Greetings, and welcome to the MRI Interventions’ Inc. 2016 Fourth Quarter and Full Year Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Frank Grillo, CEO. Thank you, please begin.

Thank you, moderator. All right, good afternoon everyone. Thank you for joining us for our Q4 and year end 2016 earnings call. With me for today’s call is Hal Hurwitz, our CFO. On behalf of the management team and employees of MRI Interventions, we appreciate your interest in our company. And for those of you who are shareholders, thank you for your support. For Q4 2016, we have good news about procedure growth, disposable revenue growth, continued improvements in our balance sheet and use of cash and pipeline building going into 2017. The adoption of our technology continues, and we are very pleased with our position and progress in the market, and our momentum going into Q1 in 2017 is stronger than it is ever been. We’re honored to be working for you in building this great company, and we’re proud of the care patients are receiving as a result of the continued adoption of our products and technology. With that, let me turn the call over to Hal for a review of our Q4 year end and year end 2016 results. Then I’ll provide further context regarding our progress in the marketplace. Hal?

Thank you, Frank. Before we begin, I want to point out that the comments made on this call may include statements that are forward-looking within the meaning of Securities Laws. These forward-looking statements may include without limitation statements related to anticipated industry trends, the company’s plans, prospects, and strategies both preliminary and projected; and management’s expectations, beliefs, estimates, or projections regarding future results of operations. Actual results or trends could differ materially. We undertake no obligation to revise forward-looking statements in light of new information or future events. For more information, please refer to our annual report on Form 10-K for the year ended December 31, 2015, as well as our quarterly report on Form 10-Q for the quarter and nine months ended September 30, 2016, both of which have been filed with the Securities and Exchange Commission and our annual report on Form 10-K for the year ended December 31, 2016 that we will be filing with the SEC on or before March 31, 2017. All our filings maybe obtained from the SEC or by visiting our website at www.mriinterventions.com. Now, for our results from the year ended December 31, 2016. ClearPoint disposable product sales for the year ended December 31, 2016, were $4.8 million compared with $3.5 million for the year ended December 31, 2015, representing an increase of $1.3 million or 36%. This increase was due primarily to a greater number of procedures in 2016, which as we previously reported exceeded 500 procedures for the first time in our history using the ClearPoint Neuro Navigation System. ClearPoint reusable product sales in 2016 were $831,000, compared with $907,000 in 2015. Reusable products consist primarily of computer hardware and software bearing sales prices that are appreciably higher than those for disposable products and sales volume has historically fluctuated from…

All right Hal thank you. So let me start with a quick perspective on Q4 and now I’ll discuss 2016 as a whole. We had a lot of great accomplishments and we’re marking great progress. Also I’ll provide a little perspective on Q1 so far and how it looks for the year 2017. For Q4 2016, we had a solid quarter particularly related to procedures. As Hal mentioned, we did $1.6 million in total revenue for the fourth quarter, which included disposable product revenue growth of 35% over the same period in 2015. We set new company records for total quarterly revenue, disposable product revenue and ClearPoint procedures which reached 130 in the fourth quarter of 2016. With growing procedures quarter-to-quarter for seven quarters in a row and it’s worth noting that our procedure growth for Q1 2017 is certainly on track to extend this streak to eight quarters in a row. We recorded one capital sale in Q4 and added one additional evaluation side. More importantly our capital pipeline has improved recently and we believe the next few quarters will show better progress in terms of adding new accounts in closing capital sales. We were able to tightly manage our cash resulting in a net operating cash burn of $1.1 million in the fourth quarter of 2016 our lowest quarter we burn rate since becoming a commercially focused company. As I’ve said previously our disposable products are relatively high gross margin and when we achieve good growth in disposable revenue we see an immediate impact on our incoming cash flow for the quarter. All in all a very solid quarter we need to improve in the first quarter of 2017 and already have booked one capital sale in two new evaluation sites and we still expect more to come.…

Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Jeb Terry with Aberdeen Investment Management. Please proceed.

Good afternoon, Frank.

Hey, there Jeb. How are you doing? Thanks for joining the call.

