ClearPoint Neuro Inc.

Greetings. Welcome to ClearPoint Noro, Inc., fourth quarter and full year 2024 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, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. Comments made on this call may include statements that are forward-looking within the meaning of the security laws. These forward-looking statements may include, without limitation, statements related to anticipated industrial trends, the company's plans, prospects, strategies, both preliminary and projected, the size of total addressable markets, or the market opportunity for the company's products and services, the management's expectations, beliefs, estimates, or projections regarding future revenue. results of operation or adequacy of cash and cash equivalent balances to support operations and meet 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 forum information. 10-K for the year ended December 31, 2023. The company's quarterly report on Form 10-Q for three months ended September 30, 2024, both of which have been filed with the Securities and Exchange Commissions. And the company's annual report on Form 10-K for the year ended December 31, 2024, which the company intends to file with the Securities and Exchange Commission on or before March 31st, 2025. All of the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com. It is now my pleasure to introduce Joe Burnett, Chief Executive Officer. Thank you, Mr. Burnett. You may begin.

Thank you, Sherry. And thank you to all of the investors and analysts today joining us on today's call. This is an important and truly exciting moment in the history of ClearPoint as we enter the next phase of the company. This is a phase that we refer to as fast forward. Successful companies continuously evolve as they mature. We at ClearPoint started first in the discovery and design phase, working alongside neurosurgeons and biopharma partners to identify the tools required to build an ecosystem suitable for the future of cell and gene therapy. Once that roadmap was created and confirmed, we graduated into a more foundational phase. Over the past few years, we've built the tools and the infrastructure necessary to not only gain regulatory clearance for the products in this drug delivery ecosystem, but we also put the people, the processes, and the capabilities in place to attract hospital customers and very sophisticated biopharma partners alike. From a product standpoint, we successfully launched new MR navigation systems, operating room navigation systems, drug delivery technologies, laser therapy and access products, and preclinical and clinical drug discovery services, driving both our revenue growth and customer adoption of the ClearPoint ecosystem. From a structural standpoint, we added a new manufacturing facility, global regulatory clearances beyond the United States, a sound quality system capable of welcoming routine pharma company audits, An IP portfolio of more than 100 owned and licensed patents, safeguarding our inventions in multiple countries, a biopharma partner base of more than 60 customers, and more than 100 activated ClearPoint centers around the world. Here in 2025, we enter the fast forward phase, which is where we put that foundation to work and build a thriving, scalable business on top of it. Fast Forward has three primary commitments that we are making as an organization. First, we will extend our lead in cell and gene therapy delivery by leveraging our complete and unique drug delivery ecosystem, including navigation hardware, predictive modeling and monitoring software, cannula-based routes of administration, preclinical and clinical drug discovery services, and clinical case support. We will use this ecosystem to support our more than 60 active biopharma partners in their path to regulatory clearance and eventual commercialization. Second, we will evolve our portfolio to focus not only on accuracy and precision, but also on fast, simple, predictable workflows. These new product launches are designed to increase hospital efficiency and throughput and to create capacity for the significant demand that we believe is coming when patients learn that these new restorative therapies have proven effective. And third, we will expand our global installed base to enable more patients around the world access to the ClearPoint system that will be used for these novel treatments. Let's remember the first of these cell and gene therapies is already commercially available in the United States, European Union, and Brazil. And there is the potential of additional approvals in the next two years for much larger patient populations. There is no time to waste and the time to fast forward is now. And like any successful team, we not only look to the ground ahead of us, but we also look to the horizon as well. We have already named the aspirational phase of ClearPoint that follows in the years ahead, a phase that we call Essential Everywhere. The Essential Everywhere phase will begin when our 60 plus biopharma partners not only have clinical success, but commercial success and start to achieve full market release across the more than 20 disease indications for which potential therapies are enabled by ClearPoint technology. It is crucial to note, as seen with the very first approval here in the United States and Europe, We believe these drug platforms will continue to be co-labeled with ClearPoint technology, making us an essential vendor and relationship for any hospital that wants to be a regional treatment center delivering these cell and gene therapies to their patients. And because our products are co-labeled with the drug, we will not only be an essential vendor to hospitals, but we will continue as an essential supplier to biopharma partners. These partners will want to control the delivery of their drug within the ClearPoint ecosystem for decades. If the drug can only be delivered using ClearPoint technology, well, then we have 60 plus biopharma partners, including some of the biggest pharma companies in the world that will want and will need to see ClearPoint succeed. There are billions of dollars being spent developing these new cell and gene therapies each year, and any commercial success will move the entire new and transformative market forward. Our biopharma partners will all benefit if ClearPoint can build this global ecosystem, including consistent navigation, consistent infusion technology, consistent software monitoring, consistent quality case reporting, and consistent in-person clinical support. To ensure quality, we want every drug infusion to be the same, akin to a lean manufacturing line set up at hospitals all around the world, delivering the exact same quality to every patient. Essential quality. and everywhere. With that backdrop for context, I will now turn the call over to Danilo, our CFO, to close the books on 2024, after which I will provide additional commentary on what we expect in 2025 and beyond as a part of our four-pillar growth strategy and our next phase, Fast Forward. Danilo?

