ClearPoint Neuro Inc.

and thank you all for joining us today. Looking at the first quarter 2022 results, total revenue was $5 million for the three months ended March 31st, 2022, and $4 million for the first three months of 2021, which represents 25% growth versus the first quarter of 2021. Our revenue is made up of three components, functional neurosurgery navigation therapy, biologics and drug delivery, and capital equipment and software. Functional neurosurgery navigation revenue consists of commercial sales of disposable products and services related to cases utilizing the ClearPoint system to deliver medical device therapy to the proper target. This revenue segment increased 17% to $2.2 million for the first quarter, up from $1.9 million in the first quarter of 2021. Biologics and drug delivery revenue includes sales of disposable products and services related to customer-sponsored preclinical and clinical trials utilizing our products. Biologics and drug delivery revenue increased 30% to 2.2 million in the first quarter, up from 1.7 million in 2021. This increase was fueled by a 75% increase in biologics and drug delivery service revenue. Capital equipment and software revenue consisting of sales of ClearPoint reusable hardware and software and of related services increased 41% to $0.6 million for the first quarter from $0.5 million for the same period in 2021, following our new installations in the first quarter. ClearPoint Neuro achieved a gross margin of 65% on its sales for the first quarter of 2022, in line with the gross margin recorded in the first quarter of 2021. Research and development costs were $2.5 million for the three months ended March 31st, 2022, compared to $1.6 million for the same period in 2021, an increase of $1 million or 62%. The increase was due primarily to increases in personal costs of $0.3 million following our growth in headcount and a product development costs of $0.7 million, both resulting from our efforts to expand the applications of our technological platforms. Sales and marketing expenses were $1.8 million for the first quarter, an increase of $0.3 million compared to the same period in 2021. General and administrative expenses were $2.7 million for the first quarter compared to $1.7 million for the same period in 2021, an increase of $1 million or 65%. The increase was due primarily to increased share-based compensation of $0.6 million and personal costs of $0.3 million, both attributed to increases in headcount. Net interest expense for the three months ended March 31st, 2022 was 0.1 million compared to 0.3 million for the same period in 2021 due to the conversion into equity of two tranches of convertible debt in May 2021 and in November 2021. With respect to our cash position as of March 31st, 2022, we held cash and cash equivalent balances of 49.7 million compared to 54.1 million as of December 2021. I'd like to turn now the call back to Joe.

