Greetings and welcome to ClearPoint Neuro, Inc. First Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. Comments made on this call may include statements that are forward-looking within the meaning of the security laws. These forward-looking statements may include, without limitation, statements related to anticipated industrial trends, the company's plans, prospects, strategies, both preliminary and projected, the size of total addressable markets or the market opportunity for the company's products and services, the management's expectations, beliefs, estimates or projections regarding future revenue, results of operations or the adequacy of cash and cash equivalent balances to support operations and meet future obligations. Actual results or trends could differ materially. The company undertakes no obligation to revise forward-looking statements for new information or future events. For more information, please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2024, which have been filed with the Securities and Exchange Commission and the company's the company's quarterly report on Form 10-Q for three months ended March 31, 2025, which the company attempts to file with the Securities and Exchange Commission on or before May 15, 2025. Although the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com. I will now turn the conference over to your host Joe Burnett, Chief Executive Officer. Thank you, Mr. Burnett. You may begin.

Thank you, Joe, and thank you to all of the investors, partners and analysts joining us on today's call. 2025 is off to a terrific start here at ClearPoint Neuro as we have officially entered the third phase of our company history, a phase we refer to as fast forward. As a brief reminder, this new stage at ClearPoint has three primary tenets. First, we will extend our lead in cell and gene therapy by leveraging our complete and unique drug delivery ecosystem, including navigation hardware, predictive modeling and monitoring software, cannula-based routes of administration, preclinical and clinical drug discovery services, and best-in-class clinical field personnel. We will use this ecosystem to support our more than 60 active biopharma partners on their path to regulatory clearance and commercialization, many of which have already been selected for some form of expedited review by the FDA. Second, we will evolve our portfolio to focus not only on accuracy and precision, but also on fast, simple, predictable workflows. These new product introductions are designed to increase hospital efficiency and throughput and to create capacity for the significant demand that we believe is coming when patients learn that these new restorative therapies are available and have been proven effective. And third, we will expand our global install base and generate scale to enable more patients around the world access to the ClearPoint ecosystem that will be used for these novel treatments. Let's remember the first of these neuro cell and gene therapies is already commercially available in the United States, the EU and beyond, and there is the potential of additional approvals in the next two years for much larger patient populations. There's no time to waste. The time to hit fast forward for us is now. As announced yesterday, despite unpredictable market conditions, we have now successfully secured the foundational funding necessary to execute on this strategy for many years to come. This capital, in the form of both debt and equity has been provided by our new partner, Oberland Capital, which we will discuss a bit more later on today's call. With that backdrop for context, I will now turn the call over to Danilo D'Alessandro, our CFO, to discuss the financial details of the first quarter, after which I will provide additional commentary on our progress in these three fast forward initiatives. Danilo?

Thank you, Joe and thank you all for joining us today. Looking at the first quarter 2025 results, total revenue was $8.5 million for the three months ended March 31, 2025 and $7.6 million for the three months ended March 31, 2024, which represents 11% growth versus the first quarter of 2024. Our revenue is made up of three components biologics and drug delivery, neurosurgery, navigation and therapy and capital equipment and software. Biologics and drug delivery revenue include sales of disposable products and services related to customer sponsored preclinical and clinical trials utilizing our products. Biologics and drug delivery revenue increased 9% to $4.7 million in the first quarter, up from $4.3 million in 2024. This increase was fueled by a $1.2 million increase in product revenue as numerous partners progress in their preclinical development and regulatory clinical trials. The product growth was partially offset by a $0.8 million decrease in biologics and drug delivery services. Neurosurgery navigation revenue consists of commercial sales of disposable products for the ClearPoint navigation system and the PRISM laser units. This revenue segment grew 70% to $3.3 million for the first quarter 2025. This large increase is driven by higher sales for new product offerings as well as an increased customer base and adoption. Capital equipment and software revenue consisting of sales of ClearPoint reusable hardware and software and of related service contracts decreased 63% to $0.5 million in the quarter from $1.4 million for the same period in 2024. This decrease is due to fewer new placements of ClearPoint Navigation and PRISM laser units, primarily driven by inflation timing and other new product introduction priorities that occurred in the first quarter. Gross margin for the first quarter 2025 was 60%, an increase of 1% compared to 59% in Q1 2024. Research and…

