ClearPoint Neuro Inc.

Greetings and welcome to the ClearPoint Neuro, Inc. second quarter 2024 financial results conference call. At this time, all participants are in a listen-only mode. A brief 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 that are forward-looking within the meeting of 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, the size of the total addressable markets or the market opportunity for the company's products and services, and management's expectations, beliefs, estimates, or projections regarding future revenue, results of operations, or the adequacy of cash and cash equivalent balances to support operations and new future obligations. 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 10k for the year ended december 31st 2023 and the company's quarterly report on form 10q for the three months ended march 31st 2024 both of which have been filed with the securities and exchange commission and the company's quarterly report on Form 10-Q for the three months ended June 30th, 2024, which the company intends to file with Securities and Exchange Commission on or before August 14th, 2024. All the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com. And it is now my pleasure to introduce your host, Joe Burnett, Chief Executive Officer. Thank you, Joe. You may begin.

Thank you, Morgan. And thank you to all of the investors and analysts on today's call for being a part of the ClearPoint neuro vision and journey. Our mission and our priority is 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 second quarter of 2024, the entire ClearPoint neuro team contributed to a record revenue quarter of 7.9 million, and in our view, the strongest financial and strategic performance in our history. We made significant progress across all four of our growth pillars, including number one, biologics and drug delivery, number two, neurosurgery navigation, number three, therapy and access products, and number four, in achieving global scale. Before we get started, I would like to frame the call by reminding everyone a bit about our history and why these four individual growth pillars are important. When we started our journey here at ClearPoint, we were reliant on just one of these four pillars, which was neurosurgery navigation. We were an MRI navigation company focused on guiding placement of deep brain stimulation leads, and that was about it. As leaders, we're always looking for that best analogy to help tell our story. Instead of pillars, maybe we should think about a growth engine. And back four years ago, we were essentially a one-cylinder engine. If that cylinder or piston was firing, then we were on the move. If anything happened to that one cylinder, we were stopped in our tracks, as we saw at times in our history with COVID case cancellations and limited MRI access. As a team, we set out to improve the performance of this engine. We invested first in catheter and cannula technology to focus on products for clinical trials sold directly to pharmaceutical partners. We added preclinical services to incorporate our technology into the drug discovery process and to build relationships with pharmaceutical companies well in advance of those first patients being treated. We added laser therapy to control larger portions of the procedure and offer not only the surgical navigation, but also the therapy itself. We realized that MRI access can be a barrier at some hospitals, so we added technology to enable our platform to work not only in the MRI, but also in the operating room using CT as the primary imaging tool. We partnered with technology companies to build out unique software and artificial intelligence modeling capabilities to aid in precisely delivering therapeutics and also grow our installed base. We invested in regulatory submissions to expand access to our technology beyond the United States by growing into the European Union, Asia Pacific, and other countries to further support the growing cell and gene therapy market. We now feel that we have successfully added additional cylinders to our company's growth engine, as our year-to-date 2024 results show. The expansion and increased depth of our products and services portfolio will not only help us accelerate our growth, but also allow us to diversify our revenue streams and reach more patients. We are no longer that one cylinder engine, but rather a multi-cylinder engine that is ready for the next stage of our journey. What we have seen here in the second quarter has been the start of that next phase of ClearPoint where we are now seeing the contribution of all of these cylinders starting to ramp up and to propel us forward. 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 and expectations for the second half of 2024. Danilo?

Thank you, Joe, and good afternoon, everyone. Looking at the second quarter 2024 results, total revenue was $7.9 million for the three months ended June 30th, 2024, and $6 million for the three months ended June 30th, 2023, which represents 32% growth versus the second quarter of 2023. As a reminder, our revenue is made up of three components, biologics and drug delivery, neurosurgery, navigation and therapy, and capital equipment and software. 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 28% to $4.3 million in the second quarter, up from $3.4 million in 2023. This increase was fueled by $1.3 million, or 383% increase in biologics and drug delivery product revenue, as multiple pharmaceutical customers progress in their preclinical and clinical development. The biologics and drug delivery growth was partially offset by a $0.4 million decrease in service revenue. Neurosurgery navigation revenue consists of commercial sales of disposable products related to cases utilizing the ClearPoint system, the PRISM laser system, or SmartFrame OR. This revenue segment increased 17% to $2.6 million for the second quarter of 2024. The revenue growth is primarily attributable to our new product offerings and our new recent placements. Capital equipment and software revenue consisting of sales of ClearPoint reusable hardware and software and of related services increased 148% to $0.9 million in the quarter from $0.4 million for the same period in 2023 due to an increase in the placements of ClearPoint Navigation Capital and Software and PRISM laser units. Gross margin for the second quarter 2024 was 63%, as compared to a gross margin of 53% for the second quarter of 2023. The increase in gross margin was primarily due to lower costs for the three months ended June 30th, 2024, due to transition to the new manufacturing facility occurring in 2023 and higher volumes in 2024. In the second quarter of 2024, our operating expenses were $9.7 million, compared to $10.3 million for the second quarter of 2023, as we continue to gain operating leverage. Research and development costs were $3.1 million for the three months ended June 30, 2024, compared to $3.6 million for the same period in 2023, a decrease of $0.5 million, or 13%. The decrease was due primarily to lower product and software development cost of $1 million as a result of reprioritization of certain research and development initiatives, partially offset by increased personal cost of $0.3 million and trial cost of $0.2 million. Sales and marketing expenses were $3.8 million for the second quarter compared to $3.5 million for the same period in 2023, an increase of $0.4 million or 10%. This increase was due to additional personal costs and travel expenses as we expand our commercial reach as we execute on our new product launches and prepare for increased procedural volume. General and administrative expenses were $2.8 million for the second quarter, compared to $3.2 million for the same period in 2023, a decrease of $0.4 million, or 13%. This decrease was due primarily to lower debt expense of $0.7 million, mainly as a result of subsequent recoveries, partially offset by higher personal costs and share-based compensation of $0.2 million. As of June 30, 2024, our year-to-date operating expenses were about 4% lower than our operating expenses in the same period of the prior year, despite growing our revenue 36% in the first half of 2024. With respect to our cash position, as of June 30, 2024, we held cash and cash equivalent $8 million compared to $23.1 million as of December 31, 2023. In line with the prior quarters, we continued to meaningfully reduce our operational cash burn. Our operational cash burn in the second quarter of 2024 was $2.7 million, or 47% lower than our operational cash burn in Q2 2023. In the past trailing 12 months, our operational cash burn was $9.5 million, This represents a 46% reduction compared to the corresponding prior 12-month period, that is, from July 2022 to June 2023. With that, I'd like now to turn the call back to Joe.