NeuroOne Medical Technologies Q3 2025 Earnings Call Transcript

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August 14, 2025

Key Takeaways

  • Positive Sentiment: Product revenue surged 105% year-over-year to $1.7 million in Q3, with gross margin improving to 53.9% from 34.1%, reflecting strong cost controls and operational efficiency.
  • Positive Sentiment: The company remains debt-free with $8.0 million in cash and cash equivalents as of June 30, bolstered by an $8.2 million oversubscribed financing in April that funds operations through at least fiscal 2026.
  • Positive Sentiment: NeuroOne celebrated its first patient achieving one-year seizure freedom with the OneRF ablation system and plans a post-market registry to collect broader outcomes data.
  • Positive Sentiment: The pipeline expanded with a FDA 510(k) submission for trigeminal neuralgia ablation targeting late-2025 revenues, ongoing development of lower-back pain and spinal cord stimulation products aimed at a $3 billion market, and the first order for its drug delivery system.
  • Negative Sentiment: Despite improvements, NeuroOne reported a net loss of $1.5 million ($0.03 per share) in Q3 and $2.0 million ($0.05 per share) for the first nine months, underscoring ongoing profitability challenges.
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Earnings Conference Call
NeuroOne Medical Technologies Q3 2025
00:00 / 00:00

There are 4 speakers on the call.

Operator

Good day, ladies and gentlemen. Welcome to the 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 Volker, the company's Chief Operating Officer, will also be in attendance. Before I turn the call over to Mr.

Operator

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. Forward looking statements, including statements regarding our fiscal twenty twenty five 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. See NeuroOne's financial results press release and SEC filings for information regarding specific risks and uncertainties that could cause actual results to differ.

Operator

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.

Speaker 1

Thanks, operator. We made excellent progress in the 2025 on our financial objectives as well as achieving successful outcomes in treating patients with our 1RF ablation system, advancing our product development programs and strengthening our management team. In terms of our financial progress, product revenue increased 105% to $1,700,000 and product gross margins increased to 53.9% compared to 34.1% in the 2024. These represent sizable improvements year over year, highlighting the strength of our current business as well as efforts to reduce costs. The company has done a great job of making meaningful progress with a limited burn rate.

Speaker 1

We also remain debt free and reiterate our expectations of being funded through at least fiscal year twenty twenty six based on contractual minimum orders expected under our contract with Zimmer Biomet, with the potential to get to cash flow breakeven if we achieve some of the key milestones currently in progress. This is due in large part to the oversubscribed financing of $8,200,000 in net proceeds that we raised in April. Regarding patient outcomes, in the 2025, we celebrated our first patient to reach the one year of seizure freedom milestone after being treated with our 1RF ablation system. I am pleased to report that the patient has been able to return to many of the activities she participated in prior to being diagnosed with epilepsy. It has had a major impact on her well-being and improved her quality of life.

Speaker 1

Additional patients are showing significant improvements with reduced or eliminated seizures and as a result, an improved quality of life. In an effort to highlight these positive outcomes, we are planning to initiate a post market registry to collect outcomes data for patients treated with our 1RF ablation system. With respect to expanding our product portfolio, I wanted to discuss a few market opportunities that we see as potential future revenue drivers. First, in pain management, we reported earlier that we submitted a five ten to the FDA for clearance to market an ablation technology to treat facial pain, otherwise referred to as trigeminal neuralgia. This is our first foray into pain management therapies with our thin film ablation technology, and we expect to pursue additional opportunities leveraging our technology platform in pain management and other therapeutic applications.

Speaker 1

If cleared by FDA, we expect to either commercialize the product directly or work with a strategic partner. There is the potential to generate revenues from trigeminal nerve ablation late in calendar year 2025, which is not currently factored into our operational plan. The next application that we are pursuing with our OneRF ablation system is the treatment of lower back pain through a procedure called basi vertebral nerve ablation, which would involve the percutaneous placement of our 1RF ablation electrode to disrupt the basi vertebral nerve, which is located in the vertebral body. It is understood that this nerve is a primary contributor to lower back pain and that by using RF energy to ablate this nerve, it can provide long term pain relief. The company recently received commitments from key physician thought leaders to serve as advisors for our 1RF BBNA, product development program.

Speaker 1

Keeping with an emphasis on pain management, we continue to move our spinal cord stimulation electrode technology forward as we recently launched a chronic study in animals. If these results are positive, we will be in a position to start preparing for first in man implants in early twenty twenty six, which could open up a new market opportunity for NEURO-one to treat lower back pain. This market currently generates over 3,000,000,000 in annual revenue and would represent the largest current market opportunity for NeuroOne. We continue to discuss with strategic corporate partners their interest in this and other potential applications for a thin film chronic implant electrode. Another market opportunity for the technology platform that we've previously discussed is our drug delivery system, which is still in development.