I’m doing great. I’m doing great. Thanks. First one, ask you for some color on the gross and procedures for this quarter is terrific and the additional sites coming on. I know that’s a key one to spec a lot of work that’s going to part. So could you – can I have some color about the business this is kind of represent a bend in the curve where it momentum in these patients. And/or similarly can you say that something about the pipeline of sites that might indicate where we are in the trend, is the trend changing upward I guess is the question.

Sure, sure. Thanks for the question. We’ve been very pleased, Jeb with the way procedures have come together this quarter. Even in February which was kind of a short month we had a good procedure month and March is shaping up to probably be our busiest month ever. Right now based on what scheduled in March, March will be our busiest month ever, but we often have a few adds and a few cancels throughout the course of a month. So we’ll see, but March is shape up very nicely. Where I – the bend in the curve is a great discussion, I feel like momentum around interest from new customers and from new institutions is higher now than it was six months ago or nine months ago for sure. Our sales guys are definitely field in more calls and visiting more new potential accounts. I also look at where we are in terms of market share of current procedures. Overall for our market if you combine everything DBS, laser, roll it all up, we’re probably pushing up over 10% market share now of those procedures being done with our system, with our Navigation system. So when I think about – where do you see that knee in the adoption curve and where do you really begin across the chasm. I think most people would tell you, in medical technology is in that 10% to 20% share range. And we’re just entering that range now. In laser, I think we’re actually significantly higher than that, at the top end of that range. So I feel like we’re right on the cusp of really driving some new adoption here and seeing some nice trends in the market. And the year started off very nicely with strong procedures and strong interest from some new accounts.

And in relative to the – those cases in new accounts, can you give me – how many doctors are now trying them that 47 sites at the end of the year, and there is more sites coming. But, are there more doctors trend or are we seeing – the same doctors doing more cases.

Yes. I think it’s more, if I think about where we’re seeing some utilization increases and what I would described in our mid-tier account, I think it’s more that the same doctors are doing more cases. When we get a new account it’s typically one or two surgeons who bring us in and we tried to expand horizontally form there. That dynamic hasn’t really changed in terms of getting new accounts up and going. So when I look at where some of the bump up in procedures its coming from – its form a couple of mid-tier accounts where they are getting more interest, where the neurosurgeon is getting more interest for their neurologists community, where they are fighting for and getting more MRI time. And in a couple of instances where they are also starting to add laser ablation to their procedure mix win previously they were just a DBS surgeon for us. So all those dynamics kind of contributing, it’s not just one thing.

Okay. I’ll let someone else ask question and I’ll get back.

All right. Thanks, Jeb.

Thank you. Our next question comes from the line of Bruce Conley a Private Investor. Please proceed.

Hi, Frank.

Hey, Bruce. Thanks for joining the call.

Thank you. I am wondering if you – really like your comments on the drug delivery business in general. And I’ve heard a lot about Voyager form a couple of different brokers and that the program seems to be doing pretty well. Do you have any projections for cannula sales for the year for Voyager?

For 2017 Voyager will be in clinical trials, I believe that they are aiming to initiate their Phase 2 trial this year. I do not have specific projections for their trials. I believe they have something like 20 to 24 additional occasions to do in their Phase 1 cohorts, and my numbers are in that range. And for Phase 2, that will be a larger trial but I don’t think they’ve announced details of the structure that yet. And we’ll have to see how it goes. I think as we’ve discussed the drug delivery programs are very exciting. But right now they’re all Phase 1, 2 type trials.

Okay. Thank you. Also one other very general question conceptually is there been progress in the industry or more talk about using the MRI suite is oppose to transporting patients to the operating room.

Well. I think, what you are referring to specifically is some of the laser ablation cases where so many of these procedures start out in the operating room they place the fiber stereo tactically, which means it’s not real time imaging and then roll the patient down to the MRI suite and do the ablation there. So they can use the temperature mapping of MRI. We are hearing more and more accounts as they get busy getting frustrated with that kind of work flow and then they get interested in using the ClearPoint Navigation system, which would allow them to do the entire procedure in the MRI. We also expect that this is an area that will be adventurous to risk management type personal in hospitals. And we’re expecting sometime this spring that season papers published on the topic. And we’re looking forward to see that happen although those haven’t come out quite yet.

That could be a real driver for us couldn’t it?

