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spk00: 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 risks, uncertainties, and other factors which may cause actual results to differ materially from those expressed or implied by such statements. See NORA 1's corporate update press release and SEC filings for information regarding specific risks 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 NORA 1. Dave, the floor is yours.
spk03: Thanks, Operator. During our fiscal second quarter and through today, we continued to make progress towards the commercial launch of the Evo SCEG product line. We announced the commercial release of the product line and the completion of initial training with Zimmer Biomed sales personnel for a limited launch. In addition, we also fulfilled five orders to Zimmer Biomed for the initial launch. The first clinical case was successfully performed at the Mayo Clinic by Dr. Jamie Van Gompel using a stereotactic frame system. An additional procedure using the EVO-SCEG electrode in robotic neurosurgery was performed at a different medical facility. This procedure was the first to utilize NeuroOne's EVO-SCEG electrode with Zimmer Biomed's ROSA OneBrain a robotic platform that assists surgeons in planning and performing complex, yet minimally invasive neurosurgical procedures. Finally, we presented the complete EVO product line at the American Association of Neurological Surgeons annual meeting in the Zimmer Biomed booth. To date, we are excited with the physician feedback and will provide future updates on our progress. Regarding our 1RF ablation system, we mentioned last quarter that we were planning to complete internal device verification and validation protocols for the final 1RF system. I am pleased to announce that we were able to complete these tasks as well as completing usability testing with 15 neurosurgeon thought leaders. We are waiting for additional testing to be completed along with other documentation from a few key suppliers but remain on track for an FDA 510K submission in the second calendar quarter of 2023. During the quarter, we also continued discussions with a few strategic organizations regarding their interest in our technology. Next quarter, in addition to submitting a 510K for the 1RF system, we expect to transfer the project to production activities. We also have plans to complete an in vivo animal study with key neurosurgeons. Finally, we are scheduled to present results of a preclinical study at the Neurological Disorders Summit in June. Next, I want to update you regarding our progress in the development of an electrode to provide chronic stimulation and recording to treat chronic back pain due to multiple failed back surgeries. We successfully implanted a paddle electrode in an animal model via surgical means. Benchtop testing was also successfully completed on delivering a paddle lead percutaneously through a needle. Next quarter, we expect to complete percutaneous placement in a spinal cord model by one of our physician advisors, as well as complete an animal study designed to assess the electrode's biocompatibility. In the second fiscal quarter, we discussed the potential for our electrode technology to offer the ability to deliver gene therapy or drugs as well as record the drug's impact to the patient. I am pleased to report that we successfully completed feasibility benchtop testing of our initial prototype and are planning on conducting additional testing in the small animal model. Physician enthusiasm remains high regarding the systems. During the second fiscal quarter, the company also strengthened our management team with the hire of Anthony Millar as Vice President of Operations. Anthony has held similar senior-level roles with large, well-respected medical device organizations, such as Boston Scientific, Medtronic, Minitronics, and Great Batch, where he was involved with electrode technology that was in development. We also expanded our patent portfolio with a new U.S. patent titled Improved Neural Depth Probes and Related Systems and Methods regarding our thin-film SCEG electrode technology. Finally, we also delivered an oral presentation at the annual North American Neuromodulation Society meeting, also known as NANS, titled Electrochemical Characterization of the first FDA-cleared thin-film electrodes for recording and stimulation of brain activity. Thank you for your time and attention. I would now like to turn the call over to Ron McClurg for a more in-depth review of our fiscal second quarter financial results. Ron? Thank you, Dave.
spk01: Product revenue was $466,000 in the fiscal second quarter of 2023. compared to product revenue of just $37,000 in last year's second quarter. In the first six months of fiscal 23, product revenue was $581,000 compared to $70,000 for the same period in fiscal 2022. Collaboration revenue was $1.46 million in the first six months of fiscal 2023 compared to collaboration revenue of $6,000 in the first six months of fiscal 22. Collaboration revenue is derived from the Zimmer Development Agreement and represents the portion of the exclusivity and milestone fee payments that were eligible for revenue recognition during the respective periods. Our total operating expenses in fiscal second quarter of 2023 were 3.5 million compared with 3.0 million in the same period of the prior fiscal year. R&D expenses in the fiscal second quarter of 2023 were 1.7 million compared with 1.2 million in the same period of fiscal 22. SG&A expense or selling general and administrative expense in the fiscal second quarter of 2023 was 1.8 million compared to the same 1.8 million in the prior year period. For the first six months of fiscal 23, total operating expenses were 6.8 million compared with 5.8 million in the same period of the prior year. This increase can be attributed to the R&D expense, which was 3.3 million for the first six months of fiscal 2023 compared to 2.3 million in the same period of fiscal 2022. SG&A experiences in the first six months of fiscal 2023 were 3.5 million compared to 3.6 million in the prior year period. Our net loss was 3.5 million for the fiscal second quarter of 23. compared to a net loss of 3.1 million in the prior year period. Net loss for the first six months of 2023 was 5.3 million compared with 5.9 million in the same period of fiscal 2022. As of March 31st of 2023, the company had cash, cash equivalents and short-term investments of 4.6 million compared to 11.1 million as of September 30th, 2022. The company had working capital of $4.8 million as of March 31, 2023, compared to working capital of $9.1 million as of September 30, 2022. The company had no debt outstanding as of March 31, 2023. With that, I will turn it back to Dave.
spk03: Thanks, Ron. Operator, at this time, I think we can open for questions.
