NeuroOne Medical Technologies Corporation

Good day, ladies and gentlemen, and welcome to NeuroOne Medical Technologies Corporation's second quarter fiscal 2026 financial results conference call. Today's call will be conducted by the company's chief executive officer, Dave Rosa, and Ron McClurg, the company's chief financial officer. 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, including events, trends, and performance, which are based on management's beliefs and assumptions as of today's call. 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. Senior 01'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, NeuroOne undertakes no obligation to update such forward-looking statements. With that, I will turn the call over to Mr. Dave Rosa, Chief Executive Officer of NeuroOne. Please go ahead, sir.

Thank you, Operator, and thank you to everyone for joining us today. I'd like to welcome you to our second quarter fiscal 2026 financial results conference call. Product revenue for the 1RF brain ablation system in the second quarter of fiscal 2026 grew 72% year over year to $2.4 million compared to $1.4 million in the second quarter of fiscal 2025. We continue to be energized by reports of the positive impact this therapy is having on people's lives. Most recently, the U.S. Department of Veterans Affairs published an article regarding Dr. Garrett Banks' experience with the technology. The article discussed the challenges that Navy veteran Derek Harpole had to endure after being diagnosed with epilepsy. For more than two decades, he was unable to work. drive, or hunt alone. Dr. Banks and his team at the Houston VA performed their first 1RF brain ablation procedure on Derek. He woke up the morning after the procedure bright-eyed and bushy-tailed, in his words. With his seizures dramatically reduced, he now has hope that he can regain the life he once had. Through our partnership with Zimmer Biomed, our goal is to expand this therapy into new centers in order to change other people's lives as well. The company also had several important corporate developments I'd like to highlight. First, we appointed David Wombeck as Chief Business Officer to lead our drug delivery program, oversee investor relations, and support business development. As a meaningful sign of his confidence, David purchased one million shares of NeuroOne Common Stock on a pre-split basis. We were also pleased to announce that we regained compliance with NASDAQ's minimum bid price requirement following a one for six reverse split of our common stock. Finally, we are always excited to welcome new investors and we're pleased to learn a new high net worth investor acquired approximately 7.4% of our outstanding common stock in the open market. Now, let's move on to discuss the exciting progress we have made with our existing product portfolio. Regarding our 1RF brain ablation system, as I mentioned in the opening, we experienced 72% year-over-year revenue growth. We believe there is upside for growth domestically and internationally. Domestically, we are developing a webinar that will highlight clinical experience with the device that we can expand exposure to neurologists and neurosurgeons that may not be aware of the exciting results that are being reported. With respect to international commercialization progress, we completed the Stage 2 audit of our Minnesota facility for ISO 13485 certification and remain bullish on certification in the latter part of 2026 which is a key step in the process of enabling international distribution of our products. We also had an important clinical milestone this quarter with the publication of a peer-reviewed case series that validates what physicians using our platform have been telling us, that real-time temperature monitoring during FEG-guided RF ablation is an important technology feature when performing brain ablations on patients with drug-resistant epilepsy. The 1RF brain ablation system was also highlighted at Zimmer Biomass booth at the American Association of Neurological Surgeons meeting in San Antonio, Texas, alongside presentations on the technology. Moving on to our 1RF trigeminal nerve ablation system, we have continued to gain clinical experience and have experienced clinical success following our FDA 510K clearance and limited market release. To date, we have successfully completed 16 cases using the ablation system for the treatment of facial pain known as trigeminal neuralgia, with all patients reportedly pain-free after the procedure. We continue to be optimistic regarding the advantages and clinical performance of the device for treating facial pain. As a reminder, unlike traditional ablation systems, our product is intended to be placed once due to the multiple contacts present on the device. Whereas traditional systems typically require multiple probe placements, that can cause additional patient discomfort and extend treatment times. We were also pleased to be highlighted in the business research company's April 24, 2026 report which noted that emerging growth patterns are driving expansion in the trigeminal neuralgia market, valued at approximately $780 million, toward stereotactic surgery using technology similar to our 1RF trigeminal nerve ablation system. Regarding our drug delivery program, we remain on track for commercial availability of the system in the second half of fiscal 2026 for use in investigational clinical studies or animal studies. Also, we are currently evaluating distributors for commercialization of the product. In addition, we announced the collaboration with the Department of Neurology's Division of Epilepsy at the University of Minnesota Medical School to advance a study evaluating next generation epilepsy therapies using our drug delivery platform. Moving on to our two lower back pain management programs, I will first provide an update on our basie vertebral nerve ablation system. This quarter, we completed the user design requirements for the system, and initiated preclinical testing to support continued development of the program. Our strategy remains to leverage our existing 1RF generator, temperature accessory, and ablation electrode while outsourcing access tools either through outside vendors or potential distribution partners. We continue to remain excited about the prospects of the system given the potential clinical advantages it offers. Now let's move on to our spinal cord stimulation percutaneous paddle lead program. As a reminder, this system is designed to offer broader, customizable stimulation, lower energy consumption, and can be inserted through a 14-gauge needle, eliminating the need for an incision in the patient's back. During the quarter, we concluded our chronic animal study and identified opportunities to enhance performance. In addition, the system was also displayed at the North American Neuromodulation Society, or otherwise known as NANS, and we received a great deal of interest from physicians that stopped by our booth. Finally, we also announced a CFO transition plan. Ron McClurg, who has served as our CFO with great distinction for over five years, will retire as CFO effective June 30, 2026, and remain a senior advisor to the company through year end. Effective July 1, 2026, Chris Volker, our current chief operating officer, will assume the role of chief financial officer. We are confident that this transition will be seamless and support continued execution against our strategic priorities. I also want to personally thank Ron for all his efforts, his commitment, and his willingness to remain through this transition, and I am confident that Chris Volker is a great fit for this role. I would now love to turn the call over to Ron to provide a review of our second quarter fiscal 2026 financial results.

