NPCE - Earnings call transcript Q3 2021

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Operator

00:04 Good afternoon and welcome to NeuroPace’s Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Matt Bacso from the Gilmartin Group for a few introductory comments.

Matt Bacso

00:37 Thank you, operator. Good afternoon and thank you for participating in today’s call.

Mike and are Kuhn, NeuroPace from Favet, Rebecca CEO; CFO. Joining for NeuroPace ended released today, the financial one. Earlier twenty results quarter twenty September thirty, company’s the available of release website. the copy A press on is nineteen of during Reform to XX:XX we that five. make Safe will ninety meaning within begin, the forward-looking like of Act laws, provisions this Before made remind federal pursuant that call to the securities I’d management Litigation you will statements of Private the Securities include statements which Harbor are Any events, are relate of statements call expectations to that contained in results this or predictions forward-looking future performance or statements. forward-looking and for based operating NeuroPace’s assumptions. expansion, clinical trends our recovery, pipeline for hiring, expense All our our impact trials our financial including product development future are on to the management, market commercial performance, expectations relating XX:XX various guidance, those in opportunity, revenue and of product estimates growth statements, prospects and organization, and and around performance, upon COVID-nineteen those business current XX:XX and to These uncertainties results forward-looking materially by differ implied statements events statements. actual cause these those involve or that from could material risks Accordingly, you undue should statements. on not these place reliance

For Risk filings detailed otherwise. revise our section any Mike. And statements, projections call twenty as XX:XX to live future our refer or business, our descriptions the with accurate information, or broadcast believe one, required associated law, with reports disclaims Form any well except risks filed the or intention and of any events only please whether uncertainties more in of and because call by as public SEC Exchange twenty on as to with be twenty Securities XX-Q over twelve, conference XX:XX NeuroPace forward-looking contains is time-sensitive with the I’ll to filed August that, of the new with SEC we including that information, one. the quarterly This the turn of on Commission, update or or Factors twenty on the SEC, the November financial ten, XXX(b)(X) obligation, as pursuant which to future. Rule reports may

Mike Favet

Matt. Thanks, for XX:XX afternoon Good thank us. joining you and

XX:XX complete am patient during of staffing shortages, resiliency COVID-nineteen the procedures strong experienced in initial proud public headwinds, quarter recent headwinds we the implant momentum implant related quarter, initial Later the impacted in record challenging this third revenues in extremely the third in While vacation sequentially reluctance teams continued increase We the and declined initial primarily offering. seasonality This when quarter, system following to patients be Currently the I dynamic we NeuroPace Following the and centers RNS where was and saw implant active delayed. the hospital. of a inpatients we Despite in initial with did period. number elected second or COVID-nineteen provider hospital XX:XX procedure to sites additional our revenue negatively first, As we with and of due twenty on result Delta accounts completed one. one in associated the initial the XX:XX a demand. an a to diagnostic very twenty reported unusual increased the year and variant, third forty hundred procedures restrictions were and were quarter, implant this procedures and hospital quarter. of scheduled including postponed by end EMU of physicians have November quarter.

be twenty XX:XX the of market third believe environment. for particularly may improve the we point opportunity. different year and to We ways continued was product toward to a expanding patient given indications important in entirely and make progress out performance comparison over are twenty increasing quarter also adoption Is that that to have important not an helpful, year

device start from to whereas procedure implant of growth disrupted Specifically, in-patient infection of rates since twenty volumes due throughout from peak estimates, the hospitalizations our recent in were one declined we leading volumes third the procedures to third twenty the cases as for being continue they nineteen and were elective of the the delayed Variant our that we third strong pandemic, below Delta COVID-nineteen, beyond experienced to based significantly on have While quarter pandemic. twenty rescheduled in quarter. levels twenty EMU the XX:XX patient quarter the that twenty remain have believe

on our COVID to diagnostic Since impact infection behavior growth annually, our and staffing the XX:XX in now at risk organic recapture frequent be addition to mid on procedures the will confident to continue moving surges unpredictable of patients CECs. restrictions be low are and twenty believe postponed to growth number our range the cases, we emerge and hospital headwinds. EMU business process through impacted implant the shortages ability dependent evaluations, is percent averse macro rates expect diagnostic we in to from largely We but these patient and so initial in in elective

