Neuraxis, Inc.

Good day and thank you for standing by. Welcome to NeurAccess Report's second quarter 2024 financial results. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would like to hand the conference over to your speaker today. Ben Shemerson, you may begin.

Good morning, everyone, and thank you for joining us for NeurAxis's second quarter 2024 financial results and corporate update conference call. Joining us on today's call is Brian Carrico, CEO of NeurAxis, and Tim Hendricks, CFO of NeurAxis. At the conclusion of today's prepared remarks, we will open the call to questions. If you are listening through the webcast, you can send in a question through the portal utilizing the ask a question box or by simply emailing a question to nrxs at lithiumpartners.com. If you are dialed into the live call and would like to ask a question, you can follow the instructions provided by the operator by pressing star and 11 button. Today's event is being recorded and will be available for replay through the webcast information provided in the press release. Finally, I'd like to call your attention to the customary safe harbor disclosures regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of NeurAxis. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors, including but not limited to the factors set forth in the company's filings with the SEC. NeurAccess undertakes no obligation to update or revise any of these forward-looking statements. With that said, I would now like to turn the event over to Brian Carrico, Chief Executive Officer of NeurAccess. Brian, please proceed.

Thank you, Ben. Good morning and thank you for attending the second quarter 2024 earnings call. During today's call, I will highlight the many recent accomplishments in our revolutionary neuromodulation technology commercialization strategy. We will discuss the milestones and growth plans for 2024 and into 2025. as we continue the strong execution of the commercialization of our market-leading PENFS technology. Following my remarks, Tim Henrichs, our CFO, will review our financial results for the second quarter of 2024. First, I'm going to review the recent achievements and milestones. We are continuing to execute at a high level on our growth objectives, rooted in the foundation that strong published data will drive insurance expansion leading to sustainable revenues and margins. We laid out these objectives in previous calls and are coming off another very successful quarter where we continue to put the final pieces in place to allow blanket insurance coverage and, in turn, the scaling of PENFS revenues. In recent months, we have made significant achievements as we advanced and hit milestones, forging a clear path to profitability in 2025. Regarding IV STEM, we are primarily focused on revenue trajectory. And we had a significant change from Q1 to Q2 as new insurance policy coverage is taking effect, and some of the issues from Q1 are residing. Further to that point, we are very optimistic, based on the strong first month of Q3, that real revenue growth is taking hold based on the continued adoption of the insurance policy coverage. As we all know, the scientific community has accepted our flagship technology, but has been hindered by a lack of written insurance policy coverage. The largest payers have been waiting on the Academic Society to publish guidelines for functional abdominal pain associated with IBS. The most important recognition any technology can receive, any MedTech technology can receive, is independent guidelines by the Academic Society because this is an independent review of the literature and a grade is assigned, which the payers accept as the standard. We are thrilled to announce the systematic review by the Academic Society Naspagans was released at a conference in late May showing our technology has the highest grade certainty level and the largest magnitude effect. NASPGAN, as mentioned in earlier calls, is the North American Society for Pediatric Gastroenterology, Hepatology, and Nutrition, and they are the academic society for pediatric gastroenterology where our technology resides. This systematic review is not published guidelines, but we believe this information is the work being used to publish guidelines in the coming months. That's important because we have been told by the largest payers that this publication is an internal mandate for policy coverage, so we are eagerly waiting for this publication to get to the payers. Sticking with insurance policy coverage, I want to go into detail about the most important aspect of our growth. As we stated, late in 23 and early in 24, written policy coverage is the key to revenue exponentially increasing. We also stated that once the insurance policy coverage is written and in place, it takes 90 to 120 days for the children's hospital to get the technology loaded, their processes in place, and begin ordering. One example of this is the Care First Blue Cross Blue Shield policy that took effect in the Washington, D.C. and Maryland areas on January 1st of this year. The two primary children's hospitals in that coverage area began ordering in May, increased orders in June, and increased again in July, showing how this process works. With all of that said, I am happy to announce that we have received written confirmation from one of the nation's largest not-for-profit health plans, serving 12.6 members that they have approved IV STEM for all pediatric gastroenterologists nationally, and we expect that to take effect around October 1st. We do not yet see written policy coverage in the public domain, so we will technically keep our total lives at 22.5 million versus 4.5 million at the same time last year. But as soon as this policy becomes public, our covered lives will officially be 35.1 million covered lives. In addition to this announcement, we have roughly 15 payers in the review process. Assuming even a few of those payers make positive decisions this fall, we will exceed the 50 million covered lives number we projected early in 2024. Turning data into policy and then into revenue is a process that we believe is beginning to work well, and the expected academic society guidelines will only expedite that process. In addition, We have submitted an application for a Category 1 CPT code, which will allow for more seamless billing and reimbursement. Furthermore, we made a submission to the FDA for the expansion of our IV stem label to include a patient population beyond the current 11 to 18 years old to 8 to 21 years old, which would nearly double the number of children we can treat. We're cautiously optimistic that the FDA will clear that age expansion later in 2024. Regarding RED, or Erectile Expulsion Device, our point of care device that identifies patients with pelvic floor dysfunction and provides immediately actionable test results in patients with chronic constipation, licensed from the University of Michigan. We submitted an FDA 510 in early August, and we are optimistic we will begin commercialization in late 2024. And finally, we have closed the necessary financing with reputable healthcare funds ensuring we are properly positioned to reach profitability. I will touch upon each of these areas in more detail throughout the call today. I want to move to the focus on PENFS or IV STEM. I want to begin by highlighting the work we have done over the last five years to demonstrate and document the