Speaker 1

We're excited to announce that we received our first order from a leading biotech company to test our drug delivery system. As designed, the biotech company is interested in using our technology to both deliver a therapy and to record brain activity before and after the therapy has been administered. We believe this is a very exciting example of the unique combination of therapeutic and diagnostic capabilities provided by our technology platform. Additionally, we continue to make progress with regulatory matters, intellectual property, and strengthening our management team. We previously reported that we were initiating a process to secure ISO thirteen thousand four and eighty five certification, which is required to commercialize and obtain regulatory clearances internationally.

Speaker 1

To date, we have not sold or commercialized any of our products in international markets. So if successful, international markets could represent significant revenue in the years to come. Regarding NeuroOne's intellectual property portfolio, we recently received a notice of allowance from the U. S. Patent and Trademark Office regarding the novel method of manufacturing that the company has developed.

Speaker 1

We also recently received notification that we have been granted our first international patent, which is for our spinal cord stimulation electrode. This is part of 17 patent applications that are either pending or approved. During the past quarter, we also welcomed Doctor. Parag Patil, a world renowned neurosurgeon as our Chief Medical Advisor, and Emily Johns, a partner at Hanigmann as General Counsel and Corporate Secretary. Both of these new hires have made immediate contributions, not to mention that their additions have also brought cost savings.

Speaker 1

In conclusion, we are reiterating our fiscal year twenty twenty five guidance and expect product revenue to be in the range of 8,000,000 to $10,000,000 representing an increase of between 132190% over fiscal year twenty twenty four. And we are also increasing our product gross margin expectations to be between 5053% versus our previous guidance of 47 to 51%. This compares to 31% in fiscal year twenty twenty four. I would now like to turn the call over to Ron McClurg to provide a review of our fiscal third quarter financial results.

Speaker 2

Thanks, Dave. Product revenue increased 105% to $1,700,000 in the 2025 compared to product revenue of $800,000 in the '4. As we discussed on our last quarterly call, we expect product revenue to ramp through the end of the fiscal year as the product launch expands. For the first nine months of fiscal twenty twenty five, product revenue increased 100% to 6,400,000.0 compared to 3,200,000.0 for the same period of fiscal twenty four. The company also had licensing revenue of 3,000,000 in the first nine months of fiscal twenty twenty five, which is not included in product revenue.

Speaker 2

Compared to no licensing revenue in the first nine months of fiscal twenty twenty four. License revenue in fiscal twenty twenty five was derived from the expanded exclusive distribution agreement with Zimmer Biomet. Product gross profit increased significantly to $900,000 or 53.9% of revenue in the 2025 compared to product gross profit of $300,000 or 34.1% of revenue in the same quarter of the prior fiscal year.

Operator

For the

Speaker 2

first nine months of fiscal twenty twenty five, product gross profit increased significantly to $3,600,000 or 56.8% of revenue compared to product gross profit of $900,000 or 29.5 percent of revenue in the first nine months of fiscal twenty twenty four. Total operating expenses decreased 9% to $2,800,000 in the 2025 compared to $3,100,000 in the same quarter of the prior year. R and D expense in the '5 was 1,200,000.0 the same as the '4. SG and A expense in the 2025 decreased 14% to $1,600,000 compared to $1,900,000 in the same quarter of the prior year. For the first nine months of fiscal 'twenty five, total operating expenses decreased 5% to $9,500,000 compared to $10,000,000 in the same period of fiscal twenty twenty four.

Speaker 2

R and D expense in the first nine months of fiscal twenty twenty five decreased to $3,900,000 compared to $4,000,000 in the same period of fiscal twenty twenty four. SG and A expense in the first nine months of fiscal twenty twenty five decreased 8% to $5,600,000 compared to $6,100,000 in the prior year period. Net loss in the 2025 improved to $1,500,000 or a loss of $03 per share compared to a net loss of 2,800,000.0 or a loss of $0.10 per share in the same quarter of the prior year. Net loss for the first September of fiscal twenty twenty five improved significantly to $2,000,000 or a loss of zero five dollars per share compared to a net loss of $9,000,000 or a loss of $0.35 per share in the same period of fiscal twenty twenty four. As of 06/30/2025, the company had cash and cash equivalents of $8,000,000 compared to $1,500,000 as of 09/30/2024.

