NEUROONE MEDICAL TECHNOLOGIES Corp Q1 FY2025 earnings call

• NeuroOne is a medical technology company transforming neurological disorder diagnosis and treatment, with the OneRF ablation system performing well for epilepsy. - Achieved record product sales of $3.3 million and record product gross margins of 58.9% in Q1. - Expanded partnership with Zimmer Biomet includes exclusive distribution rights in the US and certain outside geographies, with an upfront license payment of $3 million. - OneRF ablation system has strong clinical results: most patients seizure-free or significantly improved, with one patient seizure-free for over nine months. - On track to submit 510(k) application for trigeminal nerve RF ablation system in H1 2025. - Regained NASDAQ share price listing standards.

Product revenue in the first quarter of Fiscal Year 2025 was $3.3 million, a 235% increase compared to $1 million in the first quarter of Fiscal Year 2024. License revenue in the first quarter of Fiscal Year 2025 was $3 million, derived from the expanded exclusive distribution agreement with Zimmer Biomet. Product gross profit was $1.9 million or 58.9% of revenue in the first quarter of Fiscal Year 2025, compared to $0.3 million or 27.2% of revenue in the first quarter of Fiscal Year 2024. Total revenue for the first quarter of Fiscal Year 2025 was $6.3 million, a record for NeuroOne.

• Reiterates Fiscal Year 2025 product revenue guidance of $8 million to $10 million, representing 132%-190% growth from Fiscal Year 2024. - Product gross margin guidance for Fiscal Year 2025 is 47% to 51%. - Expects product revenue to decline sequentially in Q2 FY2025 but ramp up later in the fiscal year as product launch expands.

• Forward-looking statements involve known and unknown risks that may cause actual results to differ. - Dependence on successful commercialization of products like the trigeminal nerve RF ablation system. - Regulatory risks related to FDA approvals for new products.

Q: Congratulations on a great quarter. I'd like to just ask a few questions that were submitted. Dave, maybe first off, why have your results been so positive to date and what is the measuring stick for clinical success for epilepsy?

A: So it's been a preferred therapy for patients that have epilepsy to actually use ablation technology, whether it's radio frequency ablation or laser ablation for those patients that are resistant to pharmacologic therapy, it's been the preferred method. So I'm not surprised that we're having success. But the success we're having, I think part of the reason is that we're using the same device to both do the diagnostic procedure as well as the therapeutic. So typically, within a week, the diagnostic process is able to determine precisely the tissue that's triggering the seizures. And given the fact that we're not sending the patient home and replacing the device when they come back a few months later we're doing this really all in one hospitalization, I think it certainly contributes to the success that we're having. The measuring stick for epilepsy patients, typically, what you'll see in the clinical literature is that it's -- the time line is one year, either one year post surgery seizurefree or improved -- dramatically improved reduction in seizures. So as we mentioned in the discussion, right now, the patient that's been treated the longest is a bit beyond nine months. So it will be interesting to see over the course of the next 12 months, how many of those patients remain seizure-free or are dramatically improved, but we're off to a great start with that.

Q: And the second one is you reported a really strong product gross margin of almost 60% in Q1. And your guidance for the year is expected to range between 47% and 51%. Do you think these levels of margin are sustainable long term?

A: I'm very confident that the margins of 47% to 51% are sustainable. The reason why we saw a higher gross margin in Q1 was, if you remember, prior to finalizing the agreement, the extension with Zimmer Biomet, NeuroOne was actually commercializing the technology directly and because of that our margins were higher. But we're very confident and really expect those margins to be within the range that we provided in guidance and that's 47% to 51%.

Q: And the final question is, what does NeuroOne have to do before submitting the 510(k) application for facial pain? And as a follow-up, how long is the expected FDA review for that?

A: It's always a tough question to determine how long it's going to take to get through FDA clearance. But the good news here is that we've said we expect to submit it in the first half of calendar 2025 and we're certainly still on track with that. There is some remaining testing that we have to perform things like sterilization, testing, packaging, that's really required to be included in the FDA submission. But the good news here is that we've actually already kicked off the process of putting the application together for the submission. And in terms of the expected FDA review and the timing of that, I guess what I would say is our last submission, which was for the OneRF ablation system in the brain, that took about five months from the time we submitted to the time that we actually received clearance. So assuming we stay on track and we submit this by mid-year I would expect that it would probably be somewhere in that range of what we've experienced before. But it's not a guarantee but we've had great success, especially with our ablation system for use in the brain.