NeurAxis, Inc. (NASDAQ:NRXS) Q4 2023 Earnings Call Transcript

NeurAxis, Inc. (NASDAQ:NRXS) Q4 2023 Earnings Call Transcript April 9, 2024

NeurAxis, Inc.  isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Thank you for standing by and welcome to NeurAxis Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the call over to Ben Shamsian with Lytham Partners. Please, go ahead.

Ben Shamsian: Thank you and good afternoon everyone. Thank you for joining us for NeurAxis’ fourth quarter and full year 2023 financial results and corporate update conference call. Joining us on today’s call is Brian Carrico, CEO of NeurAxis, and Tim Henrichs, CFO of NeurAxis. At the conclusion of today’s prepared remarks, we will open the call to questions. If you are listening through the webcast, you can send in a question through the portal utilizing the Ask a Question box, or by simply emailing questions to NRXS@lythampartners.com. If you are dialed into the live call and would like to ask a question, you can follow the instructions provided by the operator. Today’s event is being recorded and will be available for replay through the webcast information provided in the press release.

Finally, I would also like to call your attention to the customary safe harbor disclosures regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of NeurAxis. Although management believes these statements to be reasonable based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance. Time-sensitive information may no longer be available — may no longer be accurate at the time of any [telegraphic] (ph) or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors, including but not limited to, the factors set forth in the company’s filings with the SEC.

NeurAxis undertakes no obligation to update or revise any of these forward-looking statements. With that said, I would like to turn the event over to Brian Carrico, Chief Executive Officer of NeurAxis. Brian, please proceed.

Brian Carrico: Thank you, Ben, and welcome everyone. Good afternoon and thank you for attending the first quarterly earnings call from NeurAxis. We look forward to holding these quarterly calls going forward to update you on our progress. During today’s call, I will highlight the many accomplishments from 2023 and our commercialization strategy of our revolutionary neuromodulation technology. We will also discuss the milestones and growth plans for 2024 as we continue to execute the commercialization of our market leading PENFS technology. Following my remarks, Tim Henrichs, our CFO, will review our financial results for our fourth quarter and full year 2023. But before that, with this being our first call, I thought it’s best to provide a broad overview of NeurAxis and the opportunities that we believe will drive the company’s growth going forward.

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Q&A Session

NeurAxis is a leader in the field of neuromodulation. Our company was founded in 2012 with the vision of using neuromodulation to help treat many of the disorders that exist today and we are the first to market for our indications. Our initial focus is the pediatric and adult GI space, specifically on disorders of gut-brain interaction or DGBIs, which includes functional abdominal pain associated with IBS, functional dyspepsia, irritable bowel syndrome, and more. With our targeted indications, we have a large total addressable market with 9 billion on the pediatric side and over 23 billion in adults. While we are currently focused on the pediatric space, we are evolving into the adult space later this year on two fronts, which I will discuss later.

There are currently no FDA approved drug therapies for children with abdominal pain related disorders of the gut-brain interactions. The current medical treatments, which are off-label drugs, can often have serious side effects and most lack scientific evidence of efficacy. In peer-reviewed publications, our proprietary technology has been shown to be equivalent to or better than prescription medications in alleviating symptoms associated with these disorders. In part, this has driven the support of academic medical societies, including the American Academy of Pediatrics and the North American Society of Pediatric, Gastroenterology, Hepatology & Nutrition. With the great body of work we have on all the publications and the subsequent support from the key societies, we are now rapidly achieving insurance company acceptance.

We expect to significantly expand upon the 16 million covered lives that we currently have throughout 2024 and earn broad coverage by all the major insurance companies by the end of 2025. This will mark the true acceptance of our therapy and our goal is to become the standard of care for these debilitating conditions. Our proprietary technology can be referred to as percutaneous electrical nerve field stimulation or PENFS. Percutaneous electrical nerve field stimulation targets nerves, including the vagus nerve, to alter pain transmission at the central level. This is accomplished via a set of electrode needle arrays placed into and around the auricular area. We currently have one authorization from the FDA for functional abdominal pain associated with irritable bowel syndrome in children 11 to 18 years of age.

This was a de novo clearance from the FDA. We also received and currently have a PENFS technology specific CPT Category III billing code and are now taking the natural next steps in working with the American Medical Association toward an eventual Cat I CPT code. We also have other indications we are working on, including but not limited to, functional dyspepsia in children, post-concussion syndrome in children, pediatric chemotherapy-induced nausea and vomiting, and our first adult indication of functional abdominal pain and irritable bowel syndrome. We are on track, barring any unforeseen hurdles, to begin commercialization of these additional indications over the next two years. Separately, we are working to expand our portfolio of devices with the rectal expulsion device, or RED, for which we have acquired a right to license from the University of Michigan.

This is a very exciting opportunity for NeurAxis, which I will speak about in more detail in a moment. With that review behind us, I would like to review our 2023 achievements. During the 2023 calendar year, 3,321 IB-Stim devices were purchased, which treated about 830 children. Children’s hospitals and private pediatric GI practices accounted for 67% of sales through a purchase order process, indicating the patient had insurance coverage for IB-Stim. The remaining 33% were patient purchase devices through various financial assistance programs offered through our IB-Stim guidance and patient support for GPS program, indicating that insurance coverage was unavailable for those patients. This data demonstrates why increasing insurance coverage for PENFS has been and continues to be our top priority.

The GPS program is primarily in place to access — to increase access to care for children. GPS also provides prior authorization services, patient advocacy services where families are educated on how to do consumer appeals for coverage, and several financial assistance options. In 2023, GPS assisted 645 patients, a 53% increase from 2022. Prior authorizations were launched in May of 2023 and served 101 patients throughout the year, with 74 of those 101 in the fourth quarter alone, showing this program’s growth and importance. As insurance coverage increases across the country, the percentage of sales through purchase orders will increase exponentially. This is why our number one priority is written insurance policy coverage. Our plan of action is clear.

We believe that strong peer-reviewed publications and key society support from the likes of NASPGHAN and the American Academy of Pediatrics result in successful coverage from insurance companies, which results in strong revenues. With this formula, we have rapidly reached 16 million covered lives as of today. And as mentioned earlier, we have great confidence that throughout 2024, we will significantly expand upon the 16 million covered lives already in place and obtain broad coverage by all the major insurance companies by the end of 2025. With the support that we already have from the primary [academic] (ph) societies in this broad coverage over the next few years, we expect a significant acceleration of revenue. 2023 was a year filled with many important milestones and achievements.

In total, to date, over 2,600 children have been treated with the IB-Stim therapy, which treats functional abdominal pain associated with IBS in patients 11 to 18 years of age. In 2023, we treated 830 of the 600,000 debilitated children with IB-Stim, representing a penetration rate of 0.14%. We believe this is less than one quarter of 1% of all children that suffer from functional abdominal pain that could benefit from our therapy. From a commercialization standpoint, we know there is a very large market with an unmet need, and the key to success in the MedTech space is strong insurance reimbursement. This plan is on schedule and the proof of concept is apparent as we have seen 14 studies published by independent investigators from top children’s hospitals.