Q2 2025 NeuroOne Medical Technologies Corp Earnings Call
Speaker Change: Good day, ladies and gentlemen. Welcome to the second quarter of fiscal year 2025 financial results conference call for Neuroone Medical Technologies Corporation. Today's call will be conducted by the company's chief executive officer, Dave Rosa, and Ron McClurg, the company's chief financial officer. Chris Volcker, the company's chief operating officer will also be in attendance.
Ron McClurg: Before I turn a 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 today's call or other specified date.
Ron McClurg: Forward-looking statements, including statements regarding our fiscal 2025 guidance, 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.
Ron McClurg: C. Neuroone's 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, Neuroone undertakes no obligation to update such forward looking statements.
Dave Rosa: With that, I will turn a call over to Mr. Dave Rosa, CEO of Neuroone. Please go ahead, sir.
Dave Rosa: Thanks, operator. For those of you who may be new to Neuroone, we are a medical technology company that is dedicated to transforming the diagnosis and treatment of neurological disorders initially with epilepsy where we have minimally invasive high resolution solutions or EEG recording brain stimulation and ablation solutions for patients
Dave Rosa: Our patented and disruptive one RF ablation system is the first and only FDA-cleared RF ablation system for brain procedures using a single implant for both diagnostic and therapeutic applications.
creating a unique competitive and first mover advantage.
Dave Rosa: Today, it is commercially available and effectively treating patients suffering from seizures due to epilepsy.
Dave Rosa: As we build awareness through our strategic distribution partners in our biomed, we believe more patients will seek our solution for epilepsy given its ability to reduce the number of hospitalizations and procedures while also improving outcomes.
Dave Rosa: We have made tremendous progress in the first half of fiscal 2025 with product revenue, increasing 97% to $4 $7 million in product gross margins, increasing to 57, 9%, which is more than double our product gross margin in the first half.
Dave Rosa: Fiscal 2024, we.
Dave Rosa: We have no debt and we anticipate being fully funded through at least fiscal year 2026, with a potential to get to cash flow breakeven. If we achieve some of the key milestones currently in progress.
Dave Rosa: The second quarter of fiscal 2025 was highlighted by our significant operational progress with our commercial one RF ablation system technology platform, which is increasingly being validated as a versatile and scalable platform across multiple applications.
Dave Rosa: First and foremost we continue to have clinical success with patients who are remaining seizure free following the one RF ablation procedure.
Dave Rosa: In fact, one patient has now been seizure free for almost an entire year, enabling them to enjoy a significant improvement in the quality of life.
Dave Rosa: We are also pleased to report that the majority of patients treated with our system to date, our analyses are free.
Dave Rosa: Not only are we seeing positive patient outcomes, but we are also reducing the number of hospitalizations typically patients undergo to hospitalizations with multiple procedures that are a few months apart.
Dave Rosa: Whereas only one hospitalization is required with our system, allowing the neurosurgeon to use the same electrode for both diagnostic and ablation purposes Alice.
Dave Rosa: Outside of the improved patient outcomes. We are also having success due to the following.
Dave Rosa: Hospitals favoring FDA cleared solutions instead of off label alternatives.
Dave Rosa: Physicians are more inclined to use an FDA cleared system, reducing liability concerns.
Dave Rosa: <unk> or more trusting of FDA cleared technology similar to ours.
Dave Rosa: How can we get this mass adoption first by ensuring the sites. We initially targeted at launch continued to use our technology as the go to device to treat eligible patients suffering from epilepsy.
Dave Rosa: By fostering these relationships and building trust our strategy has paid significant dividends and we continue to see strong success at these locations.
Dave Rosa: Second by leveraging Zimmer Biomet extensive distribution network and scale as they have one of the largest global medical device companies in the U S with a very strong presence in the epilepsy market.
Dave Rosa: After receiving an upfront license payment of $3 million and completing the initial stocking orders to Zimmer and the first quarter of fiscal 2025, we are now excited to expand to new centers.
