Neuropace Inc (NPCE) 2024 Q3 法說會逐字稿

Greetings and welcome to the No third quarter, 2024 earnings conference call.

At this time, all participants are in a listen-only mode.

A brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jeremy Investor Relations.

Thank you, sir.

You may be in good.

Afternoon.

Thank you for joining us for Neuropace's third quarter, 2024 financial and operating results conference call on today's call.

We will hear from Joel Becker, Chief Executive Officer and Rebecca Kuhn, Chief Financial Officer.

Earlier today, NeuroPace released financial results for the third quarter ended September 30th 2024.

A copy of the press release is available on the company's website at NeuroPace dotcom.

Before we begin, I would like to remind you that throughout this call, we will make statements that include forward-looking statements within the meaning of federal securities laws which are made pursuant to the safe harbor provisions of the private securities Litigation Reform Act of 1,995.

Any statements made during this call that relate to expectations or predictions of future events, results or performance or forward-looking statements, all forward-looking statements including those around Neuropace's projections, business opportunities, commercial expansion, market conditions, clinical trials and those relating to our operating trends and future financial performance expense management.

Estimates of market opportunity and forecasts of market and revenue growth are based on current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those implied by these forward-looking statements accordingly.

You should not place undue reliance on these statements.

For more detailed descriptions of the risks and uncertainties associated with our business.

Please refer to the risk factors section of our public filings with the SEC including our latest annual report on form 10-K for the year ended December 31st 2023 filed with the SEC on March 5th, 2024 and our quarterly report on form 10-Q for the quarter ended September 30th 2024 to be filed with the SEC and any other reports that we may file with the SEC in the future.

This conference call contains time sensitive information which we believe is accurate only as of this live broadcast on November 12th 2024.

NeuroPace disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.

And with that, I will now turn the call over to Neuropace's Chief Executive Officer Joel Becker.

Joel.

Thank you Jeremy and good afternoon everyone.

I will start out today's call by reviewing our performance in the third quarter as well as providing additional insight around our key business priorities for the remainder of the year.

Before turning the call over to our Co Rebecca Kuhn to present the details of our financial performance for the quarter ended September 30th 2024 which will be followed by a Q&A session.

Let's get started.

We are very pleased with the performance of the business in the third quarter of 2024.

As we generated record revenue delivered on track gross margins and demonstrated disciplined operating expense management as we continue to execute against our Multiphase growth strategy.

For the third quarter of 2024 we reported total revenue of $21.1 million an increase of 28% compared to the same period last year.

Revenue growth for the quarter included contributions from sales of the R&S system and dixie medical seeg products with the majority of the year over year growth coming from sales of the R&S system.

This Q3 2024 performance was driven by execution in a number of areas across the business.

With regard to the top line.

We continued to demonstrate execution of the first part of our strategy of increasing adoption and utilization of RNS systems in level four centers and increased the number of active prescribers of RNS therapy to record levels.

Adding to RNS system growth, we began to see a meaningful increase in the number of implants at centers that are part of our project care pilot program and in the number of referrals for RNS implants from these centers to level four CECs, we also continued to expand the market penetration and utilization of dixie medical products which contributed to our revenue growth in Q3.

In the middle part of the income statement, we delivered a gross margin that was on track with our target range.

And when combined with the disciplined investment strategy in our key growth and development priorities reduced our cash burn to $1.8 million for the quarter.

Combined with opportunistic use of our ATM facility, our cash balance increased in the quarter from $55.5 million at the end of the second quarter to $56.8 million.

At the end of the third quarter, we believe that our current cash position is sufficient to fund operations for the foreseeable future.

We also focused on leveraging and developing our organization to increase our level of current performance as well as prepare for the significant opportunities in front of us.

The placement of additional sales representatives in the US has helped build momentum in the launch of the project care program this year which has contributed to our revenue growth over the past several months while also increasing our field capacity so that we will be well positioned to take advantage of the multiple market development and indication expansion opportunities to come.

Additionally, given the significant opportunities in the business, we've also been focused on strengthening our leadership team.

We recently announced the hiring of new senior leaders including Katie Teller to lead our marketing function.

Brett wear to lead our research and development team and Amy Treadwell to head up human resources.

I would like to take a moment to touch on each valuable new team member's background.

We are excited to now have Katie Keller leading our marketing function.

Katie brings specific experience in the neurostimulation market and expertise in market development that position her well to manage our market development efforts around key strategic initiatives, namely expansion of the care program planning for launch of our indication expansions, guiding our direct to patient outreach and digital marketing efforts and working with our research and development team on our product pipeline.

