.

Ron McClurg: Revenue of $3 5 million in fiscal year 2024.

Ron McClurg: The company expects product gross margin in fiscal year 2025 to range between 47% and 51% compared to product gross margins of 31% in fiscal year 2024.

I would like now like to turn the floor back to Dave Rosa for closing remarks.

Dave Rosa: Thank you Ron.

Dave Rosa: In closing we are very happy with the progress made in fiscal 2024 and are looking forward to driving accelerated revenue growth and margin improvement in 2025.

Dave Rosa: We now have clear near term growth drivers as well as a strong product pipeline leveraging our novel platform technology.

Dave Rosa: In the near term, we are well positioned to drive meaningful revenue growth and margin improvement, having just completed the first shipments to Zimmer biomet of the one RF ablation system, the first and only FDA cleared device for RF ablation in the brain we.

Dave Rosa: We also expect our trigeminal nerve indications to be commercialized potentially in calendar year 2025, and we are continuing to make progress on product development miles milestones and potential strategic partnerships for our drug delivery and spinal cord stimulation programs.

Dave Rosa: I would like to thank everyone for attending the call and look forward to updating you on our progress next quarter.

Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.