I believe it could be a real driver and it will highlight I think what everybody is – what many of these accounts are already experiencing that if there is concerned about patients safety and risk management in the hospital, wheeling a patient down the hallway and often having to get into an elevator because MRI’s are typically in the basement with radiology. Having a patient to be wheel down the hallway that way with a fiber sticking out of their head is not an ideal work flow to save the least. Now, we’ve also seen a few hospitals invest in intraoperative MRI suite that are more tailored to enable procedures to be done in the MRI. That’s also a great trend that supports our business although that’s a very capital intensive way of gong about it. So we’ll see.

Okay. Thank you.

Thank you.

Thank you. Our next question comes from the line of Scott Billeadeau with Walrus Partners. Please proceed.

Hi, thanks for taking my question. I just got a couple of questions, one on how the sales force is organized in terms of – maybe if you can give us how many guys you got out there, how many are working on capital sales, how many are either work training and working on getting doctors up to speed and reuse.

Sure, sure. Thanks for the question Scott. Thanks for joining the call. Yes, so our commercial team, we have a field based commercial team these are all direct employees this is not a distributor type business. We have six people on the sales side including the VP of the group. And they are essentially what I considered to be the hunters of the group. So their goal is to go out and initiate new accounts and get started. And frankly, the hardest part of the sales process is the number of touch points to get going. It’s not just a neurosurgery it also includes radiology, administrations, staffing et cetera. So that’s what they really focused on. And they are really driven on new accounts. In support of those people or kind of in partnership with the sales team is the clinical support team. The clinical support team is currently eight people and I think we’ll be hiring there given some of the procedure growth. They are more technical and their responsibilities and they support procedures day in and day out. And we look to them it will also help drive penetration within an account. Selling horizontally both to existing surgeons who maybe doing DBS and our great potential customers for a laser but also for new surgeons within the hospital. So, and that’s the structure of that group. So it’s a group of 14 or 15 people total couple of marketing folks also who will support the sales team as well. And that’s the structure of the commercial team.

Great thanks. And then you mention you’re probably at 10% penetration or 10% of share of procedures maybe higher on the laser. So where can that go? I mean is that, what’s a reasonable number of where that number can get to.

Well it’s a great question. I don’t really know that I can give you an exact answer on that. I think it can go a lot higher, I’ll say that. I think for laser ablation I certainly think it could be – laser ablation we’re in two types of procedures one is where they’re bleeding the hippocampus for epilepsy I think that’s an ideal procedure for a ClearPoint Navigation system. And we should be at 50% to 80% share in that procedure. For brain tumor ablation, if it’s a large tumor on the surface of the brain, I think that’s a fairly easy targeting environment. But even the workflow there, you still have to sick the patient in the MR. I could see being very high share there as well. And then finally DBS, I think our share potential is certainly 50% plus the challenge for us there is the stereotactic method is just a little bit more ingrained in surgeon training. And that just tends to be a little bit harder for us to penetrate. So, I’m not sure I can pay a single share but I’m talking about the current available market. So it’s not a pie in the sky number I’m referring to.

Yes. Great. And then one last question following-up on something you mentioned just on keeping everything in the MRI suite maybe if you could inform us, what does that really – if a center wants to do that other than your equipment. What else do they need? What is the procedure? What is the capital cost? What are we talking to be able to keep that person in the MRI suite to be able to do that procedure as opposed to roll them out?

Sure, sure. So keeping in mind that the majority of our customers are utilizing diagnostic MRI’s that are already in their hospital. So we work with the vast majority of the diagnostic MRI’s already in place in hospitals. This is a hospital based procedure of course.

Right. That’s what I want to – but most of the market quite keyed up to do surgery in there. I guess that’s what I am talking about. Those ones, what else needs to be done so that they don’t have to pull the guy out of there? Is it significantly up over the period?

