Neuropace, Inc.

Greetings and welcome to the third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeremy from Investor Relations. Thank you, sir. You may be in.

Good afternoon. Thank you for joining us for Neuropace's third quarter 2024 financial and operating results conference call. On today's call, we will hear from Joel Becker, Chief Executive Officer, and Rebecca Kuhn, Chief Financial Officer. Earlier today, Neuropace released financial results for the third quarter ended September 30th, 2024. A copy of the press release is available on the company's website at neuropace.com. Before we begin, I would like to remind you that throughout this call, we will make statements that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. All forward-looking statements, including those around Neuropace's projections, business opportunities, commercial expansion, market conditions, clinical trials, and those relating to our operating trends and future financial performance, expense management, estimates of market opportunity, and forecasts of market and revenue growth, are based on current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For more detailed descriptions of the risks and uncertainties associated with our business, please refer to the risk factors section of our public filings with the SEC, including our latest annual report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 5, 2024, and our quarterly report on Form 10-Q for the quarter ended September 30, 2024, to be filed with the SEC and any other reports that we may file with the SEC in the future. This conference call contains time-sensitive information, which we believe is accurate only as of this live broadcast on November 12, 2024. Neuropace disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I will now turn the call over to Neuropace's Chief Executive Officer, Joel Becker. Joel?

Thank you, Jeremy, and good afternoon, everyone. I will start out today's call by reviewing our performance in the third quarter, as well as providing additional insights around our key business priorities for the remainder of the year before turning the call over to our CFO, Rebecca Kuhn, to present the details of our financial performance for the quarter ended September 30th, 2024, which will be followed by a Q&A session. Let's get started. We are very pleased with the performance of the business in the third quarter of 2024 as we generated record revenue, delivered on track gross margins, and demonstrated disciplined operating expense management as we continue to execute against our multi-phase growth strategy. For the third quarter of 2024, we reported total revenue of $21.1 million, an increase of 28% compared to the same period last year. Revenue growth for the quarter included contributions from sales of the R&S system and Dixie Medical SEEG products, with the majority of the year-over-year growth coming from sales of the R&S system. This Q3 2024 performance was driven by execution in a number of areas across the business. With regard to the top line, we continue to demonstrate execution of the first part of our strategy of increasing adoption and utilization of RNS systems in level four centers and increased the number of active prescribers of RNS therapy to record levels. Adding to RNS system growth, we began to see a meaningful increase in the number of implants at centers that are part of our project care pilot program and in the number of referrals for RNS implants from these centers to level four CECs. We also continued to expand the market penetration and utilization of Dixie Medical products, which contributed to our revenue growth in Q3. In the middle part of the income statement, we delivered a gross margin that was on track with our target range, and when combined with a disciplined investment strategy in our key growth and development priorities, reduced our cash burn to $1.8 million for the quarter. Combined with opportunistic use of our ATM facility, our cash balance increased in the quarter from $55.5 million at the end of the second quarter to $56.8 million at the end of the third quarter. We believe that our current cash position is sufficient to fund operations for the foreseeable future. We also focused on leveraging and developing our organization to increase our level of current performance, as well as prepare for the significant opportunities in front of us. The placement of additional sales representatives in the U.S. has helped build momentum in the launch of the Project CARE program this year, which has contributed to our revenue growth over the past several months. while also increasing our field capacity so that we will be well positioned to take advantage of the multiple market development and indication expansion opportunities to come. Additionally, given the significant opportunities in the business, we've also been focused on strengthening our leadership team. We recently announced the hiring of new senior leaders, including Katie Keller to lead our marketing function, Brett Wingard to lead our research and development team, and Amy Treadwell to head up human resources. I would like to take a moment to touch on each valuable new team member's background. We are excited to now have Katie Keller leading our marketing function. Katie brings specific experience in the neurostimulation market and expertise in market development that position her well to manage our market development efforts around key strategic initiatives, namely expansion of the CARE program, planning for launch of our indication expansions, guiding our direct-to-patient outreach and digital marketing efforts, and working with our research and development team on our product pipeline. We are pleased to welcome Brett Wingeyer back to NeuroPACE to lead our research and development team. With his significant experience and expertise in neuromodulation and medical device development, Brett is uniquely well-suited to oversee the exciting work underway to both enhance the efficiency and ease of use of the RNS system and to amplify our focus on device and data innovation and the use of R&S to continue to advance our technology leadership position. And most recently, we appointed Amy Treadwell as Vice President of Human Resources. Amy brings an impressive track record of success in healthcare and technology roles, and she will be instrumental in helping us continue to build an engaged, high-performing culture to support our growth. We continue to make progress in the quarter on the third phase of our growth strategy, expanding the approved indications for the RNS system. The primary focus for this element of our strategy is the Nautilus study. As previously mentioned, all implants are complete. The trial is in the patient follow-up phase and remains on track to complete the required one-year follow-up in Q1 2025. As a reminder, If approved, our RNS system would be the first device with an FDA-approved indication for idiopathic generalized epilepsy. We were also pleased to submit positive three-year safety and effectiveness data from our ongoing five-year prospective post-approval study of the RNS system in adults with drug-resistant focal epilepsy. We look forward to publishing and presenting the full study results pending the expiration of a publication embargo. With that as an overview of our operational progress in Q3, let me now turn the call over to Rebecca to review our financial results for the third quarter of 2024. Rebecca?