NeuroOne Medical Technologies Corporation

Good day, ladies and gentlemen. Welcome to the second quarter of fiscal year 2025 Financial Results Conference Call for Noor 1 Medical Technologies Corporation. Today's call will be conducted by the company's chief executive officer, Dave Rosa, and Ron McClurg, the company's chief financial officer. Chris Volcker, the company's chief operating officer, will also be in attendance. 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 securities 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, including statements regarding our fiscal 2025 guidance, 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 Noor 1's financial results press release and SEC filings for information regarding specific risks and uncertainties that could cause actual results to differ. Except as required by law, Noor 1 undertakes no obligation to update such forward-looking statements. With that, I will turn the call over to Mr. Dave Rosa, CEO of Noor 1. Please go ahead,

sir. Thanks, operator. For those of you who may be new to Noor 1, we are a medical technology company that is dedicated to transforming the diagnosis and treatment of neurological disorders. Initially with epilepsy, where we have minimally invasive, high-resolution solutions for EEG recording, brain stimulation, and ablation solutions for patients. Our patented and disruptive 1RF ablation system is the first and only FDA-cleared RF ablation system for brain procedures using a single implant for both diagnostic and therapeutic applications, creating a unique competitive and first-mover advantage. Today, it is commercially available and effectively treating patients suffering from seizures due to epilepsy. As we build awareness through our strategic distribution partner, Zimmer Biomed, we believe more patients will seek our solution for epilepsy, given its ability to reduce the number of hospitalizations and procedures while also improving outcomes. We have made tremendous progress in the first half of fiscal 2025, with product revenue increasing 97% to $4.7 million and product gross margins increasing to 57.9%, which is more than double our product gross margin in the first half of fiscal 2024. We have no debt, and we anticipate being fully funded through at least fiscal year 2026, with the potential to get cash flow break even if we achieve some of the key milestones currently in progress. The second quarter of fiscal 2025 was highlighted by our significant operational progress with our commercial 1RF ablation system technology platform, which is increasingly being validated as a versatile and scalable platform across multiple applications. First and foremost, we continue to have clinical success with patients who are remaining seizure-free following the 1RF ablation procedure. In fact, one patient has now been seizure-free for almost an entire year, enabling them to enjoy a significant improvement in the quality of life. We are also pleased to report that the majority of patients treated with our system to date are now seizure-free. Not only are we seeing positive patient outcomes, but we are also reducing the number of hospitalizations. Typically, patients undergo two hospitalizations with multiple procedures that are a few months apart, whereas only one hospitalization is required with our system, allowing the neurosurgeon to use the same electrode for both diagnostic and ablation purposes. Outside of the improved patient outcomes, we are also having success due to the following. Hospitals favoring an FDA-cleared solution instead of off-label alternatives. Physicians are more inclined to use an FDA-cleared system, reducing liability concerns. Patients are more trusting of FDA-cleared technology, similar to ours. So how can we get this to mass adoption? First, by ensuring the sites we initially targeted at launch continue to use our technology as the go-to device to treat eligible patients suffering from epilepsy. By fostering these relationships and building trust, our strategy has paid significant dividends, and we continue to see strong success at these locations. Second, by leveraging Zimmer Biomet's extensive distribution network and scale, as they have one of the largest global medical device companies in the U.S. with a very strong presence in the epilepsy market. After receiving an upfront license payment of $3 million and completing the initial stocking orders to Zimmer in the first quarter of fiscal 2025, we are now excited to expand to new centers. Leveraging the same 1RF technology platform, we successfully filed our 510K submission with the FDA for the 1RF Trigeminal Nerve Ablation System, which was well ahead of schedule. This application is designed to treat patients with debilitating facial pain, also known as trigeminal neuralgia. For those of you unfamiliar, the trigeminal nerve is located in the face with one set of nerves on each side of the face, with trigeminal neuralgia causing chronic pain characterized by severe, sudden, and recurrent facial pain. Approximately 150,000 people are diagnosed with trigeminal neuralgia every year in the United States, according to the American Association of Neurological Surgeons. Trigeminal neuralgia is typically treated with medication or invasive procedures that are performed by the same neurosurgeons performing brain ablations to treat epilepsy. It was our Brain Ablation Advisory Board that encouraged us to pursue this application. Similar to our 1RF Brain Ablation System, this product is also designed to reduce procedural time and improve patient comfort and safety by using a minimally invasive surgical procedure to destroy the trigeminal nerve to relieve severe chronic pain in the face. Published data has shown that RF ablation offers high initial pain relief rates and long-term efficacy, especially with repeat treatments while maintaining a low complication rate. These characteristics make it a preferred option for patients who are not candidates for major surgery or who are also looking for less invasive approaches. If cleared by the FDA, we believe there is potential to generate revenues from trigeminal nerve ablation as soon as late calendar year 2025, which is not currently factored in our guidance. Based upon this momentum, we are currently in discussions with a number of other top-tier strategic partners for other applications leveraging our platform technology, including spinal cord nerve ablation and spinal cord stimulation for back pain management and the SEEG-based drug delivery program, which would benefit immensely from the multifunction capability that NeuroONE's technology can offer. Similar to Zimmer, these partnerships would be meaningful not only to further develop and commercialize these applications with expertise and potential upfront capital, but to drive mass adoption with robust sales and distribution networks. As you may recall, our strategic partnership with Zimmer includes exclusive distribution rights in the United States and certain additional countries for the 1RF ablation system. Therefore, we are advancing our internal efforts on distribution outside of the United States, which is currently an untapped market for us. To that end, we are initiating a process to secure ISO 13485 certification, which is required to commercialize and obtain regulatory approvals internationally. Given we have not sold or commercialized any of our products in international markets to date, these efforts could represent significant revenue in the years to come. To execute on these opportunities, we've also bolstered our balance sheet and invested in our talent. Just yesterday, we welcomed Dr. Parag Patil, a world-renowned neurosurgeon, as our chief medical advisor, as well as Emily Johns, a partner at Honigman LLP, as general counsel and corporate secretary, who will be joining us on June 1. Collectively, these additions to our team will actually reduce costs by bringing critical functions in-house and providing invaluable expertise and relationships to advance our technology. As we stand today, we currently have no debt, and our balance sheet is rock solid on the heels of a successful capital raise with quality institutional investors. The financing was oversubscribed and added $8.2 million in net proceeds to the company. More importantly, we believe this cash will fully fund NeuroOne through at least the end of fiscal 2026. And if we achieve some of the key milestones currently in progress, this capital could bring us to cash flow break even and support our long-term growth plans with no need for additional dilute of financing. With this confidence, we are reiterating our fiscal year 2025 guidance and expect product revenue to be in the range of $8 to $10 million, representing an increase of between 132% and 190% over fiscal 2024, and product gross margin to be between 47% and 51% compared to 31% in fiscal 2024. Importantly, this guidance excludes our upfront license payment of $3 million received from Zimmer in the fiscal first quarter of 2025. I would now like to turn the call over to Ron McClerk to provide additional review of our fiscal second quarter financial results. Ron?