There is not significant capital I would say there’s three things that come to mind that we always check for, one is a scrub sink near the MRI suite, this is surgery so a surgeon has to scrub for it. I would say most instances there’s a scrub sink in the MRI suite. Secondly, in the MRI-compatible anesthesia cart these patients are under general anesthesia. So to have them under and in the MRI you have to have a cart that enables that. Again, I would say most hospitals have that once in a while they have to go out and purchase that that’s probably a – I don’t know $50,000 purchase I’m going to guess. And then the third area is sometimes just airflow and ventilation in the room. Honestly that can be turning up the fan and putting in – replacing the 20 year old filter with a new one. It can be fairly simple. And that those are probably the three things that come to mind. There’s also a certain amount of cleanup. Some people do a closet full of supplies in their MRI room, you don’t really want that if you’re going to be opening up someone skull. You don’t want a cleaner environment in that. So it can be a little bit of reorganization but not real capital. So, in each of those are things we check on, very often hospitals already have all three, it’s not a big deal. Sometimes they have to do one or two of those things and would certainly have probably a couple of accounts they had to get all three things done. But it’s not like they have to go out and buy a devoted MRI. That’s a key part of our value proposition.

Okay. Great, appreciate that. Thanks for answering the questions. I’ll hop back.

All right. Thanks for joining us, Scott.

Thank you. Our next question comes from the line of Rodney Baber with Paulson Investment. Please proceed.

Hey, Frank. How are you?

Good afternoon, Rodney. Nice to (2:40).

Well, I’ve got a couple of things. One is, I keep hearing from my doctor friends that healthcare reimbursement is moving from a number of procedures to an outcomes based business model, which means they’ve got to get people in and out of hospitals quicker and to a lesser extent and they have to not come back, or they take money away from them. So I’d love a thought on how has that impacting what we’re doing. You’ve got a slower growth in doctors than I think you would have liked to have had but now the procedures had picked up. You’re getting 30% something percent growth which is great. But if the doctor thank and kick in more for whatever reason and if it’s the outcomes by sources it procedure so it kicks in and makes that happen I’d love to hear that. But there’s a question in there, trying to help us understand how all that is working in the favor of what you’re doing.

Sure, sure. I guess there’s a question in there, Rodney, let me see if I can provide an answer for it.

All right.

So if I think about the reimbursement environment that we are in and – I guess I would back up and say that the majority of our procedures are done by a functional neurosurgeon. So this is a specialized neurosurgeon who is trained and deals with movement disorders with a surgical approach. Very specialized group, which honestly makes for easy, I shouldn’t say easy but it makes them easy to target, straightforward targeting. These are big inpatient procedures, they are procedures that people think about for a long time before they get them done for the most part. DBS for Parkinson’s or laser ablation for epilepsy are both elective procedures. You don’t wake up and say, I think I’ll go get that surgery today, you think about it for a while. So the reimbursement goes through these procedures are quite well established. They are – what I refer to as DRG type payments, big inpatient payments to the hospital. And from our perspective we are a supply cost within that procedure code. So the reimbursement doesn’t say, a ClearPoint procedure it says, a DBS procedure. Whether they do it in the OR, or whether they do it in the MR is indifferent to the payer. They just pay for the implantation of the DBS electrodes and then the DBS system itself. Some of those trends you’re referring to in a broad sense, I believe Obamacare and these kind of trends have made hospitals more economically aware. And so they do think about time or utilization definitely about outcomes and patient satisfaction. And all of those play to our strengths. There’s not – I can’t point to a specific impact from any of those yet in our business and it’s kind of a broader procedural question than down to the specifics of the Navigation system.

Well if you’re not being impacted with that which makes sense when you talk about it. What about the qualitative side of it. These doctors realize that you really do have a better approach for the patient and that’s represented by the procedures going up but then you are not getting enough new doctors. So what are we missing about that why not more docs with the quality of what you are doing.

Well I think that, when I think about new docs I think about new accounts. These academic medical centers have anywhere form one to four functional neurosurgeons on staff and that’s where the growth we see in out doctors as we add new accounts. The wildcard of course is laser ablation for brain tumors that opens up a whole another surgeon group in terms of surgical oncologist, neurosurgical oncologist. And that’s a group historically was not targeted as directly since they are not in a functional meetings that we often go. So I believe that gives us the opportunity to not only to enter new accounts into that procedure but also to sell horizontally within existing accounts to bring in those neurosurgical oncologist, and we’ve seen that in a few accounts. In terms of quality of the procedure, we had an interesting paper come out at the end of September – beginning of October last year that looked at in title they – title of it was in unexpectedly high rate of revisions and removals in deep brain stimulation surgery. And that paper covered how high the rates are of having to readjust for the placement of DBS leads in patients. And it’s based on some databases from 2004 to 2013 where placement of the electrodes was stereotypic, the stereotypic approach. The rates ranged from 15% to 30% in the paper, which I think surprised, a lot of people including us. And well I can’t point to a formal pre-review study with our approach, I do know that the rate of revision with ClearPoint is very, very low. So I think over time we’ll start to see data like that emerges as well and that will contribute to people looking at our system not just as better for the patient but also really pointing to outcomes that appear in the pre-review literature.