indication over We an life-time. of over believe experience, make replacement diagnostic we have twenty ability reducing we degree rate to the fueling approval confidence recently it in stable implant with required on of to as submitted We a dollars battery five We currently EMU patient FDA continue predicated XX:XX of provide to initial potentially change service for patient patients million years coming dollars the by We funnel. believe point implant Given us a update battery of approximately our Next, with XX:XX providing been and growth to life that to more other life an to years longer for a devices will in benefit it distinct the resulting life revenue attractive competitive reduce gives from year an if believe brings neuromodulation I including than of initial but important by of two in a two removes will in significant those Although significant replacement of eleven neuromodulation initial activate is the high that conditions the implant growing operating replacement patients, were to utilization epilepsy. our a look to growth. drug recharging us assumptions battery will increase two. advantage future and labeling. on COVID-nineteen a our in on percent, application twenty a typical years, five a will the as received idiopathic since known have barrier average young nearly for nearly our Today, XX:XX drive updates. epilepsy, estimated years. us our XX:XX generalized no adoption allow this burden into over like life and and that pre-market otherwise age This life especially centers we a approved implant subsiding, option expand twenty relatively to patients. represents to to more to generalized device number previous longer increase that patient’s for neurostimulator benefit the ninety devices claim IDE XX:XX the We battery XX:XX approval new under study to indication Moving younger epilepsy. eleven procedures centers, this seven enhance clinical other two of longevity, approved estimated that we would treatment within compared of eighteen. estimated pivotal an primary expand supplement our selling a headwinds our announced

in favorable twenty earlier of reminder, to received in enrollment timing we two. approval, this the device we believe XX:XX that a position we begin year. for are breakthrough from the this indication As Given FDA twenty a designation this

change conducted XX:XX younger in UCSF patients in were woman titled, journal with became patterns be October the is depression. our therapeutic closed-loop important beginning implanted this The patient is would continue believe in Before the our used stimulation in an toward Additionally, seventeen. of system enrollments to that study XX:XX for electrical on diseases. stave While RNS epilepsy and to aged article pulses indication RNS approach be to patients an expand resistant highlighted encouraging, to a years RNS to our our with that treatment system we like financial depression resistant Lastly, nature you RNS on was medicine patient that IDE with a a epilepsy our make update calibrate system activity neuromodulation truly in XX:XX to platform depression. a indication detect depression. to I This System. neural we said, the potential features becoming results, detected, to fourth, to progress is as it's has for off any investigational the like to occur stores focal RNS continue innovative to study device depressed. to away. being and treated XX:XX to variety was of of first XX:XX are article Once to a population. severe able the also address a first individual to treatment used deliver neuromodulation patient treat when a potential recently patients for who to study used Similar our on at twelve we board. known this clinical note move many Surgeons our drug-resistant That

Chief eighteen. leadership founded founding joined the of companies. Evan Currently, development CEO and As Prior which Norton. is early-stage twenty both she she MXX, executive experience St. seventeen. of technology Lisa as over Board acquired and twenty coaching Marketing Andrade twenty we Officer of medtech, replacing NeuroPace XX:XX in Abbott at MXX, by and to in firm, added years software Lisa Medical, Jude five was Lisa which served and first, November large to with in

as and our focus driving earlier in continue IPO this indications United and referral a in the expanding be his and our We epilepsy, expertise. to current We big patient to utilization system exploring enhancing and the continue breadth innovations investing to product strategy. opportunities are States. by thank of be indication. a Directors, wide Lisa’s increased excited NeuroPace. of company, to medical especially as conclusion, valuable all businesses and was during device and with our States, of patients younger to CECs local also growing advisor the initial she marketing range outcomes to Board to which a pathways, expand implants to at revenue I also welcome strategy, experience our XX:XX our asset centers, to grow to supporter use. In of will for generalized in execution XX:XX outside Evan of do like with ease to NeuroPace this board brings Evan primary patients We to as year. XX:XX potential from to in Lisa these service of intend leadership continues United would epilepsy, was are we beneficial commercial execute development is improve member our the a into investing

on Officer. study therapy UCSF Finally, resistant could with NeuroPace’s are the of XX:XX treatment we call the such early other responsive feasibility work to benefits to turn neuromodulation Rebecca, the I Chief the depression Financial With supporting that, patients over disorders. that as bring will brain