We are pleased to welcome Brett Weinger back to neuro pace to lead our research and development team with his significant experience and expertise in neuromodulation and medical device development.

Brett is uniquely well suited to oversee the exciting work underway to both enhance the efficiency and ease of use of the system and to amplify our focus on device and data innovation in the use of RNSS to continue to advance our technology leadership position and most recently, we appointed Amy Treadwell as Vice President of Human Resources.

Amy brings an impressive track record of success in health care and technology roles and she will be instrumental in helping us continue to build an engaged high performing culture to support our growth.

We continue to make progress in the quarter on the third phase of our growth strategy, expanding the approved indications for the RNS system.

The primary focus for this element of our strategy is the nautilus study.

As previously mentioned, all implants are complete.

The trial is in the patient follow up phase and remains on track to complete the required one year.

Follow up in Q1 2025.

As a reminder if approved, our RNS system would be the first device with an FDA approved indication for idiopathic generalized epilepsy.

We were also pleased to submit positive three year safety and effectiveness data from our ongoing five year prospective post approval study of the RNS system in adults with drug resistant focal epilepsy.

We look forward to publishing and presenting the full study results pending the expiration of a publication embargo.

With that as an overview of our operational progress in Q3.

Let me now turn the call over to Rebecca to review our financial results for the third quarter of 2024 Rebecca.

Thank you, Joe.

Our team has continued to make tremendous progress in executing against our strategy.

The reach we now have through a network of physicians educated, trained and prescribing RNS therapy is extraordinary compared to just a couple of years ago and will play a key role in closing the treatment.

GAAP by driving broader adoption and utilization of our system.

For the third quarter of 2024 neuropace's revenue was $21.1 million representing growth of 28% compared to $16.4 million.

For the third quarter of 2023 revenue growth was primarily driven by increased sales of our RNS system excluding the contribution from nautilus study cases.

In the third quarter of 2023 R&F sales grew by 36%.

We also continue to generate meaningful revenue growth from sales of dixie medical products.

Gross margin for the third quarter of 2024 was 73.2% compared to 74.5%.

In the third quarter of 2023.

Gross margin continues to be in line with our target range of 72 to 74%.

R&D.

Expense was $5.8 million in the third quarter of 2024 compared with $4.8 million in the same period of 2023.

This increase was primarily driven by an increase in personnel and program expenses for product development including A I software and next generation device platform projects and clinical studies.

SG&A expense was $13.9 million in the third quarter of 2024.

Compared with $13.4 million in the prior year period.

This increase was primarily due to an increase in sales and marketing personnel related expenses partially offset by a decrease in general and administrative expenses.

Total operating expenses were $19.7 million in the third quarter of 2024 compared with $18.2 million in the same period of the prior year, representing growth of 8% with revenue growing by 28% for the quarter.

We demonstrated strong operating leverage resulting from our focus on driving revenue growth while also effectively managing our operating expenses and cash.

We plan to continue to focus on balancing these objectives.

Loss from operations was $4.2 million in the third quarter of 2024 compared with $6 million in the prior year period, we recorded $2.2 million of interest expense in the third quarter of 2024 compared to $2.2 million in the prior year period.

Net loss was $5.5 million for the third quarter of 2024 compared with $7.3 million in the third quarter of 2023.

As discussed previously, we have maintained a disciplined expense management strategy resulting in cash burn in the third quarter of 2024 of $1.8 million compared to $2.3 million in the prior year period in the third quarter of 2024 we paid coupon interest expense entirely in cash.

Whereas in the prior year quarter, $0.7 million of interest was paid in kind by increasing the principle of our debt.

If we adjust cash burn for this difference, the year over year improvement was even greater.

Our cash and short term investments balance.

As of September 30th 2024 was $56.8 million.

An increase of $1.3 million compared to the end of the prior quarter.

In the third quarter of 2024 we opportunistically raised $2.9 million in net proceeds under our ATM facility resulting in an overall increase in our cash and short term investments balance.

Our long term borrowings totaled $59.3 million as of September 30th 2024.

As a reminder, the final maturity of our debt is September 30th 2026.

Regarding annual guidance for 2024 we now expect our total revenue to be in a range of 78 to $80 million.

An increase of approximately 19 to 22% over 2023.

This growth is expected to be mostly driven by an increase in sales of our RNS system with growth from sales of dixie medical products continuing to make a meaningful contribution.

We expect our gross margin to be in a range of 72 to 74% for 2024.

Although we may see some small variability due to fluctuations in the proportion of dixie medical revenue to total revenue and other factors.

