Neuraxis, Inc.

Good day, and thank you for standing by. Welcome to the NeurAccess Third Quarter 2024 Financial Results Conference Call. At this time, all participants are in 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'll need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Ben Shamsian with Litham Partners. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us for NARAX's third quarter 2024 financial results and corporate update conference call. Joining us today on today's call is Brian Carrico, CEO of Norexis, and Tim Hendricks, CFO of Norexis. At the conclusion of today's remarks, we will open the call to questions. If you are listening through the webcast, you can send in a question through utilizing the Ask a Question box or simply emailing your 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. 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 NeurAccess. 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 any 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. NARAXIS undertakes no obligation to update or revise any of these forward-looking statements. With that said, I would like to turn the call over to Brian Carrico, Chief Executive Officer of NARAXIS. Brian, please proceed.

Thank you, Ben. Good morning, and thank you for attending the third quarter 2024 earnings call. During today's call, I will highlight the many recent accomplishments in our commercialization strategies for IV STEM, which is our IBS neuromodulation technology, and RED, our pending product for patients with evacuation disorder. We will discuss the milestones and growth plans for the remaining months of 2024 and into 2025 as we come off another strong quarter of execution and continue the commercialization of our market-leading PENFS technology. Following my remarks, Tim Hendricks, our CFO, will review our financial results for the third quarter of 2024. Let's first review the recent achievements. As I just mentioned, we are coming off a very strong quarter of year-over-year growth, the biggest milestone in the company's history, and a new FDA indication expansion. To highlight the three big announcements, we grew 40% year-over-year in Q3, We received notice of our Category 1 permanent CPT billing code, and we received FDA clearance for an age expansion from 11 to 18 to 8 to 21 years of age, nearly doubling our market opportunity. I will speak in much more detail later in the call about all three announcements. 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 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 advance and hit milestones with the goal of cash flow breakeven. Regarding IB STEM, we are primarily focused on revenue trajectory, And we had a significant change from Q1 to Q2 and even a larger positive year-over-year change in Q3 as children's hospitals get more comfortable with billing and coding. We also saw the very beginning of new insurance policy coverage take effect. As such, I'm excited to share with you that our momentum in Q3 has continued into Q4 and thus far the quarter is off to a very good start. I now want to focus on and highlight the catalyst for what we expect to be significant revenue growth in the coming quarters. In a perfect world, the children's hospitals could access blanket insurance policy coverage and a Category 1 CPT code. As mentioned earlier, the Category 1 CPT code has been awarded by the American Medical Association CPT Panel and will become effective January 1st of 2026. Regarding blanket insurance policy coverage, we went from 4 million covered lives on January 1st to about 35 million covered lives today. And we continue to announce new policies regularly. So what does it take to earn the remaining payers? 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 FAP-IBS. The most important recognition any medical 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 announced on the last call that a systematic review by the academic society NASPGAN was released at a conference in late May, showing our technology has the highest grade certainty level and the largest magnitude effect. NASPGAN 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 in abstract form now, but we believe this information is the work being used to publish guidelines in the coming months. We are 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 it 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 2023 and early in 2024, written policy coverage is the key to revenue significantly increasing. We also stated that once the insurance policy coverage is written and in place, the children's hospitals who were not already utilizing IV STEM take a minimum of 120 days to get the technology loaded, their processes in place, and begin ordering. With all of that said, I am happy to announce we have added additional payers bringing our total covered lives to about 35 million covered lives. In addition to this announcement, we have countless payers in the review process. Assuming even a few of those payers make positive decisions in Q4, we will exceed the 50 million covered lives number we projected early in 2024. We have many children's hospitals that have been ordering for years, but for a variety of reasons, we have not received early insurance policy coverage in those specific areas. Once insurance policy coverage is written in those specific areas, the children's hospitals are expected to increase revenue very quickly because the product is already in their system, therefore not needing the 120 days to get set up. Turning data into insurance policy coverage 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. Earlier