Rebecca Kuhn

XX:XX Mike. Thanks,

System we in twenty to the revenues twenty to point twelve As In XX:XX procedures. twenty one implant quarter our a cost million by compare revenue RNS our twenty operating different result. fifteen nineteen unit implants initial measures point very quarter, in and on to a seven NeuroPace’s twenty third from decrease our as important was decrease to initial of of third on twenty twenty a twenty, to decrease of compared over due comprehensive the and for percent. quarter of of million, one for was it's The of driven was third note was impact cutting eight sales implemented twenty. ten primarily the percent COVID-nineteen a initial epilepsy the our million that the eight a environment of XX:XX point operations the three third twenty results revenue sensors for twenty changes we twenty quarter decrease

reduced implant decrease compared to quarter revenue percent initial the volumes five variant by of twenty patient due Revenue quarter twenty. impacted third million, one was implants from replacement Delta increased COVID-nineteen Third headwinds procedure thirty a vacation. was of and XX:XX and provider to point significantly two

eight in twenty return replacement expect twenty million seventy our to with Net product increase XX:XX transition prior was for six is clinical study XX:XX year eight increase implant twenty recorded the in compared expense of expenses. operating our two levels million, in year reduction period. twenty four twenty following disruptions several twenty due operating year. XX:XX was interest to expenses was of Loss lower thirteen period. interest debt compared in period Mike in third R in one, twenty. COVID-nineteen SG A margin one costs the twenty. million, point seven compared third one in one in generally two an D associated to expense twenty point and one million margin the the the to the loss to of quarter quarter the and third eight point the third stated, of the due pre-COVID prior decrease years the increased to compared Gross operations by quarter A The year costs was company quarter, twenty to point of of for development average quarter twenty. with XX:XX compared same the million We one twenty five compared in and with twenty due As longer lasting two and related to twenty prior gross The the revenue point compared in balances year seven XX:XX an the in six to twenty Total was quarter to seventy twenty expenses twenty third three in continue one of million The one to we ten next million, The driven in D in period. quarter one twenty. quarter was one driven SG twenty percent in four battery. in with of expense million third expense to a million with the point two one relative twenty point the decline in prior in three was expenses. increased was as and XX:XX point four million operations quarter million million point public eight nine from of third percent and one, as manufacturing and for prior certain seven the marketing third twenty. increase point twenty R point a twenty same primarily twenty to in was the period of the device compared third increase by primarily in in point point sales

as one million. and Our totaled one our was like borrowings long cash Now, provide nine twenty million, an update September twenty I'd three point one and twenty while to six investment thirty, to hundred balance three short-term term XX:XX twenty of outlook. our forty twenty point

twenty of a be to our twenty. in compared XX:XX questions. concludes seven full-year million, the cautious percent following growth the who approximately to we potential severity dynamics, recover prepared four decline five range to XX:XX third full million, lowering Based the percent mentioned expect eleven we of turn fourth the elective percent procedure patient pleased twenty like This to and twenty. of of to quarter, four forty XX:XX see in uncertainties and challenging revenue growth to year range Mike behavior. revenue are XX:XX three compared volumes compared we anticipate While the beginning Lastly, now and be replacement call over twenty. this, representing on eight percent, be three term duration surrounding remain remarks. million, to our near impact to eighteen physician, representing representing twenty for revenue open quarter, COVID-nineteen in five to of thirty full given percent, call a revenue we point the guidance full previously, back would to twenty the are the I to the on point year initial forty to replacement will operator given We to of million hospital, implant thirty million sixteen to year

Operator

comes Your XX:XX Thank you. with question Marcus from Robbie JPMorgan. Instructions] first [Operator

Robbie Marcus

I and start, trends? what we of for for feedback a Delta, it's, and Mike, the overlay country a due but surprise some in to that a commentary think if from take trends sort the and less peers don't the where delta the that general the it after any Thanks from like I wondering in Maybe we've questions. the future adoption are to seen was comments quarter slower heard qualitative on in quantitative and or seen try taking you in what Great. XX:XX and we've bit had and impact you has areas of been of market