Dave Rosa: Again, the same one RF technology platform, we successfully filed our five 10-K submission with the FDA for the one RF trigeminal nerve ablation system, which was well ahead of schedule.
Dave Rosa: This application is designed to treat patients with debilitating facial pain.
Dave Rosa: Also known as trigeminal neuralgia.
Dave Rosa: For those of you unfamiliar trigeminal nerve is located in the face with one set of nerves on each side of the face with trigeminal neuralgia, causing chronic pain characterized by severe sudden and recurrent facial pain.
Dave Rosa: Approximately 150000 people are diagnosed with trigeminal neuralgia every year in the United States. According to the American Association of neurological surgeons.
Dave Rosa: Trigeminal neuralgia is typically treated with medication or invasive procedures that are performed by the same neurosurgeons performing brain ablation to treat epilepsy.
Dave Rosa: Our brain ablation advisory board that encouraged us to pursue this application.
Dave Rosa: Similar to our one RF brain ablation system.
Dave Rosa: This product is also designed to reduce procedural time and improve patient comfort and safety by using a minimally invasive surgical procedure to destroy the trigeminal nerve to really severe chronic pain and the phase <unk>.
Dave Rosa: Published data has shown that RF ablation offers high initial pain relief rates and long term efficacy, especially with repeat treatments, while maintaining our low complication rate.
Dave Rosa: These characteristics make it a preferred option for patients who are not candidates for major surgery or who are also looking for less invasive approaches.
Dave Rosa: Cleared by the FDA, we believe there is potential to generate revenues for trigeminal nerve ablation as soon as late calendar year 2025, which is not currently factored in our guidance.
Dave Rosa: Upon this momentum we are currently in discussions with a number of other top tier strategic partners for other applications, leveraging our platform technology, including spinal cord nerve ablation in spinal cord stimulation for back pain management and the <unk> base.
Dave Rosa: Drug delivery program, which would benefit immensely from the multi function capability that neuro ones technology can offer <unk>.
Dave Rosa: Similar to Zimmer these partnerships would be meaningful not only to further develop and commercialize these applications with expertise and potential upfront capital, but to drive mass adoption with robust sales and distribution networks.
Dave Rosa: As you may recall.
Dave Rosa: Our strategic partnership with Zimmer includes exclusive distribution rights in the United States and certainly additional countries for the one RF ablation system.
Dave Rosa: Therefore, we are advancing our internal efforts on distribution outside of the United States, which is currently an untapped market for us.
Dave Rosa: To that end, we are initiating a process to secure ISO 13485 certification, which is required to commercialize and obtain regulatory approvals internationally.
Dave Rosa: Given we have not sold are commercialized any of our products in international markets to date. These efforts could represent significant revenue in the years to come.
Dave Rosa: To execute on these opportunities we've also bolstered our balance sheet and invest it in our talent.
Speaker Change: Just yesterday, we welcome Dr Parag that til.
Speaker Change: World renowned neurosurgeon as our chief medical advisor as well as Emily John's a partner at <unk> LLP as General Counsel and corporate Secretary, who will be joining us on June the first.
Speaker Change: Collectively these additions to our team will actually reduce costs by bringing critical functions in house, and providing invaluable expertise and relationships to advance our technology.
Speaker Change: As we stand today, we currently have no debt on our balance sheet is rock solid on the heels of a successful capital raise with quality institutional investors. The financing was oversubscribed and added $8 2 million in net proceeds to the company.
Speaker Change: More importantly, we believe this cash will fully fund neuro one through at least the end of fiscal 2026, and if we achieve some of the key milestones currently in progress this capital could bring us to cash flow breakeven and support our long term growth plans with no need for additional dilutive financing.
Speaker Change: With this confidence we are reiterating our fiscal year 2025 guidance and expect product revenue to be in the range of $8 million to $10 million, representing an increase of between 132% and 190% over fiscal 2024 and.