in the call, I mentioned we have achieved the company's most important milestone to date in the form of a category one CPT code, which will allow for more seamless billing and reimbursement. This is a permanent billing code that will become effective on January 1st, 2026. The reason this code is so critical is that it brings a permanent code, making it much easier for revenue cycle teams to build a procedure It will bring a permanent reimbursement amount and RVUs, which is how most physicians' productivity is measured. Moving to FDA expansions, back in July, 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, nearly doubling the number of children we can treat. We recently heard from the FDA and this expanded indication was awarded on October 30th. Regarding RED or rectal 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 a 510 in early August and we are optimistic we will begin commercialization in late 2024. And finally, we have closed the necessary financings with reputable health care funds, ensuring we are well-funded for the foreseeable future. I want to focus on PENFS slash IB 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 associated with IBS. We at Neuraxis are very proud of this and believe it validates our optimism and expectations for IB STEM. I am excited to say that the efforts we have put in are starting to bear fruit. Not only do we expect this abstract data to change the guidelines, but we also expect it to expand insurance coverage with the largest payers significantly. We are beginning to see many of our achievements reflected in the numbers. The number of treated cases has increased to about 900 patients in the last 12 months, which represents just over one-tenth of 1% of the 600,000 debilitated children in the United States who suffer from IBS and are in strong need of IB STEM. Now I would like to focus on how this translates to revenue growth and why we continue to be bullish on significant revenue growth as we move into 2025 and beyond. I want to start by highlighting the sustained and increasing demand for IV stim. 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% versus 20% in Q1, and total units increasing by a robust 16%. In the third quarter, we had a stronger acceleration with year-over-year revenue increasing by roughly 40% and total units increasing by approximately 50%. The positive change here is due to several reasons, including accounts getting more comfortable with billing and coding, physicians seeing the academic society guidelines poster stating PENFS is the highest grade of evidence, and only the very slightest insurance policy coverage taking effect. A key point to add here is that revenue loss from 2023 is from children's hospitals that need written policy coverage from large payers, which is not yet in place. These are children's hospitals who were treating patients after a no authorization required during the prior authorization, and then they were not paid, so they have paused treating until they get written insurance policy coverage. Therefore, there is significant revenue pause versus loss. The fact that we are alleviating those losses without these children's hospitals shows the growth in new and existing accounts. Once larger payers write policy coverage, the children's hospitals that are on pause will begin ordering immediately, adding significant revenue. On average, selling prices for patients receiving IV stem through financial assistance are roughly 65% lower list price. The insurance barrier is causing us to leave significant dollars on the table. As insurance coverage increases across the country, the percentage of sales through purchase orders will also increase significantly. This is why our number one priority continues to be written insurance policy coverage. The point of action continues to be clear. Strong peer-reviewed publications and key society support from the likes of NASPGAN and the American Academy of Pediatrics result in successful coverage from insurance companies, which results in strong revenues. Our internal prior authorization team continues to be successful as it reduces the workload for clinic staff, which allows greater access for pediatric patients, and ultimately assisting in acquiring a permanent billing code. We believe that in time, most accounts will move their prior authorizations to the NeurAccess team. We expect revenue growth to accelerate meaningfully as we move into 2025 towards cash flow break-even based on two catalysts. the continued gaining of coverage from insurance companies for IB STEM, and the commercialization of REDD. Regarding REDD 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 NARACIS. We have now officially licensed this product from the University of Michigan, where it was developed, and we recently submitted a 510K to the FDA and are optimistic that this product will be on the market late Q4. If successful, RET is expected to bring great clinical benefits to patients, and because the technology has a Category 1 CPT billing code assigned to the procedure 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, anorectal function test to identify patients with chronic constipation due to pelvic floor dysinertia and who are unlikely to improve with laxative 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 in significant early insurance adoption, which we expect to grow revenues exponentially, moving us toward profitability and setting the stage for a prosperous 2025. I will now turn the call over to our CFO, Tim Henrichs, to discuss financials. Tim, please proceed.

