NeuroOne Medical Technologies Corporation (NASDAQ:NMTC) Q3 2024 Earnings Conference Call August 14, 2024 4:30 PM ET
Company Participants
Dave Rosa – Chief Executive Officer
Ron McClurg – Chief Financial Officer
Conference Call Participants
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. 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
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. We continue to make progress with the OneRF limited product launch and have now implanted 16 patients, across four centers and performed more than 50 RF ablations on three 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. The term sheet is nonbinding 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. 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 therapies impact.
We believe sEEG based drug delivery could be helpful in accelerating timelines and reducing cost 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.
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
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 ’23. 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.
Our total operating expenses in the third quarter of fiscal ’24 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 ’24 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 ’24 was $1.9 million compared with the same number of $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. 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 ’23.
SG&A expense in the first nine months of fiscal ’24 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 ’23. For the first nine months of fiscal ’24, our net loss was $9 million compared with $8.7 million in the same period of fiscal ’23.
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, at 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. Company had no debt outstanding as of June 30, 2024.
On August 2, 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.
Question-and-Answer Session
Operator
Dave Rosa
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 and 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.