true efficacy of our therapy, which now includes 16 publications covering 10 different types of studies. This has resulted in the highest level of evidence available for functional abdominal pain in IBS in children. We at Neuraxis are very proud of this and believe it validates our optimism and expectations for IB STEM. I'm excited to say that the efforts we have put in are finally starting to bear fruit. Not only do we expect this abstract to change the guidelines, but we also expect it to significantly expand insurance coverage with the largest payers We are beginning to see many of our achievements reflected in the numbers. The number of treated cases has increased over 850 in the last 12 months, which represents just over one-tenth of 1% of the 600,000 debilitated children in the U.S. who suffer from IBS and are in strong need of IV STEM. Now I would like to focus on how all of this translates to revenue growth and why we expect revenue growth to accelerate in the second half of 2024 and beyond. I want to start by highlighting the sustained and increasing demand for IV STEM. If you recall, revenue in Q1 was down 20% year-over-year and units were down 14%. In the second quarter, we had a strong acceleration with year-over-year revenue declining by roughly 5% and total units increasing by a robust 16%. The positive change here is insurance reimbursement, which is taking a strong turn for the positive There's a vast majority of patients in desperate need of IV stem. Their insurance does not cover the product. These patients mostly forego the treatment altogether, but some purchase the devices through various financial assistance programs offered through our IV stem guidance and patient support program. A key point to add here is that the revenue loss from 2023 is from children's hospitals that need written policy coverage from large payers, which is not yet in place. The fact that we are alleviating those losses without these children's hospitals shows the growth in new and existing accounts. Once large payers write policy coverage, the children's hospitals on pause will begin ordering immediately, adding significant revenue. On average, selling prices for patients receiving IV STEM through patient financial assistance are roughly 60% below our list price. The insurance barrier is causing us to leave significant dollars on the table. By our calculation, in the first half of 2024, we have left close to $2 million on the table from just a very small number of children's hospitals, which is not just revenue, but margin. As insurance coverage increases across the country, the percentage of sales through purchase orders will also increase. This is why our number one priority continues to be written insurance policy coverage. Our plan of action continues to be clear. We believe that strong peer-reviewed publications and key society support from the likes of NASFGN and the American Academy of Pediatrics result in successful coverage from insurance companies which result in strong revenues. From a proof of concept standpoint, we see the children's hospitals with even some policy coverage translated into strong revenue. We have two examples of hospitals with moderate insurance policy coverage, and each is on pace to generate well over $500,000 in annual revenue in 2024, and many more are now growing in that direction. When you think about 260 children's hospitals plus pediatrician's offices, you can understand why we are bullish on our revenue trajectory as policy coverage and coding become formal, and that is with only our first indication. We have several short-term focus opportunities, including insurance policy coverage, which is being successfully addressed, as mentioned earlier, Continuing to grow our internal prior authorization team to reduce the workload for clinic staff, which allows greater access for pediatric patients, and ultimately assisting in acquiring a permanent billing code. Regarding prior authorizations, we built and launched an internal prior authorization team in 2023 to help with the time and tense of prior authorizations required to increase access to care for children. This program has been extremely successful for those children's hospitals that have transferred their prior authorizations to us. This program continues to grow monthly, and we believe that in time, most accounts will move their prior authorizations to the NeurAccess team. Regarding the billing codes, we have our own Category 3 CPT technology-specific billing code today, which is helpful, but in some areas, but can be challenging for children's hospitals when building their charges to bill insurance. This has caused a delay in treating patients, even after written insurance policy coverage is in place. As mentioned earlier, we've submitted an application for obtaining a Category 1 CPT permanent billing code. We expect revenue growth to accelerate meaningfully in the latter half of 2024 and into 2025 to profitability based on two catalysts. the continued gaining of coverage from insurance companies for IV stem, and the commercialization of red. Demand for the product has never been stronger, but expanding insurance coverage is critical to growing revenues. While we have 22.5 million lives currently under coverage, many of them have been effective for less than 120 days. It is important to appreciate the lag time from coverage from insurance companies for PNFS to when hospitals begin purchasing the product. as time is needed for billing teams to put the proper processes in place. To that point, we saw the coverage that took place in early 2024 beginning to show up in May and June. The Q3, we see an even stronger foothold. Regarding RED for adult patients, we recently filed our FDA submission and are cautiously optimistic about FDA clearance and commercialization commencing in late Q4. Let's speak a little bit more about REDD, or the Rectal Expulsion Device product, which we believe to be a great opportunity for Norexis. We have now officially licensed this product from the University of Michigan, where it was developed, and we recently submitted a 510 to the FDA and are optimistic about this product, as I said, being on the market late Q4. If successful, REDD is expected to bring great clinical benefits to patients, and because the technology already has a Category 1 CPT billing code assigned and strong national reimbursement, we believe the providers will be able to bring this clinically beneficial technology to their practice immediately. Red is a self-inflating balloon that is an easy-to-use, office-based, point-of-care, interrectal function test to identify patients with chronic constipation due to pelvic floor dysinertia and who are unlikely to improve with increased lack of use. The current treatment involves much trial and error by the physician as to which treatment will work. And red will allow the physician to streamline the diagnosis and choose the best treatment option after the first visit, which is a real win for the patient. In summary, we are pleased with continued and consistent execution of building the foundation on strong data and academic society support. This has resulted and significant early insurance adoption, which we expect to ramp revenues in the latter half of 24, moving us towards profitability and setting the stage for a prosperous 2025. I will now turn the call over to our CFO, Tim Henrich, to discuss the financials. Tim?