Thanks, Dave. Product revenue was $2.4 million in the second quarter of fiscal 2026. a 72% increase compared to product revenue of $1.4 million in the second quarter of fiscal 2025. The increase was driven by higher sales of 1RF products. For the six months ended March 31, 2026, product revenue was $5.3 million, an increase of 15% compared to $4.7 million in the same period of the prior fiscal year. The company had no license revenue in the second quarter or first six months of fiscal 2026, compared to license revenue of $3 million in the first six months of fiscal 2025, which was derived from the expanded exclusive distribution agreement with Zimmer Biomet. Product gross profit was $1.3 million, or 53.8% of product revenue, in the second quarter of fiscal 2026, compared the product gross profit of $0.8 million or 55.6% of product revenue in the same quarter of the prior fiscal year. For the six months ended March 31, 2026, product gross profit was $2.9 million or 54.0% of product revenue compared to $2.7 million or 57.9% of product revenue in the same period of the prior fiscal year. Total operating expenses were $3.4 million in the second quarter of fiscal 2026 compared to $3.5 million in the same quarter of the prior year. Research and development, or R&D, expense in the second quarter of fiscal 2026 was $1.5 million compared to $1.5 million in the same quarter of the prior year. Selling, general, and administrative, or SG&A, expense in the second quarter of fiscal 2026 was $1.9 million compared to $1.9 million in the same quarter of the prior year. For the first six months of fiscal 2026, total operating expenses were $6.7 million compared to $6.7 million in the same period of fiscal 2025. R&D expense in the first six months of fiscal 2026 was $2.9 million compared to $2.7 million in the same period of fiscal 2025. SG&A expense in the first six months of fiscal 2026 decreased 4% to $3.8 million compared to $4.0 million in the prior year period. Net loss in the second quarter of fiscal 2026 was $2.1 million, or $0.25 per basic and diluted share, compared to a net loss of $2.3 million, or $0.44 per basic and diluted share, in the same quarter of the prior year. The net loss in the second quarter of fiscal 2025 was favorably impacted by a $0.4 million gain from the fair value change in the warrant liability. For the six months ended March 31, 2026, net loss was $3.5 million, or $0.42 per basic share, and $0.44 per diluted share, compared to a net loss of $0.5 million, or $0.09 per basic and diluted share, in the same period of the prior year. The lower net loss in the first six months of fiscal 2025 reflected a $3 million of licensed revenue recognized in the first quarter of fiscal 2025. As of March 31, 2026, the company had cash and cash equivalents of $2.8 million compared to $6.6 million as of September 30, 2025. The company also had $2.4 million in accounts receivable as of March 31, 2026, which should be converted to cash in the third quarter fiscal 2026 based on normal collection patterns. The company had working capital of $5.7 million as of March 31, 2026, compared to working capital of $7.9 million as of September 30, 2025. Neuron had no debt outstanding as of March 31, 2026. Before I turn the call back to Dave for his closing remarks, I would like to thank Dave and the Board of Directors for giving me the opportunity to be part of such a talented team. It has been a privilege to serve as NeuroOne's Chief Financial Officer for over five years and to see the life-changing results our products are providing for patients. I look forward to watching the continued growth and success of NeuroOne.