NeuroOne Medical Technologies Q4 2024 Earnings Report

NeuroOne Medical Technologies EPS Results

• Actual EPS: -$0.66
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

NeuroOne Medical Technologies Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

NeuroOne Medical Technologies Announcement Details

• Quarter: Q4 2024
• Date: 12/17/2024
• Time: Before Market Opens
• Conference Call Date: Tuesday, December 17, 2024
• Conference Call Time: 9:00AM ET

NeuroOne Medical Technologies (NASDAQ:NMTC) Corp. is a medical device company focused on developing advanced neural interface technologies for diagnostic and therapeutic applications in neurosurgery and neurology. The company’s core mission is to improve patient outcomes through next-generation electrode systems that enable high-resolution neural recording and targeted stimulation. By leveraging proprietary thin-film microelectrode arrays, NeuroOne aims to offer clinicians unprecedented single-unit precision during brain mapping procedures.

The company’s flagship platform, the EVO™ system, integrates thin-film neural electrodes with intraoperative monitoring hardware and software. This system is designed to assist neurosurgeons in procedures such as epilepsy monitoring and deep brain stimulation planning by providing real-time, high-fidelity recordings of neuronal activity. NeuroOne also supports research partnerships with leading academic medical centers to explore applications of its technology in movement disorders and neurological disorders.

Founded as a spin-out of Mayo Clinic research, NeuroOne has advanced its technology through rigorous preclinical studies and regulatory review. In September 2023, the U.S. Food and Drug Administration granted 510(k) clearance for the EVO™ intraoperative neuromonitoring system. The company is headquartered in Eden Prairie, Minnesota, and operates a research and development facility in the same region to drive continuous innovation.

Under the leadership of President and CEO Rajendra S. Singh, MD, a neurosurgeon with extensive clinical experience, NeuroOne is executing a commercial rollout of its platform across North America. The company is actively engaging with key opinion leaders, surgical centers, and research institutions to establish its technology as a new standard for neural interface procedures. Looking ahead, NeuroOne aims to expand its geographic footprint and pursue additional regulatory approvals to broaden clinical access to its solutions.

NeuroOne Medical Technologies Q4 2024 Earnings Call Transcript

Key Takeaways

• NeuroOne secured FDA 510(k) clearance for its 1 RF ablation system and extended its distribution partnership with Zimmer Biomet, receiving a $3 million upfront license payment and potential milestone payments.
• For fiscal 2025 the company forecasts $8 million to $10 million in revenue (132–190% growth) and gross margins of 47–51%, up from 31% in 2024.
• Initial launch results include over 150 RF ablations in 12 patients at 5 centers, with all patients seizure free or showing significant reduction, and 24 epilepsy centers requesting proposals.
• The pipeline is advancing with a planned 510(k) submission for trigeminal neuralgia in H1 2025 and development of spinal cord stimulation and SEEG-based drug delivery programs under strategic partnership discussions.
• As of September 30, 2024, cash and cash equivalents declined to $1.5 million from $5.3 million a year earlier, accompanied by a $12.3 million net loss in fiscal 2024, leading to a $2.65 million private placement and temporary credit facility.

Presentation

[Operator]

Good day, ladies and gentlemen. Welcome to the NeuroOne fourth quarter and fiscal year end 2024 earnings call. 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 Volker, the company's Chief Operating Officer, will also be in attendance. 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 today's call or other specified date.

[Operator]

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. See 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. With that, I will turn the call over to Mr. Dave Rosa, CEO of NeuroOne. Please go ahead, sir.

[Dave Rosa, CEO at NeuroOne]

Thanks, operator, and good morning to everyone. During our fiscal fourth quarter and through today, we have continued to execute our plan and accomplished key milestones regarding commercialization, product development, and financial objectives. In 2024, our top priorities were to pursue a 510(k) clearance from the FDA to market our OneRF ablation system and to secure a strategic partnership for distribution. While there was risk associated with the 510(k), given 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. We are proud that the OneRF 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. Our recent announcement regarding the extension of the partnership with Zimmer Biomet provides a broad distribution network for both the U.S.

[Dave Rosa, CEO at NeuroOne]

And certain OUS geographies. In addition, NeuroOne received an upfront license payment of $3 million and the potential to earn an additional milestone payment if certain performance criteria are achieved. We expect the expanded partnership to boost NeuroOne sales and to drive improved profitability. With that confidence, we are excited to provide guidance for fiscal year 2025 for revenue of $8 million-$10 million, representing revenue growth of 132%-190% over 2024. We are also projecting gross margins for fiscal year 2025 to range between 47% and 51% compared to gross margins of 31% in 2024. We are very happy to be reporting strong annual revenue growth in fiscal 2024 and expect our revenue growth and margin improvement to accelerate in 2025.

[Dave Rosa, CEO at NeuroOne]

We have also been able to strengthen our balance sheet with a $3 million license payment from Zimmer Biomet, 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. Regarding the launch of the OneRF 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. Physician interest has been very strong, including during the product exhibition at the American Epilepsy Society meeting last week. We are also very happy to report that OneRF ablation procedures have now been completed in 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 OneRF ablation procedure.