Thank you, Brian. And let me add my welcome to everyone joining us on this call. These financial results were included within our press release, which was issued earlier, and were also provided in more detail within our Q3-24-10Q filed this morning. I will add some color on key areas of the financial results, as well as an outlook on certain areas. The hard work that our team has put in the last few years is beginning to bear fruit. All year, we talked about accelerated growth in the back half of 2024, and now we are seeing it. As Brian mentioned, in the third quarter, we delivered strong acceleration in our revenues and units as a result of increased insurance coverage. The good news is we are only in the early innings of our ramp as we expect the number of covered lives to continue to grow. In addition, we are optimistic with regards to the commercialization of red in late 2024. As such, we expect revenue growth to continue in the fourth quarter of 2024 and into 2025. Given our current cost structure, Our goal as a company to reach cash flow breakeven is achievable in a function of our sales volume, given our strong gross margins. Our recent successes in obtaining substantially more insurance coverage keeps us on that path. Finally, we have strengthened our liquidity position for the remainder of 2024 and into 2025 with a $5 million investment from a dedicated life sciences fund that will replace $3.2 million in committed funding from a current investor. The transaction is expected to close mid-November, and this investment will top off our 2024 capital raise activity at $11.2 million. With that, I will go through the financial highlights in detail. 2024 third quarter revenues were $667,000 compared to $477,000 for the same period in 2023, representing a strong 40% year-over-year revenue growth. Demand remains strong as our unit sales were up approximately 50% in the quarter year over year. It is also worth noting that our September year-to-date revenue is now relatively flat to prior year, which emphasizes our strong third quarter given our revenue was down 20% and 5% in the first and second quarters of 2024, respectively, compared to 2023. Such trends give us confidence for revenue growth going forward as discounted financial assistance assistance orders turn into full reimbursement dollars with policy coverage. As mentioned before, we remain highly focused on expanding our insurance coverage. Despite the inherent lag from insurance coverage device orders, which we have spoken about before, recent performance indicates strong demand and enthusiasm on the part of healthcare providers and demand patients for our product. Gross profit for the third quarter of 2024 grew to $570,000. compared to $410,000 in the third quarter of 2023 due to sales volume. Gross margin in the third quarter decreased 50 basis points year over year to 85.4%, although we saw a significant increase in full reimbursement units quarter over quarter. Discounted financial assistance units outpaced the growth of the full reimbursement units, resulting in a decline in gross margin. Notwithstanding, the company maintains a very healthy gross margin. Our operating loss for the third quarter of 2024 was $1.7 million, compared to $3 million in the third quarter of 2023. The sharp improvement in the operating loss quarter over quarter was due to a number of factors. First, higher sales volume and higher ASPs resulted in higher gross profit. Second, 2023 included non-recurring post-IPO consulting services and incentive bonuses. Those benefits were partially offset by incremental headcount, in 2024 to build out the market access, sales, and finance teams, expenses related to the introduction of an annual short-term incentive bonus plan, and higher advertising costs to expand market awareness. Our net loss in the third quarter of 2024 was $1.8 million versus an $8.6 million net loss in the third quarter of 2023, primarily due to full amortization of the debt discount and issuance costs and the extinguishment of debt. in 2023 from the IPO last year, partially offset by our lower general and administrative costs that I previously discussed. From a liquidity perspective, our cash on hand as of September 30, 2024, was $261,000. But to shore up our liquidity, we recently secured a $5 million investment from a life sciences-focused fund that is expected to close mid-November, replacing $3.2 million in committed funding from an existing investor. Our cash used in operations was $4.3 million and $4.1 million for the nine months ended September 30th, 2024 and 2023, respectively. The increase in cash utilization was primarily due to new public company costs in 2024, such as legal insurance, board and stock exchange listing fees that were not incurred prior to the IPO August of 2023. The company held no long-term debt as of September 30, 2024. However, we did have $148,000 short-term debt related to the financing of our annual business insurance premiums. With that, let me turn the call back over to Brian.

Thank you, Tim. In summary, we are early in what we see as strong top and bottom line growth over the next few quarters. The consistent execution of our commercialization strategy is beginning to bear early fruits. as we see from the growth acceleration in the past three quarters. We are also achieving milestones that will enable continued growth, including receiving our Category 1 CPT code and the expansion of our 510 clearance. Furthermore, we remain excited about our opportunity with REDD, which we expect to become commercial in late 2024, and has the potential to drive significant revenues. With that, operator, we would be happy to take any questions. As a reminder, you can ask a question on the webcast by typing in, ask a question box, Or if you're dialed in and would like to ask a question, follow the operator's instructions. Thank you.

