Q4 2024 NeuroPace Inc Earnings Call
Greetings and welcome to the neuro pace fourth quarter 2024 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce Jeremy Feffer with lifestyle advisors. Please go ahead.
Speaker Change: Good afternoon. Thank you for joining us for your piece this fourth quarter and full year 2024 financial and operating results conference call.
Joel Becker: This call, we will hear from Joel Becker, Chief Executive Officer, Rebecca Kujawa, Chief Financial Officer.
Joel Becker: Earlier today Neuropace released financial results for the fourth quarter and year ended December 31, 2024, and a copy of the press release is available on the company's website at Neuropace Dot com.
Speaker Change: Before we begin I would like to remind you that throughout this call. We will make statements that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 any statements made during this call that relate to expectations or predictions of future events results or performance.
Joel Becker: Our forward looking statements.
Joel Becker: All forward looking statements, including those around neuro pieces projections business opportunities commercial expansion market conditions clinical trials and those relating to our operating trends and future financial performance expense management estimates of market opportunity and forecast of market and revenue growth are based on current estimates and various assumptions.
Joel Becker: These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those implied by these forward looking statements.
Joel Becker: Accordingly, you should not place undue reliance on these statements.
Joel Becker: For more detailed descriptions of the risks and uncertainties associated with our business. Please refer to the risk factors sections of our public filings with the SEC, including our recent quarterly reports on Form 10-Q annual report on Form 10-K for the year ended December 31, 2024 to be filed with the SEC and any other reports that we may file with the.
Joel Becker: So you see in the future. This conference call contains time sensitive information, which we believe is accurate only as of this live broadcast on March four 2025, Neuropace disclaims any intention or obligation except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or.
Joel Becker: Otherwise.
Speaker Change: With that I will now turn the call over to neuro paces, Chief Executive Officer, Joel Becker Joel.
Speaker Change: Thank you Jeremy and good afternoon, everyone.
Speaker Change: I will start out today's call by reviewing our performance in the fourth quarter as well as providing additional insights around our key business priorities for 2025.
Speaker Change: Before turning the call over to our CFO Rebecca could to present, the details of our financial performance for the quarter and year ended December 31, 2024, which.
Speaker Change: Which will be followed by a Q&A session, let's get started.
Speaker Change: 2024 was a tremendous year for the neuro piece team.
Speaker Change: As we delivered on several initiatives across our business.
Speaker Change: As a result, we grew total revenue in 2024 by 22% to $79 $9 million compared to $65 $4 million last year with contributions from sales of the rns system and Dixie Medical S. E G products.
Speaker Change: The momentum in our business continued to rise steadily throughout the year and we reported record quarterly revenue in the fourth quarter.
Speaker Change: In addition, I'm very proud of our team's ability to consistently deliver this topline growth while also effectively managing our gross and operating margins.
Speaker Change: Our forward looking growth plans are focused on our three part strategy of expanding adoption and utilization within level for comprehensive epilepsy centers.
Speaker Change: Expanding site of service delivery with project care and expanding the indications for use for the rns system.
Speaker Change: This strategy is designed to drive our near and medium term growth plans across existing and new groups with clinicians as well as patients and the large total addressable market in the U S.
Speaker Change: The first part of our strategy focused on increasing adoption and utilization of wireless systems and local four centers resulted in increasing the number of active prescribers of <unk> therapy to record levels in 'twenty 'twenty four and much of the rns sales grow.
Speaker Change: Our core market opportunity within the level for comprehensive epilepsy centers is estimated at approximately $2 billion annually.
Speaker Change: We also made good progress throughout 2020 for unexplained in access to Ernest therapy outside the local foresee he sees.
Speaker Change: We refer to this as the project care program.
Speaker Change: The pilot program under this initiative was launched in early 'twenty 'twenty four as we progressed throughout the year, we began to see an increase in the number of implants and referrals, both the referrals and implant procedures began making a meaningful contribution to our revenue growth during the second half of 'twenty 'twenty four positive.
Speaker Change: Early trend for this program.
Speaker Change: We are executing these growth initiatives with financial discipline and have demonstrated gross margin improvement as well as efficient operating expense allocation, including investing in our organization with a focus on our commercial team.
Speaker Change: The focus on these levers was demonstrated in 2024 by generating greater than 20% topline growth, while increasing operating expenses by only 7% and maintaining gross margins.