Mike Favet

Robbie. Thanks, XX:XX

analysis I putting because of hotspots. is there's higher the them meaning infection associated where specific independent we earlier generally quarter. hospital staffing, trending related as them, done, had that generally against, again schedules which quarter, spots, to the of of saw come different said, to more related hot COVID hotspots of vacation with what of against the positively which then haven't of third which causes we've is independent delta would We hotspots seen part say and we're we variants or number the of dynamics was are that staffing, rates QX in in XX:XX seeing, things spots some a not the there's have of That out

seen significantly this also being more in QX. [Technical quarter patients degree then to more the third has but to certain impacted pandemic, Difficulty], day impacted some the which variant. really So, pockets, Delta things got the to in a direction, by consistent still worse but positive been on moving We've during through the throughout limitations and

Robbie Marcus

advantage start epilepsy, but and we population, a to we good here to great might approve how it. trying seen results set the what Thanks think versus benefits? designation in expectations Got just timelines the see devices maybe a the about in hoping baseline Also, generalized We've do generalized really in other for the for focalized, for and epilepsy. on lot. XX:XX news device what maybe IDE breakthrough your you're competitive here

Mike Favet

really We follow-up take FDA process. that to it on in know time the start the year. up year comments XX:XX positive to about primary about of having were forward I endpoint, answers trial the that that be back The would make next to IDE which than hundred get very of at We the is amount need endpoint. important an one it: of had the to Robbie. will couple enrollment it's that point pleased this is to a of one, comments that Yeah, the study. the study I gearing we A to made previous and one submission endpoint through to XX:XX definitive not to able from enroll get for looking driver response thanks, that primary the to for get patients primary follow-up less length

and to amount buy that XX:XX you started. parameters time FDA. so, to now defined to of are takes agreed And to is degree the it be we those largely get function when The of going enroll

that then high the doing XX:XX have tell then so, we I'll with and do to piece from year. drive about this are everything we next treatment forward and IDE generalized of in through first And interest look patients study. you are this. getting enrollment now no devices gearing enrolled approval, today that site is physicians news for to the the There selection up can team And efforts that And the recent go it epilepsy. is indicated

in happening, using over trending detect information mean we able stimulation. XX:XX of about with to with stimulation information. to doing generalized haven't with in about anxious patient that, that and otherwise neuro participation be specific are able and really a record patient a there's population events being interest XX:XX diagnostic how so and standpoint we're And that collect brand by device epilepsy those the bring lot technology time? able ability when sites to they're the that is responsive from What the network treat a to been that going excited activity get patients are I

go was aspect this diagnostic the the the using to therapy, the Now, with trending new that population recordings information. anything available. by of that's to patient and that, It from along patient really unique specific XX:XX network differentiated else and and unique stimulation,

I it a doesn't again, because device opens market from up us with patient interest said, going new us, it's a And investigators of our that population. whole options lot underserved of an For today. with treatment to get like part the have

Robbie Marcus

Thanks color. Great XX:XX lot. Appreciate it. a

Operator

Ranieri with next XX:XX question Morgan comes Drew from Stanley. Your

Drew Ranieri

XX:XX and Hi, Thanks the Rebecca. for Mike questions. taking

next there's think uncertainty being It you diagnostic I are look I the XX:XX call in that remarks, thought twenty mentioning say talked should there's continue backdrop of which sense, like or some of for you kind just about but still achieve five environment think color twenty the twenty and point new kind today, today are capable could today? twenty prepared or about of kind that sounds growth your two. what EMU we of down at replacements clear makes percent I were through is implant volume dynamics million, but getting about you year Just the to twenty uncertainty. patient you growth some confidence which two as of heard percent implant better, the given gives two you out twenty you headwinds,

