NeuroOne Medical Technologies Q3 2024 Earnings Report

NeuroOne Medical Technologies EPS Results

• Actual EPS: -$0.60
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

NeuroOne Medical Technologies Revenue Results

• Actual Revenue: $0.83 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

NeuroOne Medical Technologies Announcement Details

• Quarter: Q3 2024
• Date: 8/14/2024
• Time: N/A
• Conference Call Date: Wednesday, August 14, 2024
• Conference Call Time: 4:30PM 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 Q3 2024 Earnings Call Transcript

Key Takeaways

• Completed a $2.65M private placement and entered into a $3M secured credit facility to expand the 1RF limited commercial launch, finalize product development, and advance partnership diligence.
• Launched the 1RF ablation system in a limited commercial release with 16 patients implanted across four centers and over 50 RF ablations performed, and initiated sales quotations with 12 additional centers.
• Secured a new ICD-10-PCS code for the 1RF ablation procedure effective October 1, 2024, enabling hospitals to accurately report inpatient procedures and support reimbursement claims.
• Advanced product development on multiple fronts, including pursuing an FDA submission for pain indications in early 2025, engaging partners for a SEEG-based drug delivery system, and finalizing design for a percutaneous paddle lead for spinal cord stimulation.
• Reported Q3 product revenue of $826K (up from $630K YoY) with a net loss of $2.8M (improved from $3.5M), while cash and equivalents totaled $1.6M at quarter-end before the recent financing.

Presentation

[Operator]

Good day, ladies and gentlemen. Welcome to the NeuroOne Medical Technologies Corporation third quarter of fiscal year 2024 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. 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 all based on management's beliefs and assumptions as of today's call or other 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.

[Operator]

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.

[Dave Rosa, CEO at NeuroOne Medical Technologies Corporation]

Thanks, operator. During the third quarter of fiscal 2024, we made significant progress on our commercialization, product development, and financial objectives. First, I would like to provide an update on improvements to our balance sheet with the recent capital raise and most importantly, the limited commercial release of the OneRF Ablation System. On August 2, we completed a $2.65 million private placement and also entered into a $3 million secured credit facility agreement. This will allow the company to expand the OneRF limited commercial launch, complete product development intended for a new ablation indication, and complete the diligence process with a potential strategic distribution partner for the OneRF Ablation System. As a reminder, this technology is the first FDA-cleared system with an intended use for both recording electrical activity and ablation of nervous tissue utilizing the same device.

[Dave Rosa, CEO at NeuroOne Medical Technologies Corporation]

We continue to make progress with the OneRF limited product launch and have now implanted 16 patients across 4 centers and performed more than 50 RF ablations on 3 patients. We have also initiated the sales quotation process with an additional 12 centers. The manufacturing transition of our product offering from Evo sEEG diagnostic electrodes to strictly OneRF electrodes has also been completed. In addition, the completion of the development of the RF generator and transition to OneRF electrodes are also expected to drive improvements in our product margins and monthly cash burn going forward. Regarding device distribution for the OneRF Ablation System, we are currently distributing the product directly, but as we recently announced, we have signed a term sheet with an undisclosed global medical technology company to distribute our OneRF Ablation System.

[Dave Rosa, CEO at NeuroOne Medical Technologies Corporation]

The term sheet is non-binding, and the partnership is subject to the negotiation and execution of definitive documentation, due diligence, and other customary closing conditions. We are also happy to report that the Centers for Medicare and Medicaid Services, otherwise known as CMS, approved and granted a new ICD-10-PCS code for the OneRF ablation procedure. The new code will be effective October 1, 2024, and allows hospital reporting of inpatient procedures that are performed using the OneRF Ablation System to support accurate data collection and processing of reimbursement claims by hospitals for the procedure. In addition to RF ablation in the brain, we are also planning to leverage our ablation generator for other indications to treat pain. We are targeting our next application to the FDA in early calendar year 2025.

[Dave Rosa, CEO at NeuroOne Medical Technologies Corporation]

We believe having multiple indications for our OneRF Ablation System will leverage our investment in developing the generator and provide added value to hospitals, which can be a critical consideration in hospital purchasing decisions. We are also making great progress with our product development programs, leveraging our thin film electrode platform technology for drug delivery and spinal cord stimulation. We continue to be excited about the potential for our sEEG-based drug delivery system, where we can leverage our existing sEEG technology platform to deliver pharmacologic therapies to the brain with the capability of monitoring the therapy's impact. We believe sEEG-based drug delivery could be helpful in accelerating timelines and reducing costs for drug development and clinical studies for a variety of neurological conditions being treated with a variety of therapeutic agents, including biopharmaceutical drugs, as well as stem cell and gene therapies.