Thank you. As mentioned, at this time, we'll now conduct the question and answer session. As a reminder, to ask a question, you'll need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile our Q&A roster.

Hi, Brian.

While we wait for some questions, we have some that were sent to us. First, can you talk about the significance of receiving the Category 1 code as well as the 510 extension?

Sure, Ben. First, the Category 1 code is the culmination of five, six, seven years of work. It requires an overwhelming amount of evidence and data, and it requires a significant amount of utilization. The criteria are strict and the bar is high, but the reason for that is that Category 1 essentially cements the technology into the medical foundation from the standpoint of the commercial insurance companies and state Medicaid recognize Category 1 CPT codes. The billing of a Category 3 code, which is what we currently have, is more difficult. Many Medicades or most Medicades don't recognize the code, which makes the prior authorization and the billing very difficult. The commercial payers, when it comes to billing a Category 3 code, it requires a children's hospital, for example, to itemize the device cost, the position time, the facility time, and the supplies. It's just a longer process and much more difficult for a chief revenue officer and revenue cycle team to operate with. So the category one code brings a recognizable code that will have all of those items included in the code and the reimbursement, there will be a permanent reimbursement amount. So number one, it makes the code much easier to bill. And that's really what's causing the delay once we get insurance policy coverage for accounts that have not brought the technology in before. The time to get that Category 3 code set up is significant, as we mentioned multiple times today. So it brings a very clear path with a Category 1 code to billing. Number two, it will bring a permanent reimbursement amount. So there's a set reimbursement amount. And number three, and probably most important, it brings RVUs. So RVUs are how physicians time is measured. So, for example, a physician is required to earn so many or work so many RVUs throughout the course of the year, and this will bring RVUs. So this motivates them. Currently, if they're doing this procedure, they're not receiving RVUs, so it doesn't go towards their workload for the year. So they're doing this from a clinical benefit standpoint, but they're not receiving any compensation, if you will, because they're not meeting those RVUs. So this is extremely important when you talk about streamlining and scaling the technology. Regarding the 510K extension, we're excited about the 510K. It increases the age range to eight, beginning at eight years of age up to the 21 years of age. I can't tell you how many patients on a daily basis were contacted that are 8, 9, 10, 19, 20, or 21 years of age. So this is a significant improvement. It was just an excellent quarter when it comes to Category 1 code and the 510K extension.

Thank you. Our next question comes from the line of Sergio Hyper with Hyper Research. Your line is now open.

Hi, guys. Congratulations on achieving everything that you stated that you were going to achieve with the code and the age extension. I was wondering about getting the clearance for extending the age. Doesn't that increase the covered lives?

Morning, Sergio. How are you? It won't change. Yeah, it won't change. We still need covered lives. So age expansion just allows more patients to be treated and actually be on label. But the policy coverage is separate. We still need to get written policy coverage from payers. They still have to write policy coverage to enable this. I mean, there are still large payers, for example, still cover this technology on a one-off case-by-case basis. But to get written policy coverage where it's an approved treatment for children, we still need to get written policy coverage with all of the payers.

I understand. Let me rephrase the question. So you have existing coverage with some insurance companies. Those same insurance companies have patients in the new age group that is not covered.