Speaker Change: However, these activities are just part of our long range plan to drive growth.
Speaker Change: As we presented at our Investor Day in January we are also advancing a number of key development programs across our clinical product and market development initiatives.
Speaker Change: With regard to clinical development, we've made good progress across three key programs our post approval study.
Speaker Change: And the novelist idiopathic general H D. R E and pediatric vocal D. R E indication expansion studies.
Speaker Change: We recently announced positive three year safety and effectiveness data from our ongoing five year prospective post approval study of the rns system.
Speaker Change: Which is the largest prospective study in neuromodulation for adults with drug resistant focal epilepsy.
Speaker Change: This strong data showed unmatched seizure control with lasting impact.
Speaker Change: Patients experienced rapid seizure reduction long term relief and 42.5 per cent of patient in the study experienced periods of seizure freedom for six months or more.
Speaker Change: These data are a great addition to the rns system safety and efficacy profile and we can't wait to see the study data presented at AAN April 5th through the night 2025.
Speaker Change: Moving to our ongoing Nautilus pivotal study, which I know everyone is really looking forward to seeing the top line data in the coming months.
Speaker Change: As the first and only pivotal clinical study to evaluate neuromodulation therapy in the idiopathic generalized epilepsy or a G E population.
Speaker Change: Successful and supports regulatory approval it would make me R&M system. The first device based therapy with an approved indication for idiopathic generalized epilepsy.
Speaker Change: In addition, this patient segment has the potential to have more ready access to rns.
Speaker Change: And that they do not require face to invasive monitoring and would be able to proceed to rns system therapy faster.
Speaker Change: Following a noninvasive diagnostic process that could be performed both within and outside of C. He sees.
Speaker Change: In terms of the status of the study we expect the primary end point safety and effectiveness evaluations to be performed following the completion of one year follow up visits later this month.
Speaker Change: We will then plan to proceed with data readout and the F. D. A submission in the second half of 2025.
Speaker Change: As also discussed in detail at our Investor Day, we are working on a pediatric indication for the <unk> system as well with the F D. A and an organization called the National evaluation system for health care technology or nest and organization focused on the use of real world data to expand indications for you.
Speaker Change: <unk>.
Speaker Change: Particularly to underserved populations.
Speaker Change: We believe <unk> therapy for pediatric patients with drug resistant focal epilepsy is a great candidate for this program.
Speaker Change: We are well underway on this initiative and are also working with the pediatric epilepsy research consortium or PERC.
Speaker Change: Gathering and extensive set of data from a database, we found with children treated with rns therapy across 27 pediatric epilepsy centers.
Speaker Change: And more than 25 peer reviewed publications about rns system use in pediatrics.
Speaker Change: These data had been the topic of several meetings with FDA to discuss how we can use all of these data sources to support an expansion in our indication for use.
Speaker Change: In addition, we have the support of several advocacy groups, calling for this review.
Speaker Change: We believe that we are making good progress towards the attainment of the official nest mark of approval.
Speaker Change: If this is the result, it would mean that the FDA has agreed in principle that the data is available to develop and support a full study protocol and they will accept that is sufficient.
Speaker Change: We would then pro forma data analysis, along with Neste following the protocol and provide that data to F. D. A.
Speaker Change: We also plan to submit these data to the F D. A in the second half of this year.
Speaker Change: Moving to our product development programs and our annual cadence of product releases with AI enabled software tools remote programming and our next generation platform to enable efficiency ease of use.
Speaker Change: And increased efficacy for the platform.
Speaker Change: As we continue to gather more and more data from an ever growing population of patients. We saw an exciting opportunity to use new cloud technologies to build the next generation scalable patient data management system.
Speaker Change: That will support our advancement into the future for years to come and.
Speaker Change: And we plan to release, our first AI enabled software tool later this year with an AI powered seizure classifier that automatically identifies <unk>.
Speaker Change: Electrographic seizures.
Speaker Change: This has been designed to allow physicians an easier more efficient path to treatment.
Speaker Change: In addition, physicians will be able to review histograms that show the progress of treatments as well as the patient's unique circadian and multi day rhythms.
Speaker Change: These are insights designed to translate directly to patient care.
Speaker Change: These are exciting developments, which we believe will further contribute to the access to and adoption of rns therapy.
Speaker Change: As you can see our team has been very busy and delivering on many fronts and as I've mentioned previously.
