NeuroOne Medical Technologies Corporation (NASDAQ:NMTC) Q4 2023 Earnings Call Transcript

NeuroOne Medical Technologies Corporation (NASDAQ:NMTC) Q4 2023 Earnings Call Transcript December 14, 2023

NeuroOne Medical Technologies Corporation beats earnings expectations. Reported EPS is $-0.13, expectations were $-0.17.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the NeuroOne Medical Technologies Corporation Fiscal Fourth Quarter and Full Fiscal Year 2023 Financial Results Conference Call. Today's call will be conducted by the company's Chief Executive Officer, Dave Rosa, and Chief Financial Officer, Ron McClurg. 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 the federal -- 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 corporate update press release and SEC filings for information regarding specific risks and uncertainties that could cause actual results to differ. Except as required by law, we undertake no obligation to update such forward-looking statements. With that said, I'll turn the call over to Dave Rosa, CEO of NeuroOne. Dave?

Dave Rosa: Thanks, operator. And before I start, just a heads up for everyone that I'm trying to get over a cough and I apologize in advance, if I start to cough, it becomes a nuisance, I'll just have Ron finish the call. So first and foremost, thanks for joining us this evening. During our fiscal fourth quarter and through today, the Company continued to make significant strides in our objectives relating to commercial progress, product development and regulatory clearances. I would first like to discuss what I believe is the Company's most significant accomplishment in our history, and that is FDA clearance of our OneRF Ablation System, which is the first FDA-cleared system that has obtained an indication for both recording electrical activity and ablation of nervous tissue, utilizing the same device.

I mentioned last quarter that we had submitted a 510(k) application to the FDA this past June. The FDA responded to the submission with questions that we responded to last month. We were confident in our responses to FDA, and this past Monday, we announced that the FDA provided a 510(k) clearance for the system for the creation of radiofrequency lesions in nervous tissue for functional neurosurgical procedures. We anticipate a commercial launch in the first half of 2024. Currently, we are waiting for hardware components for the RF generators. Once they are available, we will release the product for commercialization. We remain in discussions with two strategic organizations regarding their interest in licensing the technology for these procedures and expect to reach a decision in the near future.

We also remain open to commercializing the device directly if we believe it presents the best option for the Company. In addition, the Company is exploring other applications for the system to treat pain. We believe there are additional market opportunities we may be able to take advantage of with the system, and we'll provide further updates regarding this in the future. We are extremely excited with this major accomplishment and continue to demonstrate the Company's ability to execute on our strategic plan. We believe that the addition of the system to our product offering positions us well to compete not only for the ablation business but also for the sEEG electrode sales opportunity. I'd now like to provide an update regarding the expanded launch of our Evo sEEG electrode product line with our commercialization partner, Zimmer Biomet.

In our fourth fiscal quarter, Zimmer continued to strategically open new centers. Feedback remains consistently positive regarding the device performance, and we are seeing increasing usage in recent months. We expect to see a continued ramp in device sales and revenue as the launch expands further and believe that the clearance of our OneRF Ablation System will also have an additional potential positive impact on the Evo sEEG sales. Moving on to our drug delivery program. You might recall that I discussed potential for our sEEG electrode technology to offer the ability to deliver genes or drugs to the brain as well as record the therapy's impact. During the past quarter, we defined the product requirements for use in both clinical and research, develop prototypes for future studies and were granted a patent by the United States Patent and Trademark Office.

We are currently in contract discussions with a biotech company regarding their interest in using our device in their upcoming clinical studies and have discussions scheduled with other potential partners as well. We are excited with the prospects of this technology and how it may assist the biopharma, biotech industry in their drug or gene therapy delivery development, but also its value clinically in current neurosurgical procedures. If we are able to reach an agreement with our existing contract negotiations, the technology has the potential to add revenue later in calendar year 2024. Regarding our development efforts with our spinal cord stimulation program to treat chronic back pain, members of our Physician Advisory Board successfully placed a 9-millimeter paddle electrode.

Paddle electrodes are very similar in concept to cortical or film electrodes but they were able to place a 9-millimeter paddle electrode utilizing a percutaneous placement approach and a cadaver model. In addition, we completed a histological analysis of a 28-day implanted paddle electrode without any notable concerns. Spinal cord stimulation and pain management remain a priority for the Company, given the market opportunity and potential competitive advantages of our technology. Thank you for your time. And now, I'd like to turn it over to Ron for a more in-depth review of our fiscal fourth quarter and full fiscal year 2023 financial results, highlighting revenue gains, past financing and other key financial metrics. Ron?

A scientist studying the effects of neurotrophic factors on neuronal survival.

Ron McClurg: Thank you, Dave. Product revenue was $742,000 in the fourth quarter of fiscal 2023 and $1,952,000 for the full fiscal year compared to a product revenue of about $69,000 in the fourth quarter of fiscal '22 and $171,000 for the full fiscal year 2022. The Company had no collaboration revenue in the fourth quarter of fiscal 2023 and $1.45 million for the full year of fiscal 2023, compared to collaboration revenue last year of $1.9 million in the fourth quarter and just slightly below $1.950 million for the full year of fiscal 2022. Collaboration revenue was derived from the Zimmer development agreement and represents a portion of the exclusivity and milestone fee payments that were eligible for revenue recognition during the respective periods.

Our total operating expenses in the fourth quarter of fiscal '23 were $3.4 million compared to $3.3 million in the same period of the prior year. R&D expenses in the fourth quarter of fiscal 2023 were $1.8 million compared to $1.4 million in the same period of the prior year. SG&A expenses in the fourth quarter of fiscal '23 were $1.6 million compared with $1.9 million in the prior year period. Total operating expenses for the full fiscal year of 2023 were $13.9 million compared with $11.9 million in the prior fiscal year. R&D expenses for the full fiscal year of 2023 were $6.9 million compared with $4.9 million in fiscal 2022. SG&A expenses for the full fiscal year of 2023 were $6.9 million compared with $7 million in the prior fiscal year.

Our net loss was $3.1 million for the fourth quarter of fiscal 2023 compared to a net loss of $1.4 million in the prior year period. For the full year, net loss was $11.9 million for fiscal '23 compared to a net loss of $10 million in fiscal 2022. On July 27th of this year of 2023, the Company consummated an underwritten public offering of its common stock for $6 million in gross proceeds from which the Company received $5.2 million in net proceeds. In addition, the Company sold common stock under the ATM program at an average price of $1.77 per share from which the Company received net proceeds of $2.5 million. As of September 30, 2023, the end of our fiscal year, the Company had cash, cash equivalents and short-term investments of $5.3 million compared to $11.1 million as of September 30, 2022.

We had working capital of $5.5 million at September 30, 2023, compared to working capital of $9.1 million as of September 30, 2022. The Company had no outstanding debt as of September 30, 2023 or 2022. With that, I will turn it back to Dave.

Dave Rosa: Thanks, Ron. Operator, at this time, I think we can open up the call for questions.

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