Thanks, Inouye. As I mentioned earlier, it was important for ClearPoint to get off to a good start here in 2022, and we did exactly that in the first quarter with record revenue and installs despite challenges with Omicron transmission, hospital staffing shortages, and supply chain delays and added costs. We also made significant progress across our development pipeline and added a number of new product and pharma partnerships. Now let's break that progress down into our four growth pillars. First, our biologics and drug delivery team continued to add additional partners and services here in the first quarter, increasing our total partner list to approximately 45. Over the past two years, we have been adding partners at a rate of more than one per month and believe that there are still a significant number of potential partners in neuro and spine that could benefit from ClearPoint hardware, software, and cannulas. As expected, each new partner brings new revenue, particularly early-stage service revenue, which grew 75% in the quarter. As a reminder, a key part of our strategy is to start working with our biologics partners well before they treat their first patient, so that we build relationships and familiarity with our products throughout the entire drug development process. Growth in this segment will continue from four primary sources. the addition of new partners and new indications into our portfolio to provide additional shots on goal and additional sources of revenue. Two, the addition of new services that we can provide to partners and become a more valuable provider to these companies that need our specific device expertise. Three, the progression through the development cycle from consulting to bench testing to preclinical testing to clinical trials to commercialization each progression creating larger revenue opportunities for ClearPoint. And finally, number four, new creative ways to partner with pharma through co-development, milestones, and potential royalties in the future. If we can continue to grow on all four of these axes, this will be a very exciting and diversified platform business for us. We continue to believe that a commercial gene therapy could be achieved in Europe later this year, and we expect that more information should become available in the coming months. And initial therapy approval will be an important milestone for the entire biologics community as regulators continue to define appropriate and achievable pathways to commercial availability. Now moving to our second pillar, our functional neurosurgery business, also showed growth of approximately 17%. We believe that this number could have been higher in the first quarter, and it was impacted by a six-week disruption in case volume, primarily in January and the first half of February. Although our March case volume was our highest monthly total in our history. Our cancellation and postponement rate remains at historic highs as daily COVID testing for patients, surgeons, staff, and even our own employees routinely identifies a key party to the procedure as COVID positive. When a patient shows up the day of their surgery, they're administered a COVID test. If they test positive, the procedure is postponed regardless if they are asymptomatic or vaccinated. Similarly, if a surgeon tests positive, they could be sidelined for weeks, postponing all procedures during that time. Unfortunately, we believe this higher postponement rate will continue for the foreseeable future, as long as this COVID testing remains a significant requirement. On the bright side, we did place four new systems here in the first quarter and expect those sites to all perform their first cases in Q2, a couple of which have already become active. We see this as a positive sign that hospitals are once again committing to capital purchases and, importantly, allowing new technologies and vendors access to the hospital for installation and training. From a pipeline standpoint, we did recently achieve FDA clearance for the ClearPoint Array 1.1 software, which now includes an important pre-planning module to facilitate more efficient planning and data transfer. The Array system is ClearPoint's first foray into the operating room environment. Here, we are going to walk before we run as we focus first on hybrid operating room MR suites, and we'll move into full operating procedures in 2023 and beyond. We had originally planned to do our first cases with the 1.1 software version in the second half of 2022, so this approval came a bit early versus our projected internal timeline. We have continued development across the rest of our pipeline as well, including the 2.1 ClearPoint software, the Maestro brain model, the Orchestra multi-trajectory head frame, our co-developed MER system in collaboration with BlackRock, and our robotic-assisted system called Revolution in partnership with D&K Engineering. We feel that we have an exciting cadence of new and improved products over the next few years, which will continue to demonstrate ClearPoint as one of the true innovative companies in the neurosurgery space. Our previous timelines remain intact. and we continue to expect first cases of ClearPoint 2.1 and Maestro software here in 2022, and Orchestra, MER, Revolution, and our Brain Computer Interface Navigation System sometime in 2023. While the team is doing what we can to keep these timelines intact, we do recognize the risk introduced by the global supply chain crisis on raw materials and components. So far, we have been successful in finding solutions to keep projects on track, but as you have heard from many firms and hospitals, there are issues that arise almost daily, and our team spends an inordinate amount of time firefighting, qualifying new materials and suppliers, and making sure that supplying product for current patients is still the number one priority. For our third pillar, our therapeutic products and access devices, we have continued our development progress and remain on schedule for our previously communicated timelines again. The ClearPoint exclusive laser ablation system that is in development with CLS in Sweden continues to make progress and has been submitted to the FDA for review. We remain on track for our first human cases to be performed later this year. We have received our first inventory of access drill solutions from Adior and expect to enter a full market release of the operating room version of the drill in 2022. Similarly, we remain on track to evaluate prototypes of the MRI conditional version in 2022 with an estimated first clinical use sometime in 2023. Access technologies, like our partnership with Adior, are important across our entire portfolio as they are designed to make procedures faster and more predictable, enabling more and more centers to perform two procedures a day in the same MRI suite or the same operating room. It is also important to note that the majority of our investment into the navigation system mentioned in Pillar 2 applies to biologics and drug delivery, as well as our therapy products. That's the beauty of a platform strategy, as much of the investment is applied across many indications, including biologics, deep brain stimulation, laser ablation catheter placement, biopsy, brain computer interfaces, and perhaps even more in the future. This is crucial from a training standpoint as well. Every biopsy case, laser ablation case, or DBS case that a hospital does with ClearPoint today is in fact training and preparing them to do biologics and brain computer interface cases in the future. Finally, our fourth pillar of achieving global scale has made progress as well. Our quality system has been successfully updated to be compliant with the new European MDR rules that went into effect in May of the past year. This is not a small task and has been daunting enough to some companies that they have decided not to sell certain products in Europe under these new regulations. We believe our quality system and knowledge is a strength and something that helps us differentiate ourselves in the eyes of our pharma and our device partners. We have been successful thus far in securing additional inventory ahead of the supply chain backlog that are very real and very challenging. We have used our existing capital to purchase materials ahead of time, particularly raw materials, which you can see by the expansion of inventory investment on our balance sheet today. Our cash burn for the quarter was approximately 4.5 million, leaving us with a balance of just under 50 million at the end of Q1. And at present, we do not have plans to raise any significant capital this year. If you add up the global opportunities across all of our current and future product lines, the results are quite impressive. Today, we are actively working directly or through partnerships on more than 35 different indications, which is estimated to include more than one million new patients diagnosed each year. If those one million plus patients were all treated with ClearPoint-enabling technology, the potential market is in excess of $12 billion annually. These markets, of course, will take time to develop but the sheer number of partnerships and opportunities we have today has diversified ClearPoint in a way that many individual therapy technologies cannot. We have many ways to win and to positively impact a large number of patient lives. At this point, we are adjusting our full year 2022 revenue guidance to between $21.0 and $22.0 million, up from $20 to $22 million, which was previously announced. We do expect further growth versus our Q1 results and think it's appropriate to increase the lower end of the range to reflect that. Our revenue guidance of $21 to $22 million does include the impact of certain risks. First, we assume that the effect of any new COVID-19 variant will have a modest impact on elective procedures that is somewhat transient and lasts for a month or two. Second, we assume that supply chain issues persist but that no meaningful back orders or supply issues take place to our customers for our products or for the therapeutic partner's products. Finally, the geopolitical issues in Europe are very difficult to predict relative to travel, new installations, material costs, hospital overcrowding, et cetera. So that risk is really not understood at this point and therefore not included in that guidance. With that, Rob, I would love it if you could open up the call to any questions.

Absolutely. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Frank Takian with Lake Street Capital Markets. Please proceed with your question.