Speaker Change: If you've not already had a chance please listen to the archives of our Investor Day presentation held in January it was a terrific event that offered some valuable insights from several kols and our own team members on many of the topics I discussed today.
Speaker Change: Considering the momentum in our business and exciting progress being made around each of our initiatives.
Speaker Change: We recently announced completing a public offering that we believe strengthened our balance sheet by the right amount.
Speaker Change: Provided for potential increased liquidity of our stock and allowed for organized evolution in our shareholder base.
Speaker Change: According to a recently presented long range plan, we anticipate our cash and short term investments will be sufficient to support our planned operations until the achieving cash flow breakeven.
Speaker Change: As a result, we have terminated our ATM offering program.
Speaker Change: As I mentioned in addition to raising capital to support our operations as part of our recent offering we raised approximately $49 $5 million specifically to repurchase.
Speaker Change: $5 million 270845 shares of the company's common stock from K C K limited.
Speaker Change: Which was an early investor in neuro pace.
Speaker Change: In this offering we were able to bring in a strong new group of long term focused institutional investors.
Speaker Change: We're also providing an organized sale of all of the KC case remaining shares.
Speaker Change: We believe that this repurchase addressed the potential overhang on our stock that selling from K C. K in the open market may have had in 2024.
Speaker Change: We would like to thank KC K for their support of neuro pace over the years.
Speaker Change: We believe that the success of this offering demonstrated a strong interest in neuro pace, among new investors and support for our long range plans.
Speaker Change: With that as an overview of our operational success in 2024 and goals for 2025 and beyond.
Speaker Change: Let me now turn the call over to Rebecca to review our financial results for the fourth quarter of 2024 and guidance for 2025.
Speaker Change: Rebecca.
Rebecca: Thank you Joe.
Rebecca: Team has been hard at work and it is great to see these efforts reflected in our financial results in his voice query.
Rebecca: Well as the building of an imaginary it will help drive our projected growth in the future.
Rebecca: For the fourth quarter of 2024, New York cases, Rabbit ear was 21 $5 million representing growth of 19% compared to $18 million.
Rebecca: Well I'm 2023.
Rebecca: Revenue growth was primarily driven by increased sales in our on our system.
Rebecca: Excluding the contribution from non list study cases in the fourth quarter of 2023.
Rebecca: Sales grew by 27%.
Rebecca: We also continued to generate meaningful revenue.
Dixie medical products.
Rebecca: Revenues for the full year 'twenty 'twenty, four with $79 $9 million, an increase of 22% compared to $65 $4 million in 2023.
Rebecca: In addition, we exceeded our original revenue guidance for 'twenty 'twenty four of $73 million to $77 million.
Rebecca: Revenue from sales of Dixie medical products was approximately 17% of our touch.
Revenue now in 'twenty, 'twenty, four compared to approximately 15% in 2023.
Rebecca: Gross margins for the fourth quarter of 'twenty 'twenty four with 75%.
Rebecca: Percent compared to 75, 2% in the fourth quarter of 2023.
Rebecca: Our gross margin increase for rns products as our fixed manufacturing overhead costs were spread over more units.
Rebecca: Partially offset by the lower gross margin from distribution of Dixie medical products.
Rebecca: R&D expense was $6 $1 million in its first quarter of 'twenty 'twenty, four compared with $5 $4 million in the same period of 2023.
Rebecca: This increase was primarily driven by an increase in personnel and program expenses for product development.
Rebecca: AI powered software and next generation device platform projects.
Rebecca: SG&A expense was $13 $8 million in the first quarter of 'twenty, 'twenty, four compared with $13 $2 million in the prior year period.
Rebecca: This increase was primarily due to an increase in sales and marketing personnel related expenses.
Rebecca: Partially offset by a decrease in general and administrative expenses.
Rebecca: Total operating expenses were $19 $8 million in the fourth quarter of 'twenty 'twenty, four compared with $18 $6 million in the same period of the prior year, representing an increase of 7%.
Rebecca: With revenue growing by 19% to go quicker, we continued to demonstrate strong operating leverage resulting from our focus on driving revenue growth. While also effectively managing our operating expenses and gross margin.
We plan to continue to focus on balancing these objectives.
Rebecca: Loss from operations was $3 $7 million in the quarter on 'twenty, 'twenty, four compared with $5 $1 million in it.