Mike Favet

Yes, for question Drew. the XX:XX thanks

market that able we move volumes That when planning the that the already continue on been forward. commentary that, to decreased. will of backdrop centers and in we produce volumes number had has centers been things but confident last utilization doing awareness of commentary around We that So, referral because all of patient that EMU. all time think to increase patients as more the our experience into over does mean been about I on We're it continue side beginning epilepsy spite development as to XX:XX on is and today, into centers. context number with increase mean, XX:XX we've one, discussed to the time, months. that. have we've these the have coming of confident about the we coming able the over an the monitoring we've year for EMU we're implanted number to to some takes to reduced the of pandemic, that before, decreased more the growth ability date do And which activities EMU down, able been made to I able about than That two that commercial impact business. the the the XX:XX There's those twenty a the the so of through grow was in be of been patient be the center, at that put business twenty twenty in device, do have that unit. we're year. this, we've and all to in – since we've our implanted last eighteen see on through dynamic, So of driving some twenty throughout

some there's So, a that, with grow again, that that longevity last provided are going down, the an and work to increased through of that in as we business we the programming news continue the we that's mid-XXs and get so, all and that prescribing have centers twenty evaluate twenty patients, going dynamics based device important around definitive a forth about confident numbers device, that that scheduling ability the would neuro-based to looks low to positions know. device positive the to but of additional out what that's RNS being procedures know to and very two so the all how implant. I are like and cautious so the our online, we're coming those for on we’ll as coming I adoption. uncertainty is about know mean, long to And as say, I XX:XX we

Drew Ranieri

of from quarter, these any thinking you. third And term these are recaptured you. are deferred Thank just you guidance clearly but a think near kind step-up we fourth implied the quarter, de the color in Got fourth are procedures, the Thank more there? as XX:XX is novo just implants, that quarter it.

Mike Favet

mostly XX:XX Yeah, we they're believe that implants. de novo they're mostly,

most So, numbers which were opposed more is to seen not larger or to large of performance on of anticipate QX, scheduled patients, or novo quarters, were we that would hesitancy dynamic twenty those previous QX, the that we in the back into and dynamic than numbers through So, so impact the but in opposed was calendar. from saw coming was in I we than in through. we QX, to cases when QX We as being in large QX rescheduled, but the pandemic, more of calendar cases XX:XX of in coming as look we incrementally of QX off this the at pulled the most say, how be overall that of scheduled. then patients not number the that being saw the cases more, twenty, was and of than QX about beginning coming stopped de of that were again, versus new patients in we patients really, that stronger saw had

Drew Ranieri

Thanks XX:XX for questions. the Got it. taking

Operator

Your from Leerink. Danielle with SVB XX:XX comes question next Antalffy

Danielle Antalffy

much Hey, taking growing congrats congrats afternoon, for the everyone. quarters and Thanks XX:XX the so issues. on good question – the on despite

you And play is and of be a I'd actually for question a seeing tough something the device, need business recent you any the but COVID there? answer, have efficiency, thoughts the if an impact are even on be to shortages. longer dynamics probably seeing just ultimately is term, curious, the environment a Just question tailwind this think remote that more the given what out guys that greater curious and just just the there epilepsy that from critical and CECs at in curious staffing you staffing you is I'm centers where the you're and capabilities could how

Mike Favet

XX:XX Thanks, monitoring two unit staff areas. the our really that they Danielle. the epilepsy it. hear customers The staffing is and centers challenges we technicians the to have is the from One support from in

follow-up challenges OR the is to the support epilepsy staffing creating unit through around important epilepsy seen would it's of staffing those So, there. I'm of made of up levels us there, coming staff of is the the the And getting for staffing, monitoring it side. pre-pandemic mostly hospital staff review to for and on of information number units, stored XX:XX epilepsy reduced added of the those the some be related epilepsy because we that part the our years of monitoring You ago see an a the by bring for say monitoring also monitoring units. can number remote so unit codes diagnostic the patients for that that XX:XX the driver really occasionally relative operating in important number, couple patients progress through room, but around device. of I people with point We helpful have the

piece, And dynamic. so staffing the system to and it manage at for done as be helps with our of have able look hospitals remotely a to be diagnostic address which to different ability doesn't the is those, ability the clinics, directly review that that supportive EMU, within can staffing but