Thank you, Danilo. We are off to a great start here in 2025, highlighted most importantly by our single use consumables business, more than doubling in the quarter. This 104% growth rate is driven by three key factors, including first, our biopharma partners ordering additional cannulas as their cell and gene therapy drugs progress through the regulatory pathway and into clinical trials. Second, our 3.0 navigation software launch, allowing ClearPoint to expand beyond the MRI suite and into the operating room. And third, the full market release of the PRISM Laser therapy system, allowing ClearPoint to penetrate the existing US laser ablation as a new and scalable adjacent source of growth. As always, let's dig a bit deeper into this progress with regard to our four growth pillars. Starting with pillar number one, biologics and drug delivery. Our strategy once again is to extend our lead in cell and gene therapy. Our biologics and drug delivery team continue to support more than 60 active partners in the biopharma space at all phases of development, including preclinical testing, clinical trial execution and even global commercialization. We have made substantial progress in the additional hiring of our preclinical team and continue to pursue both GLP capability and expanded capacity for preclinical services, which we plan to have operational sometime in the second half of this year. In addition, numerous partners have enrolled additional patients in global regulatory trials, including those partners that have been accepted into one of the FDA expedited review programs. In fact, just today we submitted our 510 for the SmartFlow cannula for use with the REGENXBIO gene therapy RGX-121 program. This submission is once again a cross labeled combination product which will be reviewed in parallel with the REGENXBIO BLA, which the company announced earlier today was accepted…

Thank you. [Operator Instructions] And our first question comes from the line of Mathew Blackman with Stifel. Please proceed.

Good afternoon, everybody. Can you hear me, okay?

Yeah. I got you Matt.

Great. So, Joe and Danilo, I've asked you this question before. What would you do if you had access to incremental capital? And well, here we are. So, I'm curious, are there initiatives that you can get after now that you perhaps have reprioritized lower on the to do list with limited capital? Is there anything from an investment standpoint that you can put to work today that could be growth enhancing for 2026 or even 2025? And then the last follow up on that very long question is, how do we think about this runway of capital in relation to your ability to hit sustained breakeven? Does this get you all the way? Just what sort of runway does it give you? Just any thoughts on that? And I've got one follow up on the Neuro franchise.

Yeah. Happy to walk through a couple of these questions. So, covering the first topic, yes, we absolutely see opportunities to go faster and we're actually pursuing a couple of those right now. As I mentioned, as we get closer and closer to the potential commercialization of some of these new therapeutic products, hiring terrific field support as well as hiring additional preclinical resources to do additional analytics testing. These are things that some of our pharma partners are asking us to get ready for. And like with anything, there's always a lag between when you hire sort of a new person and maybe six months later when they're fully trained, fully productive and flying solo. So, we've already started this process of hiring both members of the preclinical team as well as members of the field as well. So, to extend our commercial reach. We're not in a position where we're increasing guidance based on the spending because the biggest driver between the range that we've provided this year of between $36 million and $41 million is really going to be the timing of our expanded capacity for preclinical. And until we get a firm grip on exactly when we're up and operational there, we want to go ahead and kind of hold on to the guidance that we've given at this point. But there are things that I think we can accelerate and we're actively looking to do that today. Your next question, relative to the capital that we have access to through this new debt facility and can it get it to get us a cash breakeven? We feel that it absolutely can. Especially the fact that the interest only six-year component of that provides us with quite a bit of flexibility where we fully expected over the next couple years to be to be continuing to burn some cash. However, when these new drugs come online in the next two, three, four years with some meaningful more patient populations, at that point we believe the company could be generating meaningful cash flow and put us in an excellent position to repay that debt when it actually does become due. So, another way to think of it is some of this debt that we just took on we will probably never touch at least if our plans continue to work that way, which means that that debt will actually be reinvested in treasuries. So, we're really only paying the interest on the spread which given the uncertainty that's out there today, it's a good trade-off for us to make because we wanted to control our own destiny in that way.

Yeah. Makes sense. And then just on the Neuro franchise, obviously really solid first quarter. And look, I don't expect you to grow that business 70% or consumables 100% every quarter, but it does feel like and sound like the trajectory may be tracking better than at least we have modeled. I'm just interested in knowing how here in the first quarter post some of these launches, it's tracking relative to your expectations, however you want to frame that. Thank you.

