NeuroOne Medical Technologies Corporation (NASDAQ:NMTC) Q2 2024 Earnings Call Transcript

NeuroOne Medical Technologies Corporation (NASDAQ:NMTC) Q2 2024 Earnings Call Transcript May 14, 2024

Operator: Good day, ladies and gentlemen. Welcome to the NeuroOne Medical Technologies Corporation Second 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. 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 dates. 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: Thanks, operator, and welcome, everyone. During the second quarter of fiscal 2024, we continue 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. We also expect to see improvements in our product margins as we transition the product offering from Evo sEEG diagnostic electrodes to OneRF electrodes.

As a reminder, the OneRF Ablation System, the 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 five 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 third calendar quarter as additional generators are delivered to the company. 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-10-PCS hospital inpatient code application to the Centers for Medicare and Medicaid Services, otherwise known as CMS, in March for the OneRF 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 therapies impact. 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.

Q&A Session

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 five 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. I would now like to turn the call over to Ron McClurg to provide a review of our quarter — of our second quarter fiscal year 2024 financial results.

Ron McClurg: Thank you, Dave. Product revenue was $1.377 million in the second quarter of fiscal ’24 compared to product revenue of only $466,000 in the second quarter of fiscal 2023. For the first six months of fiscal ’24, product revenue was $2.355 million compared to $581,000 for the same period of fiscal 2023. The company had no collaboration revenue in the first six months of fiscal 2024 compared to collaboration revenue of $1.46 million in the first six 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 second quarter of fiscal 2024 were $3.3 million compared with $3.5 million in the same period of the prior fiscal year.

Research and development expense in the second quarter of fiscal ’24 was $1.3 million compared to $1.7 million in the second quarter of fiscal 2023. Selling, general and administrative expense in the second quarter of fiscal 2024 was $2 million compared with $1.8 million in the prior year period. For the first six months of fiscal ’24, total operating expenses were $6.9 million compared with $6.8 million in the same period of fiscal ’23. R&D expense in the first six months of fiscal 2024 was $2.8 million compared with $3.3 million in the same period of fiscal ’23. SG&A expense in the first six months of fiscal 2024 was $4.2 million compared with $3.5 million in the prior year period. Net loss was $2.9 million for the second quarter of fiscal 2024 compared to a net loss of $3.5 million in the second quarter of 2023.

Net loss for the first six months of fiscal ’24 was $6.2 million compared with $5.3 million in the same period of fiscal 2023. During the second quarter of fiscal 2024, the 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 million. As of March 31, 2024, the company had cash and cash equivalents of $2.4 million, compared to $5.3 million as of September 30, 2023. The company had working capital of $3.2 million as of March 31, ’24 compared to working capital of $5.5 million as of September 30, 2023. The company had no debt outstanding as of March 31, 2024. Subsequent to the end of the quarter, from April 1st 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 $1.3 million.

With that, I will turn it back to Dave.

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

Operator:

Dave Rosa: 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. In addition, we have other near-term product revenue opportunities with the devices and 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.