Thanks, Dave. Product revenue increased slightly to $1.4 million in the second quarter of fiscal 2025 compared to product revenue of $1.4 million in the second quarter of fiscal 2024. As we talked about on our last quarterly call, we expected product revenue to decline sequentially in the fiscal second quarter, given we completed the initial stocking order to Zimmer in December, which is our first quarter of fiscal 2025. We still expect revenues to ramp through the end of the fiscal year as the product launch expands. For the first six months of fiscal 2025, product revenue increased 97%, 4.7 million, compared to 2.4 million for the same period of fiscal 2024. We also recognized license revenue of $3 million in the first six months of fiscal 2025, which is not included in product revenue, compared to no license revenue in the first six months of fiscal 2024. License revenue in fiscal 2025 was derived from the expanded exclusive distribution agreement with Zimmer. Product gross profit increased significantly to 0.8 million, or .6% of revenue in the second quarter of fiscal 2025, compared to product gross profit of 0.4 million, or .3% of revenue in the second quarter of fiscal 2024. For the first six months of fiscal 2025, product gross profit increased over twofold to 2.7 million, or .9% of revenue, compared to product gross profit of 0.7 million, or .9% of revenue in the first six months of fiscal 2024. Total operating expenses in the second quarter of fiscal 25 were 3.5 million, compared to 3.3 million in the second quarter of fiscal 2024. R&D expense in the second quarter of fiscal 25 was 1.5 million, compared to 1.3 million in the same period of fiscal 2024. SG&A expense in the second quarter of fiscal 25 decreased to 1.9 million, compared to 2.0 million in the second quarter of fiscal 24. For the first six months of fiscal 25, total operating expenses decreased 4% to 6.7 million, compared to 6.9 million in the same period of fiscal 2024. R&D expense in the first six months of fiscal 25 decreased 3% to 2.7 million, compared to 2.8 million in the same period of fiscal 24. SG&A expense in the first six months of fiscal 25 decreased 5% to 4 million, compared to 4.2 million in the prior year period. Net loss in the second quarter of fiscal 25 improved to a loss of 2.3 million, or 7 cents per share, compared to a net loss of 2.9 million, or 11 cents per share in the same quarter of the prior fiscal year. Net loss for the first six months of fiscal 25 improved significantly to 0.5 million, or 2 cents per share, compared with a net loss of 6.2 million, or 25 cents per share, in the same period of fiscal 24. As of March 31st of 2025, the company had cash and cash equivalents of 1.3 million, compared to 1.4 million as of the previous fiscal year. The company had working capital of 2 million as of March 31, 2025, compared to working capital of 2.4 million as of September 30th, 2024. The company had no debt outstanding as of March 31, 2025. Lastly, as Dave noted earlier, we recently bolstered our balance sheet with 8.5 million in net cash by selling common stock under the ATM program at an average price of $1.16 per share, generating net proceeds of 0.3 million, and completing an oversubscribed capital raise with institutional investors in April, totaling 8.2 million in net proceeds. There is no current availability under our ATM program, and we believe we are now fully funded through at least fiscal 2026, potentially longer if the milestones are hit. Operator, at this time, I think we can open up for questions.