Rebecca: Prior year period.
Rebecca: We recorded $2 2 million of interest expense in the fourth quarter up 20.
Rebecca: 'twenty 'twenty black.
Rebecca: Q2 point $2 million in the prior year period.
Net loss was $5 $3 million for the fourth quarter of 'twenty 'twenty, four compared with $622 million in the fourth quarter of 2023.
Rebecca: Our cash burn in the fourth quarter of 'twenty 'twenty four $4.8 million.
Rebecca: Our cash and short term investments balance as of December 31, 'twenty 'twenty four was $52.8 million.
Rebecca: Subsequent to the core.
We completed a public offering of our common stock with net proceeds of approximately $69 $8 million after deducting underwriting discounts and commissions and estimated offering expenses.
Rebecca: As Joel mentioned, we used approximately $49 $5 million of the net proceeds from the op right to repurchase approximately five 3 million shares of our common stock from Casey K limit at which ensured an orderly exit from their remaining position.
Rebecca: Our pro forma cash cash equivalents and short term investments balance as of February 28th 2025, after completing the public offering and stock repurchase is approximately 68 $6 million.
Rebecca: We expect our strengthened balance sheet will be sufficient to support our planned operations as represented in the long range plan, we presented at our Investor Day in January.
Rebecca: And so achieving cash flow breakeven.
Rebecca: Our long term borrowings totaling $59 $5 million as of December 31, 2024.
Rebecca: Reminder, its final maturity of our debt is September 30th 2026.
Rebecca: Regarding your annual guidance for 2025.
Rebecca: We expect our total revenue to be in a range of $92 million to $96 million, an increase of approximately 15% to 20% over 2024.
Rebecca: This growth is expected to be mostly driven by an increase in sales our rns system.
Rebecca: With credits from sales of Dixie medical products, continuing to make a meaningful contribution.
Rebecca: We expect our gross margin to be in a range of 73% to 75% for 2025.
Rebecca: Although we may see some small variability due to fluctuations in the proportion of 16 medical revenue to total revenue and other factors.
Rebecca: We expect operating expenses were 2025 should range between 92 and $95 million incurred.
Rebecca: Including approximately $11 million and stock based compensation and noncash expense.
Joe: I would now like to turn the call back over to Joe for closing remarks.
Rebecca: Sure.
Joe: Thank you Rebecca.
We're pleased with the steady rate of revenue growth and the effective management of our margins and operating expenses, demonstrating our focus on execution of our operating priorities.
Joe: And financial discipline throughout 2024.
Joe: The success, we have had over the past year is the result of the hard work by our team.
Joe: And we are focused on maintaining this momentum.
Joe: Into 2025 and beyond.
Joe: As we've mentioned previously our goal over the course of the next three years.
Joe: Just to have a revenue growth rate of 20% plus annually.
Joe: And to achieve cash flow breakeven.
Joe: I look forward to updating everyone on our continued progress throughout 2025.
Joe: This concludes our prepared remarks, I would now like to turn the call over to the operator, who will open the call for questions.
Joe: Operator.
Speaker Change: Thank you well now be conducting a question and answer session.
Speaker Change: 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 remind you your question from the queue.
Speaker Change: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Thank you. Our first question is from pre attack demo with UBS. Please proceed with your question.
Hi, guys. Thanks, so much for taking the question and congrats on a solid end to the year.
Speaker Change: I guess I could just start on the guidance for 2025, you guys could just maybe talk about some of the puts and takes to the range. You know what gets you to the high end versus the low end and what level of growth contribution in soccer dating from project Terra.
Speaker Change: All right.
Speaker Change: Thank you I appreciate the question and where.
Speaker Change: We're looking forward to 2025 and.
Speaker Change: I appreciate your participation here today, when we look at the when we look at the guide you know there are a number of things that we consider there in crude including really the.
Speaker Change: Execution of our three part strategy, which is which is driven by acceleration of adoption and utilization within our level four centers or building out.
Speaker Change: Our project care growth and our ongoing execution with regard to Dixie as well.
Speaker Change: As we think about the things that can they can accelerate growth, it's really within the level four centers prescriber growth as well as an expanding utilization within each of those prescribers, we talked about it.
Speaker Change: The Investor day, where we were together.
Speaker Change: The opportunity.
Speaker Change: 80 to really expand projects here and our goal being to more than double the implants and referrals from tier.
