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.