Thank you, Joe, and thank you all for joining us today. Let me start by looking at the full year 2024 results. ClearPoint Neurototal revenues were $31.4 million for the year ended December 31st, 2024, which represents a 31% increase over revenue of 24 million in 2023. Our revenue is made up of three components, biologics and drug delivery, neurosurgery navigation 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 27% to $17.3 million in 2024, up from $13.6 million in 2023. This increase was primarily due to an increase in our product sales as our pharmaceutical partners advanced their development programs. 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 intended target. This revenue segment grew 21% to $10.3 million for the year 2024. The growth in this segment was mainly due to our increased installed base and the full market release of our PRISM laser system and SmartFrame OR solution. Capital equipment and software revenue consisting of sales of ClearPoint reusable hardware and software and of related services was $3.8 million for the year 2024, a 107% increase compared to 2023 as we expanded our installed base. Gross margin for the full year 2024 was 61% compared to 57% in 2023. The increase in gross margin was primarily due to lower costs due to transition to the new manufacturing facility occurring in 2023 and higher volumes for the year 2024. Research and development costs were $12.4 million for the year 2024 compared to $11.7 million in 2023, an increase of $.7 million or 6%. The increase was due primarily to increases in personal costs, including share-based compensation expense of $1.2 million due to growth in headcount Partial set by decrease of $0.5 million in research costs as a result of reprioritization of certain initiatives. Sales and marketing expenses were $14.5 million for the year 2024 compared to $12.6 million for the same year, for the same period in 2023, an increase of $1.9 million or 15%. This increase was primarily due to higher personal costs, including share-based compensation expense, of $1.6 million, resulting from increases in headcount in our clinical team, increases in travel expenses of $0.4 million, partially offset by $0.1 million in other marketing activities. General and administrative expenses were $12 million for the year 2024, compared to $11.8 million for the same period in 2023, an increase of $0.2 million, or 2%. This increase was due primarily to higher personal costs, including share-based compensation, of $1.2 million, an increase in rent and occupancy costs as a result of the new Carlsbad site of $0.5 million, partially offset by a decrease in the allowance for credit losses of $1.5 million, mainly as a result of subsequent recoveries. Net interest income for the year 2024 was $0.9 million. I will now turn to the fourth quarter 2024 results. Total revenues were $7.8 million for the three months ended December 31, 2024, an increase of 14% over $6.8 million in the fourth quarter of 2023. Biological and drug delivery revenue increased 4% to $4.2 million in the fourth quarter of 2024. The increase was predominantly due to a 74% increase in biological and drug delivery product revenue, partially offset by a 12% decrease in service revenue. Neurosurgery navigation and therapy revenue grew 43% to $2.9 million for the fourth quarter of 2024 from $2 million for the same period in 2023. Capital equipment product and related service revenue was $0.6 million for the fourth quarter of 2024, a slight decrease compared to $0.7 million in the same period of 2023. Gross margin was 61% for the fourth quarter of 2024 compared to a gross margin of 59% for the same period in 2023. Operating expenses for the fourth quarter of 2024 were $10.4 million compared to $8.7 million for the fourth quarter of 2023. The increase was mainly driven by the increase in headcount across the organization and share-based compensation. With respect to our cash position, at the end of December 2024, we held cash and cash equivalents balances of $20.1 million compared to $23.1 million at the end of 2023. Our cash decrease resulted primarily from our operating cash needs. Our operational cash burn in Q4 2024 was $1.4 million, in line with the prior year fourth quarter and with the third quarter of 2024. We maintained our focus on appropriate resource allocation and cash management and remain committed to effectively and carefully managing our operating expenses. Our operational cash burn decreased to $9 million in 2024, a 35% reduction versus 2023. We expect to continue to have a very disciplined approach on managing our expenses. In March 2024, we also completed an equity offering with net proceeds of $16.2 million, which further strengthened our balance sheet and allowed us to retire our entire outstanding debt, leaving us debt-free as of December 2024. As of December 31st, 2024, and as of today, we have not issued any shares through our ATM facility. I'd like now to turn the call back to Joe.