Speaker Change: And so we see that as a key growth driver as well.
Speaker Change: We think can really can really help us to have a strong 25 in <unk> and continue the momentum that we've got now.
Speaker Change: I'll start and then maybe just on that project Kerry do you guys called out strong referral base and our highest number of implants are so just any more color on that the impact from the rollout of project Terra that you could give us. Thanks so much.
You bet so.
Speaker Change: Last quarter, when we were together we mentioned for the first time that we've seen a meaningful impact beginning to show up in the pilot activities and in Q3, we saw that continue in Q4. In fact, we saw an increase in both the referrals as well as implants in Q4 over Q3. So continued good momentum there and again the continued meaningful impact.
Speaker Change: On the overall performance of the business and we're looking forward to accelerating that and really building on it in 'twenty five.
Speaker Change: Our next question is from Rohit <unk> with J P. Morgan.
Speaker Change: Hi, Thanks, so much for taking the question and congrats on a successful offering as well.
Speaker Change: I just wanted to start with I just wanted to start with that obviously theres no shortage of opportunities here.
Speaker Change: And that's just between indication expansion and product development.
Speaker Change: And so I just wanted to get a sense for how you're prioritizing.
Speaker Change: That capital over the next year or so where can we expect you to invest more and just how are you thinking about that and the priorities and to cash flow breakeven.
Speaker Change: Great question Rohit and thank you as you mentioned there we do have significant opportunities for growth here in front of us and as we've said previously we're.
Speaker Change: We're not going to hesitate to invest and taken advantage of those growth opportunities and so.
Speaker Change: In 2025.
Speaker Change: Our focus and our investment is on accelerating the adoption and utilization within our level four centers as our foundation, that's where the majority of our growth has been coming in.
Speaker Change: And Thats, where the majority of our customers and our highest.
Speaker Change: Our concentration of patients are and so we've been focused on building out incremental expansion of our commercial organization and.
Speaker Change: We've commented on that previously that that first group of folks is now out in the field and in <unk>.
Speaker Change: In.
Speaker Change: Participating in independent activities and and we are also planning further incremental expansion of the commercial organization here in 2025. So that's clearly an area of our prioritized investment for us as well as then.
Speaker Change: Our direct to consumer efforts, we see good response from we see elasticity and the response from our investments in direct to consumer awareness and education.
Speaker Change: So those are those are both priorities as well as then the launch of <unk>.
Speaker Change: What we're calling <unk> two point, though which are materials programs in and.
Speaker Change: And other activities associated in particular with professional education around expanding both our number of targets as well as the activities around care to Plano. So if you think about kind of impacts in 2025. Those are all things that we're investing in are focused on that can impact 2025, and then longer term.
Speaker Change: The preparing for <unk>.
Speaker Change: And really scaling the organization as well as doing the work now in front of indication expansion are things that we're investing in now and look forward to getting leverage from.
Speaker Change: Pending a successful middle and approvals for both idiopathic as well as the pediatric populations and again the investments, we're making now in the commercial organization and the investments we're making now in our launch planning. We think those are all things that will put us in position to hit the ground running on those opportunities and then gained further leverages.
Speaker Change: We moved through the plan period.
Speaker Change: Thanks, and then I just had a follow up on gross margin you had pretty healthy expansion.
Speaker Change: Year over year and sequentially and I think your target came about 200 basis points ahead of the street and where we were thinking so.
Speaker Change: I just wanted to get a sense for what the primary drivers were there how do you expect that should trend into 2025.
Speaker Change: And how should we think about just gross margin generally.
Speaker Change: Moving forward.
Speaker Change: I'll say, a little bit and then I'll ask Rebecca to say, a little bit too and you're exactly right Ryan.
Speaker Change: We picked up.
Speaker Change: 20 basis points on gross margin quarter to quarter and in 30 year on year and so the annual gross margin performance came in at the top end of the margin guide. So revenue came in at the top end of the guide gross margin came in at the top end of the guide in Opex came.
Speaker Change: In towards the bottom end of the guide and so I think we're we're walking the walk here in terms of the growth story with discipline that we talked about at the Investor day.
Speaker Change: And you know really the primary contributors to gross margin for us are ongoing ongoing value volume increases. The best thing. We can do is continue to grow the top line in terms of those implants and sales and then as we've talked about previously as well, we do have some pricing opportunity within the rns system and so low single digit pricing is also something.