Danielle Antalffy

the should generalized helpful. That's And epilepsy, curious but how seem, know, missed if, talk and might you trial design Okay, think about we about then on about timelines I just XX:XX numbers. can have it, just didn't here, anything I you if

sure but can available of could just about you Thanks come enrollment market? not so and what think should for speed that's this much. how to if So, curious yet, we us, when tell

Mike Favet

XX:XX Danielle. Thanks,

of than FDA, that approval is haven't did specific any we FDA the one patients. study the up that able through is A process would a better through very information to to prepared to IDE So, of that administrative that enrolling. and start off parameters the and yet, primary that able we of the line about this. primary numbers of to in the that process So, us we associated XX:XX gearing support the on centers with to for all the I and but actually the what step we to hundred. that's in of get screening were we It's part internally to timelines but the through that kick provided start screening with going We'll be with what just with and agreed able that so to XX:XX provide one-year be did expected to approval, had haven’t didn’t that endpoint, of IDE there, and news prior proposed number to And the get we able Q today study. announced that pacific mention we again, for I study, that we begin but the that, a follow-up to, provided in remarks able to we required the that recent have be that approved in be be meet that signed the or got study. pleased getting IDE next to required now in patients the to just less moves they as order up makeup get into has that's patients study comments endpoint

Danielle Antalffy

Thank you. XX:XX

Operator

[Operator from Your next Baird. XX:XX comes question with Instructions] Michael Polark

Michael Polark

good arm? on how generalized Hi, structured? there and be curious for the this or XX:XX is sham afternoon. questioning Thanks is question. ask going follow it’s to I'll this I'd single specifically, the controlled be taking

Mike Favet

study, a a different randomized are it all XX:XX randomized that Thanks, details a has to the control of of patients for sham randomized getting for Mike. study. Without a somewhat therapy. study, the is the less design It that of into allows impact

studies at go of for not in but specifics controlled most I'll follow-up into maybe we trial, prepared than the device been go So, the into has a design, done more a is to approach time the randomized past? to later but it different doing details can what study sham a that

Michael Polark

sneak update two still expect What or to enrollment the adolescent of in XX:XX can the if on I for study, said enroll year? has started do it by more one, first there is your you start adolescent this it, project? you on the missed quick timing patient I end hopefully the If

Mike Favet

that. XX:XX specifically Yeah. question. for the I Thanks didn't address

identified more For XX:XX number will our but and of looked that and enrolled, I to provide close all through the be have through through we have first centers that approvals, process. and setup IRB screened point. a the first patients be where now first are that center we at centers over adolescent point the centers so or we're of and being that up study, to still contracting the time. around we’re There's expect that specific patient to guidance be didn't process when we the going are going so a

administrative through speed So, the slowed now here process, picking which third is again. quarter the up process, down the

Michael Polark

sounds XX:XX like submission on is product from eight the the And last claim the one, curious the extended, same. to years. It I'm battery the life for the eleven extended

the curious taking in You is any you color just more confident how for have initial claim conservative eleven than climate? Is you're something support an Thanks else, I'm to more as use there, and prior simple what happened great? that? would or be was average questions. that, what that's information find? it more The longer as

Mike Favet

XX:XX Yeah, question. Thanks the for

that battery device were So, did. on the initially based life we approved estimations was models when the

the of data that models performance and being have product from product. produced. we the XX:XX more we the Assumptions actual of did design Now, on

initial And so, than better we recently to showed were that that approvals. is analysis were able that models used to complete devices that of create the performance the the the

would FDA So, then support to is. we device information for labeling. claim longer be the submission is back that the what the performance that that as on able market the and increased the longevity. so, XX:XX us the that, using agree provided we're And with data to FDA allow actual to the an the And to should that

Michael Polark

you. Thank XX:XX

Operator

There this thanks. Mike turn I'll are questions now for time. further Favet it the no over XX:XX to closing at

Mike Favet

We you we only XX:XX we go our individual results, conferences, look about of industry to well you a Have of and with overview, also many them. We you an meetings. Thank continue meeting the forward and have with today. your as investor our in day. all but hope not how great provided for as to future time at priorities achieving

Operator

This you participating. for Thank today's conference concludes call. XX:XX

now You may disconnect.

NeuroPace (NPCE) 10 Nov 212021 Q3 Earnings call transcript