ClearPoint Neuro Inc.

Greetings. Welcome to ClearPoint Neuro Inc.'s first 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. Please note, this conference is being recorded. Comments made on this call may include statements that are forward-looking within the meaning of the securities laws. 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 obligations for revised 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, 2020, which has been filed with the Securities and Exchange Commission and the company's quarterly report on Form 10-Q for the quarter ended March 31, 2021, which the company intends to file with the Securities and Exchange Commission on or before May 17, 2021. 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 your host, Mr. Joe Burnett, Chief Executive Officer. Thank you. You may begin.

Thank you, Devin, and thank you to all of the investors and analysts on the call today for being a part of the ClearPoint vision and journey. We are here to help restore quality of life to patients and their families who are suffering from some of the most debilitating neurological disorders imaginable. In the first quarter of 2021, we made substantial progress across all four of our pillars of growth, including functional neurosurgery navigation, biologics and drug delivery, ClearPoint-owned therapeutic products, and achieving global scale. Importantly, we made this progress in our portfolio against the backdrop of record revenue in the quarter The resumption of elective procedures at the majority of our hospitals and the addition of multiple pharma partners to our growing list of active customers. The significant infusion of capital that we closed in the quarter also supports not only the expansion and acceleration of our product portfolio, but also our geographic and quality system expansion to a more global scale. I will now turn the call over to Danilo, our CFO, to review our financial performance in the quarter, after which I will add some additional detail to our four-pillar growth strategy. Danilo?

Thank you, Joe, and thank you all for joining us today. Looking at the first quarter 2021 results, total revenue was $4 million for the three months ended March 31st, 2021, and $3.1 million for the three months ended March 31st, 2020, which represents an increase of $0.9 million, or 29%. Our revenue is made up of three components. Functional Neurosurgery Navigation and Therapy, Biologics and Drug Delivery, and Capital Equipment. Functional Neurosurgery Navigation revenue, which consists of disposable products, commercial sales related to cases utilizing the ClearPoint system, increased 10% to $1.9 million for the three months ended March 31st, 2021, from $1.7 million for the same period in 2020. This increase reflects the resumption in the three months ended March 31st, 2021 of elective surgical procedures, which were postponed or canceled over the past months due to the COVID-19 pandemic. Case volume increased each month and a quarter. Biologics and drug delivery revenue, which includes sales of disposable products and services related to customer-sponsored clinical trials utilizing our products, increased 61% to 1.7 million for the three months ended March 31st, from 1 million for the same period in 2020. due primarily to the resumption of clinical trial activities that led to increased sales of biologics and drug delivery products. Capital equipment and software revenue consisting of sales of ClearPoint reusable hardware and software and of related services increased 31% to 0.5 million for the three months ended March 31st from 0.3 million for the same period in 2020. While revenue from this product line historically has varied from quarter to quarter, We believe that the increase represents the partial resumption of hospitals' capital equipment acquisition activities following the onset of the COVID-19 pandemic. While hospital budget constraints caused by the pandemic continue to be a real headwind, the current funnel of potential installs is very healthy. The gross margin for the three months ended March 31st was 65%, compared to 70% for the same period in 2020. This decrease was primarily due to a greater contribution in the first quarter of 2020 to total sales of service revenues. which contribute higher gross margins in comparison to other product lines. And a portion of overhead allocated to cost of revenue resulting from larger production output volume during the three months ended March 31st, 2021 relative to the same period in 2020. Research and development costs were $1.6 million for the three months ended March 31st compared to $0.8 million for the same period in 2020, an increase of $0.8 million or 91%. Sales and marketing expenses were $1.6 million for the three months ended March 31st, compared to $1.3 million for the same period in 2020, an increase of $0.3 million, or 21%. Both these increases reflect additions in key areas to our team as it builds the infrastructure necessary to expand product lines, launch and indications, and comply with global standards as we plan our international expansion. General and administrative expenses were $1.7 million for the three months ended March 31, 2021, compared to $1.3 million for the same period in 2020, an increase of $0.4 million, or 30%. This increase was due primarily to increases in insurance, occupancy costs, and incentive-based and insurer-based compensation. At March 31, 2021, we had cash and cash equivalents totaling $64.9 million, as compared to $20.1 million at March 31, 2020. with an increase resulting primarily from the completion of a public offering of the company's common stock in February 2021. I will now turn the call back to Joe.