Yeah. I would say we're exactly on plan on where we expected to be in that portion. Now, we had a little bit lower comparison in Q1 of last year. So that 70% is a high number. But as we shared at the very beginning of the year, we think that franchise can -- that component of our business can grow significantly more than 20% throughout the balance of the year, no matter what that comparison is. And then we also think that there's some upside potential in there as well based on if an early approval to the 1.5 Tesla of the laser or if we continue to see the rapid adoption that we've seen with our 3.0 navigation software. Just to put a little bit in perspective, last year when we launched the SmartFrame OR, we got FDA clearance and I think about three months into that period of time, we had one, maybe two surgeons that had actually used the product because we had to use Medtronic as kind of an intermediary since it was on their software. And it took a little bit. We weren't fully in our own control. Here as I mentioned earlier on the call, we've already done 35 cases across 11 different surgeons. And if that momentum keeps up, then I think we have some upside there as well.

Okay. Really appreciate that, Joe. Thank you so much.

The next question comes from the line of Frank Takkinen with Lake Street Capital Markets. Please proceed.

Great. Thank you for taking the questions and congrats on all the progress in the recent financing. Wanted to start with maybe a -- yeah, for sure. I wanted to start with maybe a little bit bigger picture question related to kind of MRI-based procedures versus OR-based procedures. My assumption, and I think I'm correct in thinking this, that vast majority is still MRI-based procedures just given. 3.0 is just launching now, but if we were to fast forward kind of a few years out, how do you envision the mix of procedures from MRI versus OR setting trending?

Yeah. It's a really important question for us because we're trying to fully understand. Not just the capability and the performance of 3.0, but also the way that doctors are going to continue to use it. So, as an example, and what I said in the remarks, I'll double click on that a little bit here, is that what this product allows us to do is to create capacity for these drug delivery procedures that are coming. So, during the launch of many of these drug therapies, whether it's specifically indicated or not, just from a quality control standpoint, we believe that these drug procedures are going to continue to be done in the MRI at a much higher rate than say, typical DBS procedures. And because these initial procedures can sometimes be a little bit longer because of the time of the infusion or the multiple trajectories, we want to make sure that the MRI scanners are as free and clear as possible to be doing these really crucial restorative therapies. So, what this product allows a hospital to do is to kind of create that MRI capacity by moving some of their historic DBS procedures either out of the MRI into the operating room if they're a prior ClearPoint user, or if they're a new user to ClearPoint, they can start in the operating room doing ClearPoint procedures with a 3.0 software. And in essence, they're practicing every single day on how our system, how our software works. So that when these drugs become available for the MRI scanner, they've already got a head start and the hospital has built some capabilities there. So, it's one of these things where I could see DBS procedures, for example. Swinging, maybe definitely growing faster in the operating room than in the MRI scanner. But then two or three years down the road, when these drug launches start taking place, at that point the MRI mix might go up again. So, it's definitely a strategy where we plan, as far as we can see out, that we're going to be offering both of these capabilities.

Got it. That's helpful. And then maybe as it relates to GLP, I think you made a brief comment that you guys remain on track for the second half of this year to be GLP certified. What's kind of left to be completed there? And then, maybe talk about kind of customer interest. Is there pent-up demand for once you are GLP certified to be able to kind of slot in, work in that -- in that space in a relatively short order once that is GLP certified?

Yeah. The main -- the primary remaining gap is really standard operating procedures and protocols that are affect a much more sophisticated quality system is what GLP requirements need as well as certain independent study directors and sort of HR structural things. So, the good news is none of this is invention related. It's really just hiring the right people and expanding some of the capabilities that we have. From our standpoint, the primary thing we're looking to do is to expand the capacity to a second facility that would enable us to actually do these much larger studies. So, I think of it as kind of step wise. Step one is going to be taking our existing capabilities and expanding that capacity and then step two is layering on these GLP procedures on top of it. But I think, certainly the expanded capacity we plan to have this year and I'd say it's likely that we'll be in the GPL position -- GLP position by the end of the year as well.

Okay. And then, Sorry, just the second part of that follow up, just kind of pent-up demand around that.

Sorry. What I would say is that, we have a unique conduit with many of these pharma partners of which at least five, if not more have communicated to us that once we're up and running, they would like to convert some of their studies our direction, anything from discovery studies up to full GLP studies once it's available. I believe we're going to walk before we run. It's not like we're going to jump in the water and start doing 50 or 60 subject studies right away. However, I think that's something that comes more in 2026. But I think proving these capabilities, allowing our sponsors to be able to come visit our facility, meet the team, get to know us a little bit, those are all activities that we'll be doing these pilot studies in the second half of this year. And at this point, we fully expect that our growth rate for biologics and drug delivery services will sort of will grow considerably in the second half of the year. Because right now, just based on our current capabilities, we're kind of banging up against capacity in certain months. So, it's kind of limiting. And we're going to remove that governor when we get into the new facility in the second half.