so wouldn't that mean that you have more lives under coverage you are well two answers to that one most policies right now state that they will cover for example let's just use blue cross blue shield massachusetts as an example that policy states they will treat patients 11 to 18 years of age so our market access team has already gone back to those payers and said that this age expansion has happened, those conversations with the payers are going very well, and we expect in short order that they'll expand those patients, that age range within their policy from 11 to 18 to 8 to 21. Now, the second part of your question is, do we have more covered lives? The answer is yes, in theory, but we won't announce more covered lives because covered lives is a standard, you know, there's a validated standard response to covered lives. If a certain insurance company covers a product or technology, we list all of those covered lives as covered. So, you know, if you dive into this deeper, which we could do for you, we know on our internal models how many patients there are at each specific age range. But that's not how you report or we report covered lives. Covered lives is reported based on how many patients there are. For example, if Blue Cross Blue Shield Massachusetts has 1,000 lives they cover, and I forget the exact number, it's 3 or 4 million, but if they cover 1,000 lives, we report 1,000 lives. Now, to your point, yes, there will be twice as nearly double the amount of covered lives within that payer that we can now treat. That's true. But we do need to make sure that we get the payer to change the policy from 11 to 18 and move that to 8 to 21, which we're in process of, and we don't see any issue or real delay in making that happen.

Thank you. I tell a lot of my investment friends about your company, and everybody's impressed. The thing that the people that I speak to haven't really understood is that it's a cure, not a treatment. And I was wondering if you have evidence that it's a cure. Do studies reflect that there is no recidivism of the disease?

That's a great question, Sergio. So we don't use the word cure, although we have three great papers showing long-term data at 12 months that's statistically significant. There are patients, there are some patients, there are always a handful of patients that don't respond. I believe that anecdotally and that there's some registry data showing around 70% of patients have strong responses, have long-term outcomes. there are always going, nothing's 100%, and there are always going to be some patients that, A, don't respond, and we've got some patients that long-term, at nine months or 12 months or 15 months, relapse, if you will, and need another cycle of treatment. So it's not perfect. We don't use the word cure, but it's really good.

And then another question I get asked is why isn't it available for So, and will you be shooting in that direction?

Yeah, that's another great question, Sergio. We're going to release a new deck today that will be in our IR firm. And we just haven't gotten to talk about that in our earnings calls yet. But we are well on our way to approaching the FDA for an adult indication expansion that would range from 21 through all adult ages. And I believe that we're aiming for late 2025 to earn that FDA indication. But that is in process. The adult demand, the adult market size is obviously significantly larger than the pediatric size. And there is significant demand from the adult market. That's a great question. We've been working on this for a couple of years. And we believe that roughly a year from now, we're cautiously optimistic that we'll be able to earn that indication as well.

And will you need clinical studies for that?

We do, and we have what we believe the necessary research underway and completed.

Okay. And then the new product that you expect to get clearance from the FDA, does that have a similar TAM or a larger TAM than the IBC?

It's got a similar TAM. I believe it's around just a little over $2 billion market opportunity for the TAM.

And the good news, Sergio, sorry to cut you off about that product, is that it already has a Category 1 CPT code. That's what we're so excited about IB STEM that we've been working for so long on. And number two, RED already is reimbursed by most, if not all, commercial payers and Medicare.

Oh, that's fantastic. So you'll be able to market it nationally much faster, right?

we expect to hit the ground running immediately with this product from a revenue standpoint.

And how will you sell that? Will you have an in-house team, a sales team, or food distributors, or both?

Well, that's one reason we're using our W-2 sales force, Sergio, and that's one reason we took this product on. If you look at our pipeline, which will be on our deck release later today on our IR site, Our synergy between our product is all pediatric GI, adult GI, and children's hospitals. It allows our W2 sales force to have the synergy, a very laser-focused synergy who we call on. But to answer your question, it will be our W2 sales force will pick that product up. They have the time, the bandwidth, and the ability to do so. They have the gastroenterology expertise. And as we continue to build this company and the foundation on those principles I just mentioned, this will fit in very nicely.

And then my last question is, will you meet the target of 50 million covered lives by the end of the year, and do you still expect to reach profitability next year?

Twofold. Number one, we set out at the beginning of the year to reach 50 million covered lives. We also expected the guidelines to already be published, which we know there are countless payers, we believe, with policy coverage written, and they're waiting on the published guidelines to be released. And now those public guidelines are not quite out yet. We're cautiously optimistic those will be out in January, and then those other policies will come through. Having that said, there are many payers that we believe are on the cusp of announcing policy coverage, and that could happen tomorrow or it could happen on January 2nd or sometime in between. So it's still very possible that we have those 50 million covered lives by the end of the year. And regarding cash flow profitability in 2025, that's the trend, that's the goal, and we continue to work towards that, yes.