Speaker Change: And product gross margin to be between 47% and 51%.
Speaker Change: <unk> to 31% in fiscal 2024.
Speaker Change: Importantly, this guidance excludes our upfront license payment of $3 million received from Zimmer and the fiscal first quarter of 2025.
Ron McClurg: I would now like to turn the call over to Ron <unk> to provide additional review of our fiscal second quarter financial results Brian.
Speaker Change: Thanks, Dave.
Speaker Change: Product revenue increased slightly to $1 4 million in the second quarter of fiscal 25 compared to product revenue of $1 4 million in the second quarter of fiscal 2024.
Speaker Change: As we talked about on our last quarterly call. We expected product revenue declined sequentially in the fiscal second quarter. Given we completed the initial stocking order to Zimmer in December which is our first quarter of fiscal 2025.
Speaker Change: We still expect revenues to ramp through the end of the fiscal year as the product launch expanse.
Speaker Change: For the first six months of fiscal 2025 product revenue increased 97% $4 7 million compared to $2 4 million or the same period of fiscal 'twenty four.
Speaker Change: We also recognized license revenue of $3 million in the first six months of fiscal 25, which is not included in product revenue.
Speaker Change: Compared to no license revenue in the first six months of fiscal 2024.
Speaker Change: License revenue in fiscal 'twenty five was derived from the expanded exclusive distribution agreement with Zimmer.
Speaker Change: Product gross profit increased significantly to <unk> 8 million or 55, 6% of revenue in the second quarter of fiscal 'twenty five.
Speaker Change: The product gross profit of <unk> 4 million or.
Speaker Change: Our 28, 3% of revenue in the second quarter of fiscal 2024.
Speaker Change: For the first six months of fiscal 2025 product gross profit increased over two fold to $2 7 million or 57, 9% of revenue compared to product gross profit of <unk> 7 million or 27, 9% of revenue in the first six months of fiscal 2024.
Speaker Change: Total operating expenses in the second quarter of fiscal 'twenty, five or $3 5 million compared with $3 3 million in the second quarter of fiscal 'twenty four.
Speaker Change: R&D expense in the second quarter of fiscal 'twenty, five was $1 5 million compared to $1 3 million in the same period of fiscal 'twenty four.
Speaker Change: SG&A expense in the second quarter of fiscal 'twenty five decreased to $1 9 million compared to 2.0 million in the second quarter of fiscal 'twenty four.
Speaker Change: For the first six months of fiscal 'twenty five total operating expenses decreased 4%.
Speaker Change: To $6 7 million compared to $6 9 million in the same period of fiscal 2020 for R&D.
Speaker Change: R&D expense in the first six months of fiscal 'twenty, five decreased 3% to $2 7 million compared to $2 8 million in the same period of fiscal 'twenty four.
Speaker Change: SG&A expense in the first six months of fiscal 'twenty, five decreased 5% to $4 million compared to $4 2 million in the prior year period.
Speaker Change: Net loss in the second quarter of fiscal 'twenty, five improved to a loss of $2 3 million or <unk> <unk> per share compared to a net loss of $2 9 million or <unk> 11 per share in the same quarter of the prior fiscal year.
Speaker Change: Net loss for the first six months of fiscal 'twenty, five improved significantly to <unk> 5 million or <unk> <unk> per share compared with a net loss of $6 2 million or 25 per share in the same period of fiscal 'twenty four.
Speaker Change: As of March 31 of 2025, the company had cash and cash equivalents of $1 3 million compared to $1 4 million as of September 32010.
Speaker Change: Four.
Speaker Change: At the end of our prior fiscal year.
Speaker Change: The company had working capital of $2 million as of March 31, 2025, compared to working capital of $2 4 million as of September 32020 for.
Speaker Change: The company had no debt outstanding as of March 31, 2025.
Speaker Change: Lastly, as Dave noted earlier, we recently bolstered our balance sheet was $8 5 million net cash by selling common stock under the ATM program at an average price of $1 16 per share.