Yes. That’s the best thing you said about the outcomes side of it, so happy to hear that. I will jump back in line. Thank you.

All right. Thanks, Rodney.

Thank you. Our next question comes from the line of Michael Swift a Private Investor. Please proceed.

This is Ken Gregor with Michael Swift. We were just wanting to you here someone comment on the stock, the price of the stock and you got a lot of great things happening with this company and the stock is just – seems like it just continues to stay depressed and we were just curious…

Give us a forecast or a reason why you think it’s depressed and what kind of forecast would you – you are willing to make.

Well. It’s a great question and believe me, you not the only one asking it. I would say a couple of things about the stock price. Obviously I feel like the stock price is way too low given what was going on in the business. The business is really pointing in the right direction all the trends are in the right direction and we have line of sites towards break even sometime next year. So those are all very positive trends for the business. Have we done a good enough job of getting out and marketing the company to investors, I don’t think so. And that is something that a few folks have raised to our attention, we’ve actually retained new investor relations group to start that process with us. And frankly it’s not my background and so Hal and I both look forward to putting a lot more effort into that. I’m not willing to give you a stock price prediction, I feel like it’s a public company CEO that’s about the dangers. I certainly do believe that given the direction we’ve got the company going to stock can do a better job of reflecting the progress we’re making.

We hope.

Well we’re going to prove it.

Good. Thank you, Frank.

All right. Thanks for the question.

Thank you. [Operator Instructions] Our next question comes from the line of Jeb Terry with Aberdeen Investment Management. Please proceed.

Thanks for taking another question. Frank, you mentioned something about the laser ablations is a big opportunity. And I know in the past we’ve worked with Montera in Visual AIDS and I was just curious since laser ablation is kind of a new thing all together can you – how we compared to growth in utilization for laser ablation relative to Montera’s and Visual AIDS since I know we’ve done some co-marking with them. Are we growing with them, the same as them do we have opportunities to grow faster with them. I am just – since as you mentioned it’s a big growth part of the business.

Sure. Thanks for coming back in Jeb. Yes, so it’s a little hard for me to be too specific on Montera and Visual AIDS since neither one of those reports they’re procedure growth publicly. From our sense of the marketplace we are growing about as fast as Montera and Visual AIDS in the marketplace. Although I think we’re adding new accounts. I think we’re all growing at around the same case and I think we’re all facing some of the same challenges in terms of getting into the MRI suite. So I’m seeing that work fairly well we continue to market and collaborate with both of them, both in the field and in more formal training programs and trade shows. So those relationships are solid and we continue to work together to build the marketplace. Each company has slightly different priorities and a slightly different focus and direction. But overall things are so moving ahead pretty well.

And to the extent that they’re out there doing things it innovation occurring in the space is it competitive picture about the same or changing or where does that stand.

Yes. I would say the competitive picture from my point of view is about the same. With the exception on the DBS side of the business we did see St. Jude come into the market last – but if they do their first Phase. I think around October, September-October and so they’re ramping up and now competing with Medtronic for the DBS business we’ve done a number of cases where the surgeon has chosen the St. Jude DBS system. And those cases are every bit as straightforward as the Medtronic system from our point of view. So, that certainly change the dynamic though. And I think we’ll see some more marketing dollars poured into the industry overall. And we have the biggest meeting of the year at the end of April the American Association of Neuro Surgeons, so it would be very interesting to see St. Jude and Medtronic marketing head to head at that society meeting. On the laser side, we are not seeing any new entrants or dramatic competition there and we’ve certainly not seen anyone else that can do what we can do.

Very good. Thank you very much.

Thanks, Jeb.

Thank you. Our next question comes from the line of Scott Billeadeau with Walrus Partners. Please proceed.

