ClearPoint Neuro Inc.

Greetings and welcome to ClearPoint Neuro's 2020 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Comments made on this call may include statements These forward-looking statements may include, without limitation, statements related to anticipated industry trends, the company's plans, prospects, and strategies, both preliminary and projected, and management's expectations, beliefs, estimates, or projections regarding future results of operations. Actual results or trends could differ materially. The company undertakes no obligation to revise forward-looking statements for new information or future events. For more information, please refer to the company's annual report on Form 10-K for the year ended December 31, 2019, and the company's quarterly report on Form 10-Q for the quarter ended June 30, 2020, both of which have been filed with the Securities and Exchange Commission, and the company's quarterly report on Form 10-Q All the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com. I would now like to turn the conference over to Joe Burnett, Chief Executive Officer. Please go ahead, sir. Thank you, Brock.

and thank you to everyone participating in today's call. I would like to start by saying that during the third quarter, we are encouraged by the return of many elective and pseudo-elective procedures, leading to our case volume rebounding to 200 cases covered here in the United States. I continue to be very proud of our essential employees in manufacturing and in our field clinical support team. Despite personal risks to themselves and repeated travel challenges, our team was able to ensure that every hospital and patient that requested the use of ClearPoint received it. We continue to show up when these very sick patients need it the most. I'm also very excited as we have continued to make progress in all four of our strategic growth pillars, including neurosurgery navigation, biologics and drug delivery, in-house therapeutics, and creating global scale. With all the uncertainty the last three months have offered, we all kept our heads down to ensure our development and strategic pipeline continue to move along even when much of the world was paused. By no means have we put this pandemic behind us. We currently have a number of hospital customers that have reduced surgeries due to higher COVID hospitalizations and a number of patients in high risk categories that continue to be reluctant to leave their homes to get treatment. Nonetheless, we are confident in our team and in our direction and we continue to believe that ClearPoint will exit this pandemic in a stronger position than when we started. I will now turn the call over to Hal to provide detail on our financial performance, after which I will highlight some progress across our four strategic growth pillars before answering questions.

Al? Thanks, Joe. Total revenues were $3.5 million for the third quarter of 2020 and $2.9 million for the same period in 2019, which represents an increase of $592,000, or 20%. Drilling down on the components of revenue, Functional neurosurgery navigation revenue, which consists of disposable product commercial sales related to cases utilizing the ClearPoint system, decreased 1% to $1.8 million for the third quarter of 2020 from $1.9 million for the same period in 2019. This decrease reflects the continuing effects of the COVID-19 pandemic. in which elective surgical procedures that were postponed or canceled at the outset of the pandemic have resumed, albeit at volumes that have not yet reached pre-pandemic activity. Biologics and drug delivery revenues, which include sales of disposable products and services related to customer-sponsored clinical trials utilizing the ClearPoint system, increased 162% to $1.5 million for the third quarter of 2020, from $564,000 for the same period in 2019, primarily due to an increase in biologic and drug delivery service revenues. This increase in biologics and drug delivery service revenues is attributable to the establishment of additional relationships with biologic and drug delivery companies that include period-based retainers for clinical services in support of such companies' respective clinical trials. Capital equipment and software revenue consisting of sales of ClearPoint reusable hardware and software and of related services decreased 48% to $200,000 for the third quarter of 2020 from $400,000 for the same period in 2019. While revenues from this product line historically have varied from quarter to quarter, the company believes that many hospitals have postponed capital equipment acquisition activities The company achieved a gross margin of 80% on its sales for the third quarter of 2020, compared to a gross margin of 66% for the same period in 2019. This increase was due primarily to a shift in the mix of revenues by line of business that resulted in service revenues, which bear higher gross margins in comparison to other product lines, representing a greater contribution to total sales for the third quarter of 2020 relative to the same period in 2019. Operating expenses for the third quarter of 2020 were $4.1 million, a 43% increase from operating expenses of $2.9 million for the same period in 2019. This increase was comprised of research and development costs, which increased 59% due primarily to increases in headcount and increased project activity. Sales and marketing expenses which increased 40% due primarily to increases in headcount of the company's clinical specialist team to prepare for case volume growth anticipated in 2021. And general and administrative expenses which increased 33% due primarily to an increase in company-wide share-based compensation and a reduction of the allocation of shared departmental resources to production due to the reduced manufacturing activity as an effect of the COVID-19 pandemic. Net interest expense for the third quarter of 2020 was $201,000, compared with $213,000 for the same period in 2019, primarily due to a decrease in the amortization of the discount associated with notes we repaid and retired during the first quarter of 2020, and to the repayment and retirement of other notes in June 2019. This decrease was substantially offset by the increase in interest expense associated with the secured convertible notes we issued in January 2020. Operating loss for the third quarter of 2020 was $1.3 million, compared with $900,000 for the same period in 2019. Cash and cash equivalent balances at September 30, 2020 were $14.7 million. With that, I will now turn the call back to Joe.