NeuroOne Medical Technologies Corporation

Ladies and gentlemen, thank you for standing by. And welcome to the NeuroOne Medical Technologies Corporation third quarter of fiscal year 2022 financial results conference call. Today's call will be conducted by the company's chief executive officer, Dave Rosa, and chief financial officer, Ron McClurg. Before I turn the call over to Mr. Rosa, I'd like to remind you that this conference call will include forward-looking statements within the meaning of U.S. federal security laws with respect to future operations, financial results, events, trends, and performance which are based on management's beliefs and assumptions as of today's call or other specified date. Forward-looking statements may involve known and unknown risk, uncertainties, and other factors which may cause actual results to differ materially from those expressed or implied by such statements. See our earnings release and SEC filings for information regarding specific risk and uncertainties that could cause actual results to differ. Except as required by law, we undertake no obligation to update such forward-looking statements. With that said, I'll turn the call over to Dave Rosa, CEO of NeuroOne. Dave?

Thanks, operator. During and since the third fiscal quarter, the company accomplished a great deal with respect to our SCEG electrode program, development of our 1RF ablation system, improvements to the balance sheet, and cost reductions. First, let's address the progress we made with our SCEG product line. On our previous call, we discussed that we had appealed the FDA's decision to deny clearance to increase the duration of use from less than 24 hours to less than 30 days use with recording, monitoring, and stimulation equipment for the recording, monitoring, and stimulation of electrical signals at the subsurface level of the brain. On May 16th, the company issued a press release stating that the FDA had denied our appeal. The FDA also stated that the company may submit a new 510 with new evidence, specifically as it relates to the subacute toxicity endpoint to support a finding of substantial equivalence. The company completed the process of collecting this data and submitted a special 510 on August 8th, which was earlier than previously targeted. We continue to believe that the design and materials used for the SCEG electrodes are sufficient to meet the FDA guidance for device biocompatibility. On July 12th, we reached a major milestone with our EVO SCEG electrode as it was used for the first time clinically at Emory University for intraoperative brain mapping at the subsurface level of the brain. We expect to perform additional similar cases in the near future in an effort to continue to gain more clinical experience with the electrode. Moving on to our combined diagnostic and therapeutic ablation electrode, which we have named 1RF. We made tremendous progress over the quarter, which allowed us to complete the full system prototypes two months earlier than anticipated, including the RF generator from RBC Medical. We accomplished another major milestone by successfully completing testing of the full system including Neuro1's electrode and other accessories. Next up for the project is to complete additional preclinical testing for use in our 510 submission to the FDA. We are still targeting an FDA submission by the end of the first calendar quarter of 2023. As mentioned in my opening comments, we are also excited to strengthen our balance sheet through an amendment to our existing agreement with Zimmer Biomed, providing the company with an accelerated $3.5 million payment relating to certain milestones. In exchange, Zimmer Biomet received a warrant to purchase 350,000 shares of NeuroOne's common stock at $3 per share. This provided additional capital for the company without requiring a highly dilutive financing. We appreciate Zimmer's interest in supporting NeuroOne as we continue to strengthen the partnership. With respect to cost reduction initiatives and supply chain management, We successfully completed qualification of a second source to manufacture electrodes for both the EVO cortical and SCEG product lines, reducing supply risk for both of the product lines. Additionally, we are currently weighing the potential to bring certain aspects of the manufacturing process in-house. In terms of cost reduction efforts, we successfully validated a new cable assembly manufacturer, which significantly reduces our cost for this component. We also completed the process to extend the shelf life for the Evo cortical product line to three years, which reduces the cost of expired product as well as supply chain risk. Let's now move to our chronic use electrode program. As we continue to develop the technology, we remain focused on developing a system for the treatment of chronic back pain due to failed back surgeries that provides the capabilities of recording and stimulation and a thin-film electrode technology. We recently established a physician advisory board comprised of leading anesthesiologists and neurosurgeons that have extensive experience with implanting these systems. Later this month, we will convene the group to begin to develop the framework of the feature set customized to the advantages of our electrode technology. The company continued to expand its its exposure and presented at the HC Wainwright Global Investment Conference and the NobleCon 18 Investor Conference. We also established the Evo Cortical Electrode in partnership, sorry, we also exhibited the Evo Cortical Electrode in partnership with Zimmer Biomed at the American Association of Neurological Surgeons annual scientific meeting and American Society for Stereotactic and and functional neurosurgery biennial meeting. We're also proud to have our first peer-reviewed paper presenting the biocompatibility results for EVO thin-film subdural electrode published in the Frontiers of Neuroscience journal this past April. Also, we were recently informed that the EVO-SCEG implantation accuracy study was accepted as a podium presentation at the biennial meeting of the World Society for Stereotactic and Functional Neurosurgery to be held in South Korea, September 4th through the 7th, 2022. Over the past quarter and early August, the company accomplished a number of major milestones. I'm thankful for the team of consultants and employees that expedited that process to resubmit the SCEG electrode for FDA clearance for less than 30 days use. We remain pleased with the test results of the Evo SCEG product line and look forward to engaging with FDA in the near future to discuss our recent resubmission. In addition, the team also achieved a major milestone for the 1RF ablation system by successfully completing functional testing in July, much earlier than expected. Securing $3.5 million from Zimmer Biomet without the need to have to do a highly dilutive financing was also a key accomplishment. We look forward to building on the excited momentum we generated over the last quarter in early August as we continue to address both our short-term and long-term company objectives. Thank you for your time and attention. I would now like to turn the call over to Ron McClure, our CFO for review of fiscal third quarter financial results. Ron. Thank you, Dave.

Product revenue was $32,000 in the third quarter of fiscal 22 compared to product revenue of $40,000 in the third quarter of fiscal 21. Collaboration revenue was delayed in the third quarter of fiscal 22 due to the FDA decision compared to collaboration revenue of about $17,000 in the third quarter of fiscal 21. Collaboration revenue is derived from the Zimmer Development Agreement and represents the portion of the upfront initial development fee payment that is eligible for revenue recognition as of June 30, 2022. Our total operating expenses in the third quarter of fiscal 22 were $2.8 million compared with $3 million in the prior year third quarter. Our ND expense in the third quarter of fiscal 2022 was $1.2 million compared with $0.9 million in the same period of fiscal 2021. SG&A expense in the third quarter of fiscal 22 was $1.5 million compared with $2.1 million in the prior year third quarter. Our net loss for the third quarter of fiscal 2022 was $2.8 million compared with a net loss of $3.0 million in the third quarter of fiscal 2021. As of June 30th of 2022, the company had cash of approximately $10.2 million compared to $6.9 million as of September 30th, 2021, which was the end of the company's most recent fiscal year. The company had no outstanding debt as of June 30th, 2022. That concludes my remarks. I'll now pass it back to the operator to open up the call for questions and answers. Thank you.