[Dave Rosa, CEO at NeuroOne]

We continue to be overwhelmed with the initial results and have now performed more than 150 RF ablations on 12 patients in five centers during our initial limited launch. 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. We are also happy to report that the new ICD-10-PCS code granted by CMS for the OneRF ablation procedure became effective October 1st, 2024, and will allow hospitals to report inpatient procedures that are performed using the OneRF ablation system. This will serve to support accurate data collection and processing of reimbursement claims by hospitals for the procedure. Turning to our product development programs, I am excited to announce that we are pursuing additional applications for RF ablation outside of the brain.

[Dave Rosa, CEO at NeuroOne]

Our next FDA submission will target patients with debilitating facial pain, also known as trigeminal neuralgia. The 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 150,000 patients diagnosed each year in the United States. We expect to submit our 510(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 into our 2025 revenue plan or revenue guidance. We remain convinced that the OneRF ablation system can serve as a platform technology for additional indications, such as RF ablation for lower back pain and knee pain, among others.

[Dave Rosa, CEO at NeuroOne]

We believe that having multiple indications for a OneRF ablation system provides competitive differentiation compared to a single function system and will offer added value to hospitals and physicians, which can be a consideration in hospital purchasing decisions. I would also like to provide updates on our product development programs, leveraging our thin-film electrode platform technology for spinal cord stimulation and drug delivery. 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 steerable capabilities for reliable deployment. Preclinical studies performed by renowned pain specialists have confirmed that our electrode can be implanted percutaneously in less than five minutes.

[Dave Rosa, CEO at NeuroOne]

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 surgical implant techniques. Based on the strong feedback from our advisory board, we initiated discussions with potential strategic partners and are actively exploring partnerships for this technology. 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 SEEG-based drug delivery program, which leverages the small size and easy implantation of our commercially available SEEG devices.

[Dave Rosa, CEO at NeuroOne]

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 for placement, which is very costly and time-consuming. Going forward, we will be preparing a 510(k) application for SEEG-based drug delivery, as well as developing a miniaturized device for use in preclinical research. We believe that NeuroOne's SEEG-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, stem cell therapies, and other biopharmaceutical therapies for the treatment of neurological disorders.

[Dave Rosa, CEO at NeuroOne]

Finally, we intend to continue actively monitoring the closing bid price for our common stock between now and January 7th, 2025, and will consider all available options to resolve the deficiency and regain compliance with Nasdaq's minimum bid price requirement. 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.

[Ron McClurg, CFO at NeuroOne]

Thanks, Dave. Product revenue was $0.3 million in the fourth quarter of fiscal 2024 compared to $0.7 million in the prior year fourth . The reduction in product revenue in the fourth quarter of fiscal 2024 was due to the company's cancellation of a Zimmer Biomet purchase order in order to transition our manufacturing to the new OneRF product line. Product revenue increased 77% to $3.5 million in fiscal year 2024 compared to $2 million in fiscal year 2023.

[Ron McClurg, CFO at NeuroOne]

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. Our total operating expenses decreased 12% to $3 million in the fourth quarter of fiscal year 2024 compared with $3.4 million in the prior year fourth quarter.

[Ron McClurg, CFO at NeuroOne]

Total operating expenses decreased 6% to $13 million in the full fiscal year 2024 compared to $13.9 million in fiscal year 2023. R&D expense decreased 39% to $1.1 million in the fourth quarter of fiscal 2024 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 compared to $6.9 million in fiscal year 2023.

[Ron McClurg, CFO at NeuroOne]

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. SG&A expense was $7.9 million in fiscal year 2024 compared to $6.9 million for the full fiscal year 2023. Our net loss was $3.3 million for the fourth quarter of fiscal 2024 compared to a net loss of $3.1 million in the same prior year fourth quarter.

[Ron McClurg, CFO at NeuroOne]

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. 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 standby secured credit facility agreement. As of September 30th, 2024, the company had cash and cash equivalents of $1.5 million compared to $5.3 million as of September 30th, 2023.

[Ron McClurg, CFO at NeuroOne]

The company had working capital of $2.4 million as of September 30th, 2024, compared to working capital of $5.5 million as of September 30th, 2023. The company had no debt outstanding as of September 30th, 2024. 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. Dave mentioned before. We are providing full fiscal year 2025 financial guidance.

[Ron McClurg, CFO at NeuroOne]

The company expects product revenue for fiscal year 2025 to range between $8 million and $10 million, representing an increase of between 132% and 190% when compared to the product revenue of $3.5 million in fiscal year 2024. 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 now like to turn the floor back to Dave Rosa for closing remarks.

[Dave Rosa, CEO at NeuroOne]

Thank you, Ron. 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. We now have clear near-term growth drivers, as well as a strong product pipeline leveraging our novel platform technology. 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 OneRF ablation system, the first and only FDA-cleared device for RF ablation in the brain. We also expect our trigeminal nerve indication to be commercialized potentially in calendar year 2025, and we are continuing to make progress on product development milestones and potential strategic partnerships for our drug delivery and spinal cord stimulation programs. I would like to thank everyone for attending the call and look forward to updating you on our progress next quarter.

[Operator]

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

Participants

Analysts

• Ron McClurg, CFO at NeuroOne
• Dave Rosa, CEO at NeuroOne