Speaker 2

The company had working capital of 8,700,000.0 as of 06/30/2025 compared to working capital of $2,400,000 as of 09/30/2024. We have no debt outstanding as of 06/30/2025. Lastly, as Dave noted earlier, we recently bolstered our balance sheet by completing an oversubscribed capital raise with institutional investors in April, totaling $8,200,000 in net proceeds. We believe we are now funded through at least fiscal twenty twenty six, potentially longer if key milestones are hit. Operator, at this time, I think we can open it up for questions.

Operator

Thank you. Ladies and gentlemen, the floor is now open for questions. If you would like to join the queue to ask a question at this time, you may press star one on your telephone keypad. We do ask if listening on speakerphone this morning that you pick up your handset while asking your question to provide optimal sound quality. Once again, that'll be star one on your keypad at this time if you wish to join queue to ask a question.

Operator

Please hold a moment while we poll for questions. And we have a question from Jeffrey Cohen from Ladenburg Thalmann. Jeffrey, your line is live. Please go ahead.

Speaker 3

Hey. Good morning, Dave, Ron, and Chris. Couple questions from our end. I guess, firstly, could you talk about the, the EG drug delivery platform and give us a sense of is testing being done on animals now, or will there be some, human testing going on this year?

Speaker 1

Yeah. So, thanks for joining the call, Jeff. Good to hear from you again. Right now, the devices were ordered, for, initial testing just on the bench. And then from there, assuming that's successful, they will be used in animals.

Speaker 1

And then ultimately, if the testing is successful in animals then it would roll into a future clinical trial in humans.

Speaker 3

Okay, and do you have a sense of if the compound itself is cleared or that's still in preclinical stage as well?

Speaker 1

Oh, yeah, that's that's still in development. So it's not cleared yet. There's not been any human, testing done with that, but, that will happen.

Speaker 3

Got it. Okay. Could you jump over to trigeminal ablation and talk about the marketplace and talk about specific physician specialties that you could envision a commercial presence in?

Speaker 1

Yeah, so, from what we've been able to find in market research as well as through discussions with, some of our neurosurgeon advisors that participated in our advisory board for brain ablation. Roughly, there's about one hundred and fifty thousand people in The US that suffer from this condition. In terms of actual numbers of procedures, it's less defined, but again, just in having discussions with the physicians who are doing these procedures, it seems like the opportunity is similar as to what the numbers are for brain ablations, maybe a little less. I think we'll get a better idea of this, as we go out, to these actual centers. But the physicians performing this procedure and why it made so much sense for us to pursue it is that the same doctors who were doing brain ablations for these epilepsy patients are the same ones that are treating facial pain.

Speaker 1

So it makes a lot of sense, obviously, to initially focus on the sites that are using the ablation system for brain ablation to then expand the use, for, ablation of the trigeminal nerve to treat facial pain. So that's that's kind of an overview of the market, as well as who's doing the procedures.

Speaker 3

Got it. And then lastly for us, with regard to, SCS, could you talk about is the design and the product locked down as one SKU and implants would be, could you guesstimate what level of the spine?

Speaker 1

So what we're talking about in terms of the patient population, this is lower back pain. So I would say anywhere from L3, L4, down to S1 would more than likely be the targets for this type of therapy. In terms of the SKUs, we're not at that point yet, but there are going to be multiple components to the system. There'll be a delivery system, the electrode itself. So, it's likely that there would be much like what you see in brain ablation, as well as facial pain, multiple, skews for, you know, that represents the additional components.

Speaker 3

Okay, and will the implants be ablating at one level only or will you be trying any in two levels?

Speaker 1

Okay, sorry. I thought you were talking about spinal cord stimulation as opposed to. Oh, okay. So we won't be ablating. We would be, the electrode would be placed in the spine and general area designated, by the pain specialist based on where the patient is experiencing pain.

Speaker 1

So it would cover because the electrode is much larger than the traditional electrodes used. It would cover a larger area in terms of the spine. That's one of the advantages of the device.

Speaker 3

Okay, got it. And as far as Q4 goes, thanks Ron for the eight to ten confirmation. And any, any outlook for '26 that you wanna talk about at this point in time?

Speaker 2

We are not, giving a forecast yet for 2026. We do we are confident in the range, but we just have not made that public. Again, that's due to the minimum purchase requirements that are in Zimmer amended contract.

Speaker 3

Okay. Got it. Nice quarter. Thanks for taking our questions.

Speaker 1

Thank Thank

Operator

you. And there are no further questions in queue at this time. I would now like to turn the floor back to Dave Rosa for any closing remarks.

Speaker 1

Thank you, operator. I would again like to thank everyone for attending the call and look forward to connecting with the investor community throughout the upcoming quarter.

Operator

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.

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