Speaker Change: That continues to support our gross margin performance and then good contracting discipline, you know being real focused on and in delivering on contracted disciplined as well Rebecca what would you what would you add there well that was a pretty fulsome.
Speaker Change: Sure.
Speaker Change:
Speaker Change: We do see some fluctuations quarter to quarter, and we do see a little bit of pickup in the fourth quarter. Some of that has to do with compensation costs you know.
Speaker Change: Payroll taxes being lower at the end of the year people, taking some vacations.
Speaker Change: So it's not surprising that we see a little pick up in the fourth quarter.
Speaker Change: But we're comfortable with.
Speaker Change: The guidance, we gave of 73% to 75% in 2025, we expect ongoing improvement from rns gross margins primarily with volume.
Speaker Change: And then of course that is.
Speaker Change: The gross margin from a distributor product line.
Speaker Change: Great. Thank you.
Speaker Change: Thank you Ryan.
Speaker Change: Our next question is from Frank <unk> with Lake Street capital markets.
Frank: Great. Thanks for taking the questions and congrats on all the progress I was hoping you could talk a little bit more about the indication expansion as it relates to reimbursement is there any additional work that needs to be done in those areas as it relates to kind of generalized in pediatric.
Frank: So first of all just.
Frank: As a reminder, reimbursement is very well established in routine and are currently indicated.
Frank: Population as we move into generalized epilepsy and pediatric markets.
Frank: Yeah.
Frank: Product is the same.
Frank: Coding will all be the same used for reimbursement the one thing that is.
Speaker Change: Thank you Frank is that we will need to work with payers to expand coverage criteria and their policies private payers have written coverage policies in place that.
Speaker Change: Track, our FDA approved indications really very closely so well.
Speaker Change: Well work with them sharing a published peer reviewed evidence when we have that.
Speaker Change: Uh huh.
Speaker Change: And we're confident that we'll be able to get coverage policies expanded for those new indications.
Okay. That's helpful. And then maybe just one on 2025 outlook kind of looking back at the last few years, you havent really been impacted by too much seasonality and typically we've actually seen even a step up from Q4 to Q1 can you provide us any guidance into kind of how to think about the cadence of revenues for the year and whether or not that step.
Speaker Change: Option occur again.
Frank: It's a great question Frank and.
If you look at we talked a little bit about this last quarter.
Frank: We can see a little bit of variability quarter to quarter, but if you take a look at the business kind of in six month increments are what you see is a more smoothed out good steady progression of growth north of 20%. We grew the business 20 and talking about 2024, we grew the business 21% in the first half of the year.
Frank: And 23% in the second half of the year.
Frank: And so a nice acceleration of the business throughout the year.
Frank: In the past couple of years, we've actually seen the second half of the year would be a bit stronger than the first half of the year as well.
Frank: We would expect similar kinds of trends.
Frank: We're working on things that we think are going to accelerate the growth of the business and would expect that to take place through the year and expect to see a cadence that we see that similar to what we've seen over the past couple of years as well.
Frank: Okay. That's helpful. Thank you.
Frank: Thank you Frank.
Speaker Change: Our next question is from Mike Kratky with Leerink. Please proceed with your question.
Mike Kratky: Hi, everyone. Thanks for taking our questions and apologies for any background noise, so really encouraging to see the increase in implants and referrals from project here in the fourth quarter or are you starting to see multiple implants from new accounts outside of the level for <unk> and to what degree are the economics for rns supported outside of level four centers.
Mike Kratky: Thanks for the question, Mike, it's great to see care continuing to pick up momentum we do see.
Counts, where we've seen multiple implants and referrals and.
Mike Kratky: So that's obviously encouraging to see folks kind of get the get their system down in and really start to make it a more routine part of what they do from an earnings perspective.
Mike Kratky: Rebecca to comment a little bit on the economics in these centers as well but.
Rebecca: The economics are very viable within these centers.
Rebecca: No of course centers have different reimbursement rates in payer mix as a factor as well but.
Rebecca: It makes sense for patients.
Rebecca: Patients and clinicians and centers are too.
Rebecca: To be doing rns implants, both within the comprehensive epilepsy centers as well as.
Rebecca: Within the level, three and community centers to again dependent to a certain degree on the variability in payer mix.