So, Brad, you had said that you expected the publication in January because it's inherently better to publish in January than in the end of the year, and I didn't understand that.

Could you?

Yep.

Great question. So first, the reason the guidelines are so important is because this is an independent review of the literature by the academic society, which means we have zero involvement from an ethical standpoint, a moral standpoint. We are not able to be involved. We don't want to be involved in this. That's why the credibility is so high. We were cautiously optimistic these guidelines would have been published in the fall. And the fact that they're not here yet, we believe that they'll be January. And the reason for that is we're told that journals want to publish, academic journals want to publish in January because they're judged internally based on citations. And if they, during a 12-month January to December calendar year. So if they publish in October or November or December, they only get one or two months of citations, where if they publish in January, especially something as significant as the academic society guidelines for functional abdominal pain, that gives them a full 12 months of citation. which is very beneficial to them. Again, this is not a conversation we've had directly with the journal. This is just somewhat common knowledge in the med tech space and in the academic space from a publication standpoint. And we're reading between the lines here.

Thank you. That's all my questions. Keep on doing a great job, and hopefully it will attract some shareholder attention. You keep coming up with great news, and the market hasn't responded yet.

We are cautiously optimistic that this announcement today, the 40% growth year over year, combined with the Category 1 code, the increased insurance policy coverage, the expanded FDA indication, and then upcoming launch of RED. And then, as I mentioned, Sergio, the Q4 is off to an excellent start. So the Q3 momentum has continued into Q4. And, look, at some point, Sergio, we keep stacking strong quarters on top of each other with these milestones. The market will recognize.

I think so, too. I think so, too. Thank you very much for taking my questions, and congratulations on the quarter and the excellent development.

Thanks, Sergio. I appreciate your time.

All right. We have a question for you, Tim. On the last call, you spoke about expecting G&A expenses to settle in around $2 million a quarter. Came in about $2 million in Q3. Can we continue to expect this level in the near future?

Yeah, from a cash perspective, the answer to that is yes. From a GAAP perspective, we will have some incremental startup costs for RED into 2025, and then we also introduced a long-term incentive plan for employees in the fourth quarter of 2024, and that will result in some incremental non-cash expenses. But our plan as we head into 2025 is to be able to cover those expenses with the revenue growth that we're projecting. Short answer from the cash, yes. From a GAAP perspective, we will see some increased expenses, but we expect to hold our run rate going into 2025, especially with the revenue growth that we're seeing here in the third quarter that we're expecting in the fourth quarter. And we think that'll carry into 2025 to continue to reach our goal of cash flow brief even in the future once our revenues continue to grow at the pace they currently are.

Okay. We have one more question here for Brian. Can you talk about the timeline for the commercialization of REDD and how do you think about the revenues over the next few quarters?

Yeah, Ben. So, we're cautiously optimistic that we'll have this FDA indication by the end of Q4. And then once we're really close to the FDA indication, we'll tee up manufacturing, and we will launch this product very quickly, whether that be the end of Q4 or beginning of Q1. And then we'll plan what's traditional, and from a soft launch standpoint, we'll launch so many accounts the first 30 days, so many accounts the first 60 days, and so many accounts the first 90 days, and make sure that everything is as planned. And then we'll open this up. But as I mentioned earlier, we expect meaningful revenues out of this product in 2025. And assuming everything comes through the FDA and the soft launch goes as planned, we've spent about a year and a half on this technology at this point since we began the discussions of licensing it from the University of Michigan. And we're confident that the FDA will come through, that we will launch this product, and we'll see meaningful revenues in 2025 and cautiously optimistic in the first half of 2025.

Okay, thank you.

At this point, there are no more questions in the queue. Therefore, I'd like to turn the call back to Brian Carrico for closing remarks.

Thank you, everyone. I appreciate your time. We look forward to a great Q4. Talk to you again in the spring. Everyone have a wonderful holiday season, and we will talk soon. Thank you.

Thank you. This does conclude the program. You may now disconnect.