Got it. That's helpful. Thank you.

Sure. Thanks, Frank.

The next question comes from the line of Anderson Schock with B. Riley Securities. Please proceed.

Hey, thank you for taking our questions and congrats on all the progress. So, first on capital equipment. You activated two new sites in the first quarter, I guess. How are these sites placed? Were they full sales or rental or Pathfinder agreements?

I believe they were both capital sales in the quarter. So they -- those were not those -- I'm sorry, I'm confusing the issue a little bit here because again, when we talk about a new site activation, that is a customer who has never used ClearPoint technology before. So, there were two new sites that in fact -- if you checked our installed base, you'd probably recognize them when they pop up on the new revised slide deck. Those are sites that have never used ClearPoint and now have access to ClearPoint. In addition to those new sites, we placed multiple new PRISM Laser systems. We upgraded numerous sites to the 3.0 software. So, we don't count those as new site activations because they already had access to ClearPoint now they have access to additional technology and additional revenue streams for ClearPoint. So, the two new sites, I believe were both capital placements. But a lot of the PRISM systems that we put out, for example, those fell into that Pathfinder bucket. And hopefully it was clear on how I was describing the Pathfinder work. So, if you sign a five-year Pathfinder agreement and you installed that system March 1st of this year. Instead of in the past, how we would recognize that entire transaction in the first quarter, in this example, we would have only recognized one out of 60 months in that particular quarter. So again, it's -- the placements, the capital going out the door is actually kind of same as it's always been. However, the recognized revenue doesn't quite follow. And I think it's also important to note that it doesn't necessarily mean there's a huge cash sort of discrepancy or delay either. These hospitals certainly have the right to continue to pay on a, whether it's a quarterly basis or an annual basis. However, in some cases they actually pay for the entire three to five-year term up front. We've seen that happen too. So, there's a little bit of a disjointed effort between revenue recognition and the rest of reality. But like I said, I think we're probably going to get closer in the future to possibly even 50% Pathfinders and that will smooth out our capital revenue because those will show up on a monthly basis as opposed to be kind of choppy based on the installation timing. Hopefully that makes sense.

Okay, got it. That's helpful. And then on OpEx, OpEx grew 29% in the quarter. I guess, how should we think about this and especially R&D trending going forward now that you've secured funding to accelerate the development and launch of new products?

Yes, it's somewhat similar and if not even reversed from the capital side of things is that there's certain investments that we have to make that we don't get an immediate return on, but we wouldn't be making them if we didn't see that return coming. So, I gave a couple examples on expanding these preclinical services and GLP capability. Obviously, we don't have that capability yet. We're not selling it, but we're hiring the people we're training. We're building the processes. So that's sort of an accelerated investment. Similarly, when we want to -- if we see the demand coming for our 3.0 software and we know it's going to drive case volume, we have to hire now for these people that will be ready in Q3 and Q4 of this year to absorb some of these additional procedures and provide support. So, again, that's a little bit of an accelerated investment that we wouldn't make if we didn't believe it was coming. The third example I would give you is that we have many of our pharma partners that are actually hiring us to build custom routes of administration for them. So, a slightly different actuator or cannula or surgical needle or something else to work with our software and deliver a drug to a specific portion of the brain. That's another example where we might have a contract where we don't recognize the revenue until it's done, but we hire an additional engineer or two now to be doing that work that we know the revenue is going to follow. So, to Danilo's comments, we continue to believe that for the full year our revenue growth is going to outpace our expense growth. And Q1 is just one where it's a little bit flipped upside down, because we're sort of prepaying and pre hiring some of these roles.

Okay, got it. Thank you for taking our questions.

Yeah, sure thing, Anderson.

Thank you. There are no further questions at this time. I'd like to hand the call back to Joe Burnett for closing remarks. End of Q&A:

Well, thanks again to everyone for joining today's call. We have spent the last 10 years building a strong foundation, and 2025 is again where we hit the fast forward button to get the market ready for this exciting future of cell and gene therapy. We are very excited to be in a position where we can directly impact many patient lives, often being in the room for the very first patient ever treated. Good night, everyone. Thanks again.

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