Rebecca: Absolutely obviously, they are center to center differences, but.
Rebecca: We continue to see a ramp.
Rebecca: Our reimbursement rate increase.
Rebecca: Looking across our broadened.
Rebecca: Customer base in 2024, including the care centers.
Rebecca: And as Joe mentioned, we think it's very viable if you think about.
Rebecca: The cost incurred by patients.
Rebecca: <unk> continued to have seizures, it's really quite significant due to their ongoing anti epileptic drugs and a free click emergency room visits so it's really an attractive value proposition to centers.
Rebecca: And payers chips.
Rebecca: Sure.
Rebecca: <unk> patients can get patient seizures under control.
Rebecca: Yeah.
Rebecca: Awesome, Thanks very much.
Thank you Mike.
Speaker Change: Our next question is from Vik Chopra with Wells Fargo.
Vik Chopra: Hey, good afternoon, and congrats on a strong year. So one question for me.
Speaker Change: <unk>, you've talked about project K and market expansion initiatives to more than double implant and referrals from tier accounts in 2025 can you put some more color around that or additional details and kind of what we should be in the look encore. Thanks.
Speaker Change: You bet.
Speaker Change: What we're what we're focused on is really building off of the activity from the pilot program.
Speaker Change: We're focused on the delivery of new and different pre.
Speaker Change: Programs educational as well as awareness for clinicians professional education programs that we do everything from peer to peer as well as symposia as well as then targeted DTC efforts, where we're able to use our digital media approach.
Speaker Change: To dial in messages to specific geographies in and target those geographies. So we're we're expanding all of that and watching all of that and following up with all those metrics closely.
Speaker Change: Then from an execution perspective, we're looking at really three things one expanding the number of centers. So the number of care centers.
Speaker Change: Increasing those who are doing either referrals and or implants, and we're underway with that target group expansion now to expanding the number of actual implanting centers. So.
Speaker Change: People, who are doing everything from patient identification and diagnosis all the way through implant in patient management, having a fully serviced centers is another metric that we're watching closely and then <unk>.
Speaker Change: <unk> the number of programming centers as well as I've mentioned before our sub segment is people who are who have the patients and are happy to have them managed but they want to.
Speaker Change: Be able to refer the patient out for implant and so the number of centers. The number of implanting centers and then there are number of programming centers are all three key metrics that we're we're watching and keeping an eye on and again, we've seen good momentum with increasing referrals in implants and.
Speaker Change: In the second half of the year and in Q4 over Q3, and we expect that to continue.
Speaker Change: Okay. Thanks, Joel and just a quick follow up.
Speaker Change: Just talk about the assumptions that get you to the top end of your revenue guidance range. Thank you.
Speaker Change: You bet as I mentioned.
Speaker Change: The execution within the level four centers, where the majority of our customers are today and expanding adoption as well as utilization within those centers is a key driver for us as I have mentioned previously.
Speaker Change: We continued in 2024 to set records in terms of the number of active prescribers. So the number of clinicians that have prescribed an rns device in the past 12 months, we continue to to top those numbers and Thats a key element for us in terms of metric on adoption so both increasing.
Speaker Change: The number of prescribers and in 2024, we grew that number significantly and we grew that number significantly more and faster than we did in 2023 as well so we're making increasing amounts of progress even in our level for comprehensive epilepsy centers. So then once we have people.
Speaker Change: We're prescribing building out utilization, that's that's really the first plank in our strategy. The second that can really help us accelerate growth is the expansion of the care program insights and then the third is the increased return from our expanded direct to consumer.
Speaker Change: Those are all things that can accelerate the rns business further and.
Speaker Change: And then finally the ongoing good work in growth that we've seen and are doing with Dixie as well. So those are four key leading indicators for us in terms of.
Speaker Change: Driving further and accelerated growth.
Speaker Change: Both within as well as then.
Speaker Change: To the top of the range.
Speaker Change: Next question. Please our next question is from Ross Osborne with Cantor Fitzgerald.
Speaker Change: Hi, guys. This is Matthew Clark on for Ross today, Thanks for taking the questions I guess, starting off as we work to expand our necessity treatment to pediatrics can you walk us through how you envision beside the service dynamics here with these procedures primarily be concentrated in bubble for epilepsy centers or do you see an opportunity for broader adoption in the community setting over.
Speaker Change: Tom.
Speaker Change: It's a great question Matt.