Speaker Change: Generating net proceeds of <unk> three.
Speaker Change: $3 million and completing an oversubscribed capital raise with institutional investors in April totaling $8 2 million in net proceeds there is no current availability under our ATM program and we believe we are now fully funded through at least fiscal 2026 potentially longer.
Speaker Change: Key milestones are hit.
Speaker Change: Operator at this time I think we can open up for questions.
Speaker Change: Certainly at 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.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press Star two if you would like to remove your question from the queue.
Speaker Change: 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.
Speaker Change: Your first question for today is from Jeffrey Cohen with Ladenburg Thalmann.
Speaker Change: Oh, Hi, Dave Ron and Chris just a couple of questions from era and so.
Speaker Change: On the guard you were talking about eight to 10 and that's excluding the <unk>.
Speaker Change: Three meal from the first quarter correct.
Speaker Change: Brian do you want to handle the financial or do you want me to handle that alright, yes, yes, Jeff that is correct that does exclude the licensing fee that we received in the first quarter.
Speaker Change: Okay got it and can you give us a sense for full year do you expect any revenue to be.
Speaker Change: Outside of.
Speaker Change: The deal with Zimmer Biomet.
Speaker Change: The top line for this current year or would you expect it all to be a problem.
Speaker Change: <unk>.
Speaker Change: It is almost entirely from Zimmer biomet.
Speaker Change: First half of the year, we had about.
Speaker Change: 6%.
Speaker Change: Of our revenue was from.
Speaker Change: Some of the early centers that we went to but.
Speaker Change: But otherwise going forward, we expect all of our revenue to be from the Zimmer and Greg.
Speaker Change: Got it can you give us a sense of pro forma cash level. Please.
Speaker Change: Yes.
Speaker Change: At the end of April we had $9 4 million.
Speaker Change: Which was the cash on hand that included the financing that we did with landmark.
Okay got it and then.
Speaker Change: <unk>.
Speaker Change: Lastly, could you talk about adding a chief medical advisor suite, Congrats on that and why now and what you anticipate to AR to achieve from that for.
Speaker Change: For the company.
Ron McClurg: I'll take that Ron.
Speaker Change: So.
Speaker Change: We feel really fortunate to be able to yet doctor up until to work with us this closely.
Speaker Change: When you look at really is clinical background.
Speaker Change: That experience that fits perfectly into the areas of clinical areas that were either already in or looking to move into so whether that'd be helping with our product.
Speaker Change: Product development, which he also has a background in a.
Speaker Change: Just the the clinical requirements for technologies in the areas that we're going and.
Speaker Change: He's just really a perfect fit for us and I think one of the first things.
Speaker Change: That we also want to move forward to that we've talked about in the past is really getting together a registry to track all the patient outcomes that have been treated with our ablation system.
Speaker Change: We're gonna be coming up on a year for the first patient.
Speaker Change: It will be one year seizure free that will occur next month, so gathering that information and then being able to to potentially get a publication out or something like that Dr. <unk> will be very very helpful. With so we're really excited to have them and like I said couldnt be a greater fit.
Speaker Change: For what we're doing.
Speaker Change: Yeah.
Speaker Change: Super Okay. Thanks for taking our questions nice quarter.
Jeff: Thanks, Jeff.
Jeff: Thank you that appears to be the last question at this time I would like to turn the floor back to Dave Rosa for any closing remarks.
Jeff: Thank you operator today, we stand as a larger more mature company than ever before.
Jeff: We focus on significantly ramping revenues and expanding our product margins, we have a world class strategic partner the necessary capital to execute on our strategic growth initiatives and several upcoming milestones that presents significant opportunities to increase shareholder value.
Jeff: I'd like to again, thank everyone for attending the call. This morning, and we look forward to connecting with the investor community throughout the quarter.
Jeff: Thank you. This does conclude today's conference. We thank you for your participation you may disconnect. Your lines at this time and have a great day.