NeuroOne Medical Technologies Q2 2024 Earnings Call Transcript

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May 14, 2024

There are 3 speakers on the call.

Operator

Good day, ladies and gentlemen. Welcome to the NeuroOne Medical Technologies Corporation Second Quarter of Fiscal Year 20 24 Financial Results Conference 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. 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.

Operator

S. Federal Security 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 at their specified date. Forward looking statements may involve known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such statements. 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.

Operator

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

Speaker 1

Thanks, operator, and welcome, everyone. During the Q2 of fiscal 2024, we continued to make significant progress on our objectives relating to both commercialization and product development. First, I would like to comment on the commercial progress with our EVO SEEG electrode product line and commercialization partner Zimmer Biomet. Zimmer continues to add new accounts and as previously discussed, we saw a corresponding increase in EVO SEEG sales and revenue. We still believe there is a significant opportunity for continued growth as Zimmer Biomet further expands into new centers.

Speaker 1

We also expect to see improvements in our product margins as we transition the product offering from EVO SEEG diagnostic electrodes to 1 RF electrodes. As a reminder, the 1 RF ablation says first FDA cleared system with an intended use for both recording electrical activity and ablation of nervous tissue utilizing the same device. To date, we have implanted 5 patients at one center and look forward to adding new centers this quarter for a limited commercial launch. Once we receive additional ablation generators, we will expand the launch more broadly. We expect that to occur during the 3rd calendar quarter as additional generators are delivered to the company.

Speaker 1

Regarding device distribution, we are currently distributing the product directly, but remain in discussions with potential strategic partners regarding the licensing of the technology. We also presented an ICD-ten PCS hospital inpatient code application to the Centers For Medicare and Medicaid Services, otherwise known as CMS, in March for the 1RF ablation procedure, support accurate data collection and processing of reimbursement claims by hospitals for the procedure. In addition, we plan to leverage the versatility of our ablation generator by targeting other indications to treat pain. We are targeting the submission of a new application to the FDA by the end of this calendar year and we'll provide further updates as we get closer to a submission date. We previously discussed our drug delivery program and the potential of our SEEG platform technology to deliver pharmacologic therapies to the brain as well as monitor the therapy's impact.

Speaker 1

We believe the technology could be helpful for drug development, clinical studies and eventually offer another tool for neurosurgeons to treat a variety of neurosurgical complications. During the past quarter, we made progress on developing and testing accessories that were requested by a potential strategic partner. The company continued to show progress in the development of electrode for use in spinal cord stimulation to treat patients suffering with low back pain. Members of our physician advisory board were able to successfully place a paddle electrode in 5 minutes or less using our proprietary percutaneous delivery system. We expect to freeze the design of this technology by the end of this calendar year.

Speaker 1

I would now like to turn the call over to Ron McClurg to provide a review of our quarter of our Q2 fiscal year

Speaker 2

$1,377,000 in the Q2 of fiscal 'twenty 24 compared to product revenue of only $466,000 in the second quarter of fiscal 2023. For the 1st 6 months of fiscal 2024, product revenue was $2,355,000 dollars compared to $581,000 for the same period of fiscal 2023. The company had no collaboration revenue in the first 6 months of fiscal 2024 compared to collaboration revenue of 1,460,000 dollars in the 1st 6 months of fiscal 2023. Collaboration revenue in 2023 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 the period. Total operating expenses in the Q2 of fiscal 2024 were $3,300,000 dollars compared with $3,500,000 in the same period of the prior fiscal year.

Speaker 2

Research and development expense in the Q2 of fiscal 2024 was $1,300,000 compared to $1,700,000 in the Q2 of fiscal 2023. Selling, general and administrative expense in the Q2 of fiscal 2024 was 2,000,000 compared with $1,800,000 in the prior year period. For the 1st 6 months of fiscal 2024, total operating expenses were $6,900,000 compared with $6,800,000 in the same period of fiscal 2023. R and D expense in the 1st 6 months of fiscal 2024 was $2,800,000 compared with $3,300,000 in the same period of fiscal 2023. SG and A expense in the 1st 6 months of fiscal 2024 was $4,200,000 compared with $3,500,000 in the prior year period.

Speaker 2

Net loss was $2,900,000 for the Q2 of fiscal 2024 compared to a net loss of $3,500,000 in the Q2 of 2023. Net loss for the 1st 6 months of fiscal 2024 was 6,200,000 dollars compared with $5,300,000 in the same period of fiscal 2023. During the Q2 of fiscal 2024, this company sold common stock under the ATM program at an average price of $1.43 per share, from which the company received net proceeds of $2,000,000 As of March 31, 2024, the company had cash and cash equivalents of $2,400,000 compared to $5,300,000 as of September 30, 2023. Company had working capital of $3,200,000 as of March 31, 2024, compared to working capital of $5,500,000 as of September 30, 2023. Company had no debt outstanding as of March 31, 2024.

Speaker 2

Subsequent to the end of the quarter, from April 1 to May 10, 2024, the company sold additional common stock under the ATM program at an average price of $1.21 a share and received net proceeds of 1,300,000 dollars With that, I will turn it back to Dave.

Speaker 1

Thanks, Ron. Operator, I think we can open up for questions now if there are any questions.

Operator

Certainly. The floor is now open for questions. There are no questions in queue at this time.

Speaker 1

All right. Well, I'd like to provide some closing remarks at this time. So first, I'd like to thank everyone again for attending the call. This is the best position that NeuroOne has been in since the company's inception. Our revenues are growing and we are adding to the current product lines to allow for faster revenue growth and improved margins.

Speaker 1

In addition, we have other near term product revenue opportunities with the devices in development, which will assist in helping us to get to breakeven status faster. We have excellent partnerships with the Mayo Clinic and Zimmer Biomet and have prominent institutional investors supporting us. I firmly believe the best is yet to come. Operator?

Operator

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

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Key Takeaways

  • NeuroOne reported strong commercial momentum for its EVO SEEG electrodes in partnership with Zimmer Biomet, with sales and revenue growth and anticipated margin improvement as the company transitions to its 1RF electrode offering.
  • The 1RF ablation system, FDA-cleared for both recording electrical activity and ablation, has treated five patients in a limited launch and is set for broader rollout in Q3 as additional generators arrive, with an ICD-10-PCS application submitted to CMS.
  • Research programs advanced on the SEEG drug delivery platform and a spinal cord stimulation electrode, with physician advisors demonstrating five-minute paddle placement and a design freeze targeted by year-end.
  • In Q2, product revenue rose to $1.377 million from $466 thousand a year ago, net loss improved to $2.9 million, and the balance sheet showed $2.4 million in cash, strengthened by ATM stock offerings.
AI Generated. May Contain Errors.
Earnings Conference Call
NeuroOne Medical Technologies Q2 2024
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