Q1 2024 Neuroone Medical Technologies Corp Earnings Call
Participants
Ron Mcclurg; Chief Financial Officer; Neuroone Medical Technologies Corp
Conner Chamberlain; Analyst; Craig-Hallum
Presentation
Operator
Good day, ladies and gentlemen, and welcome to the NeuroOne Medical Technologies Corporation First Quarter of Fiscal Year 2024 Financial Results conference call. Today's call will be conducted by the Company's Chief Financial Officer, Ron McClurg.
Before I turn the call over to Mr. McClurg, I'd like to remind you that this conference call will include forward-looking statements within the meaning of US 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 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 NeuroOne'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. Ron McClurg, CFO of NeuroOne. Please go ahead, sir.
Ron Mcclurg
Thank you, operator. Before I begin, I wanted to mention that Dave Rosa, our CEO, had minor surgery which prevented them from being able to present this afternoon, so I will be handling the call.
During the first quarter of fiscal 2024, we continued to make significant progress on our objectives relating to commercialization and product development. First, I would like to remind the audience of our recent milestone achievement of receiving FDA clearance for our OneRF Ablation System, the first FDA-cleared system with an intended use for both recording electrical activity and ablation of nervous tissue utilizing the same device.
As previously noted, we submitted a 510(k) application to the FDA in June 2023 for the OneRF Ablation System. And we received a 510(k) clearance from the FDA in December of 2023 for the creation of radiofrequency lesions in nervous tissue for functional neurosurgical procedures. We are very excited to be the first to market this novel technology in the United States and are preparing to initiate a limited commercial launch in the second quarter of calendar 2024.
We remain in discussions with potential strategic partners regarding the licensing of the technology for brain ablation procedures, and we expect to reach a decision in the near future regarding our commercialization strategy. We also remain open to commercializing the [vice] directly if we believe it represents the best option for the company.
And we are working in parallel on a plan to launch the technology directly. In addition, our team is exploring other applications for the OneRF system to treat pain. We believe that there are additional market opportunities for the OneRF system that we may be able to address, and we will provide further updates in the future.
I would now like to provide an update regarding the expanded launch of our Evo sEEG electrode product line with our commercialization partner, Zimmer Biomet. Zimmer continued to strategically open new centers during our first fiscal quarter.
Customer feedback remains positive regarding device performance, and we are seeing usage picking up in recent months. We completed full sales force training for Zimmer in January 2024, and we expect to see an increase in Evo sEEG sales and revenue as the launch expands. We believe the launch of the OneRF system will also have a positive impact on customer demand for the Evo sEEG electrode product line.
Moving on to our drug delivery program, we have discussed the potential for our SEEG electrode technology to deliver drugs or gene therapies to the brain, as well as record the therapy's impact. During the past quarter, we completed feasibility benchtop testing and an animal study, demonstrating the ability to deliver a therapy, and provide recording capabilities using the sEEG drug delivery system.
We are currently in contract discussions with a biotech company regarding their interest in using our device in upcoming clinical studies, and have had discussions with other potential partners. We are excited with the prospects of this technology, and how it may assist the biopharma industry in their drug or gene therapy delivery development, and also its value clinically in current neurosurgical procedures.
If we are able to reach an agreement in our current contract negotiations, the technology has the potential to add revenue later in calendar year 2024.
Development efforts with our spinal cord stimulation program to treat chronic back pain continued in our first quarter as members of our Physician Advisory Board successfully placed a nine millimeter paddle electrode utilizing a percutaneous placement approach in a cadaver model.
Paddle electrodes are similar in concept to cortical or film electrodes. In addition, we completed a preclinical study of the first acute electrophysiology experiment with NeuroOne's lead in a sheep model. Spinal cord stimulation and pain management remain a priority given the size of the market opportunity and the potential competitive advantages of our technology.
I would now like to provide a review of our first quarter fiscal year 2024 financial results. Product revenue was $978,000 in the first quarter of fiscal 2024 compared to product revenue of $115,000 in the first quarter of fiscal 2023. The company had no collaboration revenue in the first quarter of fiscal '24 compared to collaboration revenue of $1,455,000 in the first quarter of fiscal 2023.
Collaboration revenue in 2023 was 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 period.