Hi, guys. It was just a follow-up you just mentioned, and I was going to ask. What is the key marketing conference and you mention the conference at the end of April in particular. And maybe if you could just – what are some of the things anything new, any new people talking about your product. What are you working on to support that?

Sure. So there’s really three conferences we focused on, Scott. The major ones if you will. Two are really major, one is the American Association Neuro Surgery in April and then there is a Congress of Neuro Surgeons typically in September-October. And then in June we have a key meeting coming up call the Movement Disorder Society. That’s a much smaller meeting probably only 400 or 500 attendees but it’s really right in our wheel house. It’s right within our target market it’s neurosurgeons and neurologists who deal with patients who have movement disorders such as for example, Parkinson’s, Huntington’s, epilepsy, dystonia those kind of diseases. So that’s a key one for us, that’s in June this year in Vancouver Canada. So we’re very excited about that one. At these meetings we’re typically focused on seeing papers presented abstracts going up, I am going to have to plead ignorance I don’t have in front of me exactly what will be presented at those meetings. But we’ll have both in presence of course and will be doing some luncheons in that kind of marketing activity.

Great. And then you’d mentioned the St. Jude what is the marketplace to deviate the third-party guy as opposed to a – what’s your take I mean, it sounds like St. Jude is then kind of fully integrated going to have a Navigation system with their tool. What are the pluses and minuses of that that you see in the marketplace any thoughts there?

Sure. So to start with to my knowledge St. Jude does not have a Navigation system. So they have a deep brain simulator and we use for implantation, which makes them ironically dependent upon the Medtronic Navigation system or the Brainlab Navigation system. Those are the other two Navigation systems used in an operating room rather than in an MRI suite if you’re going to do DBS. So they have to depend on everyone else’s nav system and I’m sure they do not like depending on Medtronic nav system. So I think it could end up being a boost for Brainlab or to us as they are doing those procedures with the St. Jude device. Because St. Jude probably serum towards other navigation systems that’s going to be old.

Okay. Great thanks much. Appreciate it guys.

Thank you.

Thank you. Our next question comes from the line of Jeff Richard a Private Investor. Please proceed.

Hi, sorry this is Jeff Richard and Alice. I like to do a just a little bit of a follow-up on [indiscernible] question about the stock value. And I’m not asking for forecasting I’m asking for your kind of opinion. I know you made reference in the past to momentum it picks up after certain market share. Is it break even, are the metrics that we should be looking at that will kind of guide us towards the light at the end of the tunnel if you well.

I appreciate. I think ever since I joined this company as the number one metric to look at its procedures. And to be sure that our procedures are growing, that we are getting new accounts that we are growing our procedures. As I said on this call, feel really good about how 2017 is shaping up in that regards based on Q1 at least where I have pretty good visibility at this point. As far as the stock goes as I said, I’m really hesitant to make predictions on the stock price. I would say if you look at comps for companies that Medtech companies that are $6 million to $10 million in revenue growing 25% to 30% certainly their enterprise to sales ratios are much higher than ours are in the marketplace. Our people going to wake up to that it’s very challenging for me to really predict, and as I said I do feel like we need to do a better job representing the company to the investor community and painting the picture of the opportunity this company represents. And we have hired new Investor Relations consultants to help us with that effort and helps to hear us as we go down the path. So I’m looking at all those things and certainly I am getting a lot of the similar questions about the stock price. I will always stop sure though giving your prediction on the value of it.

And I wasn’t looking for prediction I was more kind of interested in what metrics to focusing on that more than anything.

Yes

Thank you.

Thank you, Jeff. Thanks for joining us.

Thank you. We have no further questions at this time. I would like to hand the floor back over to management for closing remarks.

All right. Thank you, moderator. We appreciate the interest of our investors and we hope you send our excitement about the progress with the company. We had a good year in 2016 and we expect an even better one in 2017. We are changing our neurosurgery is done were it is done and in some incidence what can be done. We are confident into the benefits of our technology and we’re committed to bringing these benefits to more and more hospitals, surgeons and patients and the marketplace is responding with growth growing interest of our product. That’s it for our call this quarter. And thank you everyone for joining us. And we will talk to you soon.

Thank you. This concludes today’s conference. You may disconnect your lines at this time. And thank you for your participation.