spk00: Thank you. The floor is now open for questions. If you do have a question, you may press Star 1 on your telephone keypad at this time. If your question has been answered, you can remove yourself from the queue by pressing 1. Again, ladies and gentlemen, it's Star 1. Please hold while we poll for questions. And our first question comes from Ben Hainar from Alliance Global Partners. Go ahead, Ben.
spk02: Good afternoon, gentlemen. Thanks for taking my questions. First off for me, congrats on getting the first SEG EVO cases done and the shipments to Zimmer. Can you talk a little bit about the stocking situation at Zimmer? Do you expect additional shipments during the current quarter or are they pretty good for the time being? How would you characterize the situation at the moment?
spk03: Thanks, Ben, by the way. Thanks for joining. So as we said earlier, we've fulfilled so far five orders. I think that probably ideally we all would have liked to maybe have done a much broader launch initially, but I think both of us have been through this enough times to know that you always want to make sure that everything that you've seen in Benchtop, Animal, preclinical cadaver testing, and, you know, even the handful of clinical cases that we have, we want to make sure that there aren't any surprises. So with the inventory that we have now and that Zimmer has now, we feel that it's adequate for at least the initial launch. Now, as we expand the launch, clearly there's going to be a need for greater inventory But the company is very confident, especially what we've witnessed, say, over the last six months in the ability of our suppliers to meet the increased demand that we'll have. So, so far, we feel pretty good, but we do expect that there'll be additional orders coming in as we begin to expand the launch.
spk02: Okay, that's helpful. And then you mentioned there's been a handful of cases now. Any kind of feedback that you can share how those cases have gone?
spk03: Yeah. So what's neat is that we had one done using just a stereotactic frame and then, you know, one done using the Zimmer ROSA-1 robot, which I think we'll see the majority of cases being done using the robot. But in the cases so far, the feedback's been pretty much what we expected, given the amount of feedback that we had prior to this. And maybe with some specifics, in particular, the handling of the electrode, we've had positive comments on that, meaning, you know, just the tactile feel when you're placing it. The resolution, there's been comments, positive comments about the clarity. regarding the waveforms. One thing that we weren't necessarily sure of but we're happy to hear is that you don't see much distortion, much artifact on a CT scan when there's an image taken of it, which is one of the challenges with some of the other devices today. So if you get too much artifact, it's difficult for a physician to really assess what's going on in the brain So far, that hasn't been the case with this device. Comments on accessories, positive comments on that, in particular, our anchor bolt. One of the challenges in cases today is that if your anchor bolt isn't seated very firmly, that you're probably more likely to not get the electrode in the spot that you want to get it in. So... Again, very good stability with respect to the anchor bolt. And one of the cases, the most devices that were tested in one of the cases was 18. And we haven't had any device performance issues. It's still early, but it's encouraging, and it's really what we expected out of the device.
spk02: Okay, that's good color. And then on the upcoming milestones that you mentioned in the press release, the expanded sales training for the FEEG product line of the Zimmer sales force, how broad does that go? I mean, is that basically just to the folks that are selling the robots, or does it go beyond that?
spk03: Yeah, so there's really two groups involved at Zimmer in selling the devices. The robotics group is involved. they were not involved in the sale of the cortical electrodes, because obviously the cortical electrodes aren't used in conjunction with the robot. But the existing sales force that was selling cortical remains the primary contact for these devices, but they're also receiving assistance and participation from the Zimmer robot group as well.
spk02: And so the training that's going to take place, is that for both groups? Sure. Yes.
spk03: And it will be the full sales force. Obviously, initially, you know, we're really focusing on the sites that were targeted for the initial launch. We will have to do broader sales training as we expand the launch of the product.
spk02: Okay, got it. And then lastly for me, and I'll jump back in queue, but on the 1RF testing with the 15 neurosurgeons, I was looking for the feedback that you've gotten there. I mean, were the comments fairly similar between the neurosurgeons that were testing it out? And then what do you have? kind of left to do there. I know there's, I think you're going to do some more testing there with athletes and surgeons or something. Can you talk more about that?
spk03: Sure. So probably the proper terminology to use for the testing I was referring to when I said usability, it's called summative testing, which is included with your submission to the FDA. And basically what it is is that a surgeon is is put into a room with a system, is handed your instruction manual, and without any assistance, he has to be able to demonstrate his ability to use the system just with the instruction manual in front of him. And the feedback that we got, so all 15 surgeons were able to do that, the feedback that we've gotten along the way is that is that the system, you know, one of the advantages is its ease of use. So we expect that that will still be an advantage and feedback that we'll receive as time goes by. Yes, we are going to do additional testing regarding, you know, everything from the size of the lesions that we're creating, you know, to just performance of the system So, but many of the clinical work that, preclinical work that needed to be done is done. What's left now is validation of things like software that's used in the system, test reports being written up. You know, we're really at the final stages of this, but You know, it's a lot of paperwork. So, you know, we just need to get this additional documentation from our key vendors so that we can put it into the 510K and get this submitted. Okay.
spk02: Got it. That's all I have for the moment. Thank you very much for taking the questions, guys.
spk03: Thanks, Ben.
spk00: Thank you. That appears to be the last question at this time. I would now like to turn the floor back to Dave Rosa for any closing remarks.
spk03: Yeah, thanks, Operator. I just want to thank everyone for joining us on the call and appreciate the time that you spent listening to the progress that the company's made. Have a good rest of the day.
spk00: Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time and have a great day.
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