Total operating expenses in the first quarter of fiscal 2024 were $3.7 million compared to $3.2 million in the first quarter of fiscal 2023. R&D expense in the first quarter of fiscal '24 was $1.5 million compared with $1.6 million in the same period of fiscal 2023.
SG&A expense in the first quarter of fiscal '24 was $2.2 million compared to $1.7 million in the first quarter of fiscal 2023. The net loss was $3.3 million for the first quarter of fiscal 2024 compared to a net loss of $1.7 million in the first quarter of fiscal 2023. In December of 2023, the company sold common stock under the ATM offering at an average price of $1.45 per share, and received net proceeds of $1.2 million.
As of December 31, 2023, the company had cash, cash equivalents, and short-term investments of $2.7 million compared to $5.3 million as of September 30, 2023, our previous fiscal year end. The company had working capital of $3.7 million as of December 31, 2023, compared to working capital of $5.5 million as of September 30, 2023. The company had no debt outstanding as of December 31, 2023.
Subsequent to the end of the first quarter, in January of 2024, the company sold additional common stock under the ATM offering at an average price of $1.46 per share and received net proceeds of $1.54 million.
Operator, at this time, I think we can open up for questions.
Question and Answer Session
Operator
Absolutely. Thank you. At this time we will be conducting a question and answer session. (Operator Instructions)
Our first question comes from Alex Nowak with Craig-Hallum. Please proceed.
Conner Chamberlain
Yes, good afternoon. This is Connor on for Alex. Thanks for taking my questions. Could you maybe speak on the RF generator parts? I know last quarter you mentioned that was one of the holdouts in getting some of these systems placed. Any update on that would be great.
Ron Mcclurg
One of the -- I think what we may have mentioned in the past was that -- there were some long lead time components and that was the gating factor for us in terms of when we could launch a limited release ofhe device. And we've got those components on order. We are expecting to receive our first units of the hardware, the RF generator itself, by the end of March. And so we are looking at beginning a very limited launch of the product in the second calendar quarter of this year.
Conner Chamberlain
Got you. And then maybe can you speak on any initial impact on Evo sEEG sales following the OneRF approval? I know you mentioned a step up, and then maybe when can we start seeing Zimmer to fully start launching Evo? Or is there any barriers preventing this full launch?
Ron Mcclurg
There are no barriers at this time that are preventing the full launch, other than and when we initiated the limited launch, we only trained a portion of their sales force. So as I mentioned during the call, in January, so just last month, we attended their national sales meeting and trained their full distribution network, including distributors and direct employees.
And one of the things is kind of gating the rollout is there -- approval by the value analysis committees at each of the hospitals. So that is underway right now. They've got a targeted launch. They're trying to do this in a methodical manner and continue to add new accounts as we go forward.
Conner Chamberlain
Great. And then one more here. Could you speak towards the progress on maybe a potential partnership? Could this be within the year time span, less or more? I know you mentioned direct as well?
Ron Mcclurg
Well, we are we are in discussions right now with a couple of potential strategic partners. And if those come to fruition, we will then distribute the OneRF Ablation System through that distributor.
If we do not get terms that are favorable or acceptable for the company, we are prepared to go and start distribution on our own. And that's what I meant when I said we are kind of -- we have a dual path right now that we are operating under so that we don't delay, regardless of which direction we go.
Conner Chamberlain
Thanks for taking my questions.
Ron Mcclurg
We do want to make that decision before we proceed with the limited launch. So we should have that decision made here in the near term.
Conner Chamberlain
Got you. Great. Thank you.
Ron Mcclurg
Thank you, Connor.
Operator
Okay, we have no further questions in queue. I will now turn the call back over to management for any closing remarks.
Ron Mcclurg
Yes, thank you, operator. I would just like to say that the company is making great progress toward our goals for fiscal 2024. We're excited by the FDA clearance of the OneRF Ablation System, and pleased with the expansion of Zimmer Biomet's launch of the Evo sEEG electrode, and the related increase in revenue. We continue to make progress on our drug delivery program, and our spinal cord stimulation program intended to treat chronic pain.
Altogether, we believe NeuroOne has the potential to add revenue in 2024 beyond just sEEG sales. With contributions coming from the OneRF commercial launch and potential drug delivery partnerships. We hope you will continue to follow our exciting progress. Thank you.
Operator
This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