[Dave Rosa, CEO at NeuroOne Medical Technologies Corporation]

During the past quarter, we have been active in discussions with multiple strategic partners for our sEEG-based drug delivery system. We are also making substantial progress with our percutaneous paddle lead program for use in spinal cord stimulation, designed to treat patients suffering from back and neck pain. We expect to freeze the product design by the end of calendar year, and are planning to initiate discussions with potential strategic partners that may be interested in funding further development and commercialization of this novel technology. I would now like to turn the call over to Ron McClurg to provide a review of our third quarter fiscal year 2024 results. Ron?

[Ron McClurg, CFO at NeuroOne Medical Technologies Corporation]

Thank you, Dave. For the third quarter of fiscal year 2024, product revenue was $826,000, compared to product revenue of $630,000 in the third quarter of fiscal 2023. For the first nine months of fiscal 2024, product revenue was $3.2 million, compared to $1.2 million for the same period in fiscal 2023. The company had no collaboration revenue in the first nine months of fiscal 2024, compared to collaboration revenue of $1.46 million in the first nine 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.

[Ron McClurg, CFO at NeuroOne Medical Technologies Corporation]

Our total operating expenses in the third quarter of fiscal 2024 were $3.1 million, compared to $3.8 million in the same period of the prior fiscal year. Research and development expenses in the third quarter of fiscal 2024 were $1.2 million, compared with $1.9 million in the third quarter of fiscal 2023. SG&A, or selling, general, and administrative expense, in the third quarter of fiscal 2024 was $1.9 million, compared with the same number, $1.9 million, in the prior year period. For the first nine months of fiscal 2024, total operating expenses were $10 million, compared with $10.5 million in the same period of fiscal 2023.

[Ron McClurg, CFO at NeuroOne Medical Technologies Corporation]

Our R&D expense in the first nine months of fiscal 2024 was $4 million, compared with $5.2 million in the same period of fiscal 2023. SG&A expense in the first nine months of fiscal 2024 was $6.1 million, compared with $5.3 million in the prior year period. Our net loss was $2.8 million for the third quarter of fiscal 2024, compared to a net loss of $3.5 million in the third quarter of fiscal 2023. For the first nine months of fiscal 2024, our net loss was $9 million, compared with $8.7 million in the same period of fiscal 2023.

[Ron McClurg, CFO at NeuroOne Medical Technologies Corporation]

During the third quarter of fiscal 2024, the company sold common stock under the ATM program at an average price of $1.19 per share, from which we received net proceeds of $1.6 million. As of June 30, the company had cash and cash equivalents of $1.6 million, compared to $5.3 million as of September 30, 2023, the end of our most recent fiscal year. The company had working capital of $2.2 million as of June 30, 2024, compared to working capital of $5.5 million as of September 30, 2023. The company had no debt outstanding as of June 30, 2024.

[Ron McClurg, CFO at NeuroOne Medical Technologies Corporation]

On August second, 2024, as Dave mentioned, following the end of the quarter, the company completed a $2.65 million private placement, resulting in $2.5 million in net proceeds, and also entered into a $3 million secured credit facility agreement. The company has not borrowed anything under the credit facility agreement at this time. Operator, at this time, I think we can open up for questions.

[Operator]

Certainly. The floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone, to provide optimum sound quality. Please hold just a moment while we poll for any questions. There appear to be no questions in queue at this time. I would now like to turn the floor back over to Dave Rosa for any closing remarks.

[Dave Rosa, CEO at NeuroOne Medical Technologies Corporation]

Thank you, operator. I would like to again thank everyone for attending the call. In closing, we are very pleased with our progress on commercial, product development, and financial objectives. We are very excited and optimistic about the strong customer interest in our OneRF ablation system, as well as interest from potential strategic partners for our products in development. We are well positioned with both near-term and longer-term growth drivers, as well as improving margins and reduced cash burn. Thank you again for attending the call, and we look forward to updating you on our progress next quarter.

[Operator]

Thank you, everyone. 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.

Participants

Executives

• Dave Rosa, CEO
• Ron McClurg, CFO