Speaker Change: Matthew.
Speaker Change: Thanks for being on with Us.
Speaker Change: So as you mentioned.
Speaker Change: We're working hard and we feel like we're making good progress.
Speaker Change: Towards the submission for pediatric indication.
Speaker Change: The way to think about the treatment for pediatric patients.
Speaker Change: Much the same as you'd think about adolescent and adult patients. It's really focused on the type of epilepsy. So for a focal patients those patients.
Speaker Change: Most of the time will need phase two monitoring in that phase two monitoring primarily takes place and comprehensive epilepsy centers and so we would see a similar potential adoption in implant dynamic with pediatric patients going through the phase two monitoring for pediatric patients.
Speaker Change: Did have a generalized epilepsy pending.
Speaker Change: Successful trial.
Speaker Change: And in generalized epilepsy idiopathic generalized epilepsy those patients could also.
Go through a similar.
Speaker Change: Referral and implant track as an adult patient, where they would only need to phase one monitoring and as a result, then those patients could be treated either in level three or outside level four centers. So really the way to think about it is not so much by each group by disease type.
Speaker Change: And we feel like.
Speaker Change: Again, our site of service expansion and our indication expansion is really all under the rubric of increasing access to rns therapy and access both in terms of the site of service as well as the.
Speaker Change: The label really being one that applies to all significant segments of the drug resistant epilepsy population pizza.
Speaker Change: A key area of focus here for us for 25.
Speaker Change: Got it that's helpful. And then just one more quick one for me with an expanding market opportunity on the horizon. How are you thinking about manufacturing capacity in 2026 and beyond.
Speaker Change: We're in good shape from a capacity perspective Matthew.
Speaker Change: We've got we've got what we need.
Speaker Change: We're ready to go.
Speaker Change: Yeah.
Speaker Change: Got it good to hear and congrats again on the quarter.
Speaker Change: Thank you.
Speaker Change: You.
Speaker Change: Our next question is from Michael Polak with Wolfe Research.
Speaker Change: Hey, Good evening, Joe you mentioned topline data from Nautilus potentially in the coming months. If I. If you said it I missed it have you decided on the forum or venue to.
Speaker Change: To show that and how and how soon thank you.
Mike Kratky: Thanks, Mike.
Speaker Change: So yes, so with regard to Nautilus, we expect.
Speaker Change: Just to reiterate we expect a submission in the second half.
Speaker Change: We will be working to coordinate the publication and presentation of Nautilus with both the agencies.
Speaker Change: <unk>.
Speaker Change: With regard to data readout on Nautilus.
Speaker Change: We've talked about during the Investor day.
Speaker Change: Our our timeline of events here is that we'll we're working to finalize patient follow up here in March.
Speaker Change: After we get that data then we'll monitor it all ensure that the data is complete then we'll do the statistical analysis exchange that statistical analysis with the agency at.
Speaker Change: At which point, we get alignment with the agency, we will have data lock and then and then be developing and then submitting.
Speaker Change: To the agency and towards the tail end of that process from the time, we have data lock in alignment with the agency to submission and then we do plan to do data readout on the study we've not.
Speaker Change: Identified a specific time or location associated with that but hopefully that helps you kind of dial in the steps in the process here.
Speaker Change: Just to further make the point, we do think we think no Nautilus trial is.
Speaker Change: It's a first of its kind trial and.
Speaker Change: Very high level of clinical evidence and study design and we think as a result of both of those things, where it's a high profile publications as well as presentation and that's how we're thinking about it we plan to to be submitting for both the publication presentation too significant for them. So that we can really do.
Speaker Change: This important information out to clinicians.
Speaker Change: Yeah.
Speaker Change: I appreciate that Joe Thank you.
Speaker Change: Thank you Mike.
Speaker Change: Thank you there are no further questions at this time I would like to hand, the floor back over back over to Joel Becker for any closing comments.
Joel Becker: Thank you everybody for your time and your attention. This afternoon were.
Joel Becker: Really excited about the year to come and really pleased with the completion of 2024.
Joel Becker: The team is working hard to execute on the growth story and the growth story with discipline. We've got a number of significant events coming up here in front of us and we look forward to keeping everybody up to date.
Joel Becker: For 2025, and and at our next time to be together at the end of Q1 for our Q1 earnings call. Thanks again.
Joel Becker: Yeah.
Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.