Certainly. At this time, we will be conducting a question and answer session. If you would 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 would 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. Your first question for today is from Jeffrey Cohen

with Ladenberg Salmon.

Hi, Dave, Ron, and Chris. Just a couple questions from Erin. So on the guide, you're talking about 8 to 10, and that's excluding the 3 mil from

the first quarter, correct? Ron, do you want to handle the financial, or do you want me to

handle that?

Yes, Jeff, that is correct. That does exclude the licensing fee that we received in the first quarter.

OK, got it. And can you give us a sense for

a full year, do you expect any revenue to be outside of the deal with Zimmer Biomet on the top line for this current year, or would you expect it all to be from Zimmer Biomet?

It is almost entirely from Zimmer Biomet. For the first half of the year, we had about 6% of our revenue was from some of the early centers that we went to, but otherwise, going forward, we expect all of our revenue to be from the Zimmer agreement.

Got it. Can you

give us a sense of pro forma cash now, please?

Yes, at the end of April, we had 9.4 million, which was the cash on hand that included the financing that we did with

LabMirror. OK, got it. And then lastly, could you talk about adding a chief medical advisor this week? Congrats on that, and why now, and what you anticipate to achieve from that for the company?

Sure, I'll take that, Ron. So we feel really fortunate to be able to get Dr. Patil to work with us this closely. When you look at really his clinical background and experience, it fits perfectly into the areas, the clinical areas that we're either already in or looking to move into. So whether that be helping with product development, which he also has a background in, just the clinical requirements for technologies and the areas that we're going in, he's just really a perfect fit for us. And I think one of the first things that we also want to move forward to that we've talked about in the past is really getting together a registry to track all the patient outcomes that have been treated with our ablation system. We're going to be coming up on a year for the first patient that will be one year seizure free. That'll occur next month. So gathering that information and then being able to potentially get a publication out of something like that, Dr. Patil will be very, very helpful with. So we're really excited to have him. And like I said, couldn't be a greater fit for what we're

doing. Super. OK, thanks for taking our questions. Nice quarter. Thanks, Jeff.

Thank you. That appears to be the last question at

this time. I would like to turn the floor back to Dave Rosa for any closing remarks.

Thank you, operator. Today, we stand as a larger, more mature company than ever before as we focus on significantly ramping revenues and expanding our product margins. We have a world class strategic partner, the necessary capital to execute on our strategic growth initiatives and several upcoming milestones that present significant opportunities to increase shareholder value. I would like to again thank everyone for attending the call this morning, and we look forward to connecting with

the investor community throughout the quarter.

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.