We expect operating expenses for 2024 to range between 80 $84 million including approximately $10 million in stock based compensation and noncash expense.

I would now like to turn the call back over to Joel for closing remarks.

Joel, thank you, Rebecca.

We are pleased with the rate of revenue growth, demonstration of financial discipline and execution of operating priorities during the quarter.

The momentum in the quarter is the result of the hard work that's been taking place over the entire year and we are focused on building on it further through the end of the year and beyond.

Before we end today's call, I want to call attention to two upcoming events.

First, we will be at the upcoming 78 American Epilepsy Society annual meeting which is taking place in Los Angeles from December 6th through the 10th.

We are very excited by the data that will be presented during the meeting including several investigator sponsored and initiated studies.

We invite any of you attending the show to stop by and visit us at booth 2,109.

As we get closer to the meeting date, we plan on issuing additional details about our poster presentations and present at Aes second.

We are planning to host an Investor Day in New York during the first quarter of 2025 with more details to come.

I look forward to updating everyone on our continued progress through the fourth quarter of 2024 and into 2025 this concludes our prepared remarks.

I would now like to turn the call over to the operator who will open the call for questions, operator.

Thank you.

At this time, we will, we will be conducting a question and answer session.

If you would like to ask a question, please press star one on your telephone keypad.

A confirmation tone will indicate that your line is in the question queue.

You may press star two.

If you would like to remove your question from the queue, we ask that you limit your questions to one and a follow up so that others may have an opportunity to ask questions for participants using speaker equipment.

It may be necessary to pick up your handset before pressing the star keys.

One moment, please.

While we pull for questions, our first question comes from Frank to Keenan with Lake Street Capital Market.

Please proceed with your question.

Great.

Thanks for taking the questions.

Congrats on the really solid results.

Maybe I'll start with just a bigger picture.

One, Joel, you've been on board obviously for a number of quarters now and execution has been really solid.

But as you look back at the previous quarters, maybe just parse out where you feel the primary growth is coming from and the core R&S growth.

Is it the project care initiative?

Is it market share taking?

Is it expanding the market and then maybe touch on kind of the durability of where that primary growth is coming from?

Great.

Thanks for the question, Frank, nice to hear from you.

So yeah, if we look back over the past number of quarters and and frankly, if we look at this quarter, it's really a matter of, of executing the strategy that we've laid out.

So as as you know, three key planks in our, in our strategy, one, increasing adoption and utilization within our core level four centers to expanding site of service beyond the level four centers and increasing access to R&S for, for people who are at site level four centers and then three expanding indications.

And if we look at where we're seeing growth, it's both adoption as well as utilization within the level four centers.

So as as I mentioned in my prepared comments there, you know, continuing to increase the number of prescribers has been great to see we continue to, you know, to increase that number.

And so we're seeing broader adoption of the RNS system and then, and then also driving utilization within that within that group of customers.

So I think there's some expansion of R&S from a market development perspective as well as share.

And then starting, as I also mentioned, starting to see some meaningful contributions from site of service in the work that we're doing on the care side.

So I think we've got a good diversification of some of those growth drivers that's now starting to come to fruition.

And really we've been working on over the past number of quarters.

Got it.

Okay.

That's helpful.

And then maybe, asking about sales reps.

I think last quarter, you called out some of your, your newly hired reps had completed training and their place in kind of geographies where you identify expansion opportunities outside of the level four centers, maybe touch on that cohort of reps and then talk about any hiring plans that you as you think about the next couple quarters and years.

It's a great question.

Thanks for remembering that Frank.

Yeah, we, we did talk about that the initial tranche of that sales force expansion group that we had talked about earlier in the year, had completed training and was being you know, kind of released as it were out to independent activities and, and, and that's happened and we, we can point to places where we, we believe we're seeing increased growth both with regard to support for current R&S business as well as then with geographies that, that, you know, we just, we didn't have what we wanted from an intensity of coverage perspective previously and now do and then there's, there's a certain component of that, that's part of care as well.

So it's really been great to see those folks hitting the ground running and beginning to add both capacity to the commercial organization as well as impact.

So, so that's been great with regard to further hiring plans.

We're not, we're not talking about that specifically here today.

Other than to say that we continue to stay opportunistic around hiring where we can take advantage of growth opportunities that we see and are being mindful about hiring and organizational expansion and preparation in advance of some of the opportunities that we see coming down the road as well with regard to further care, expansion and indication expansion efforts, pending successful clinical studies as well.

Got it.

That's helpful.

Thanks for taking the questions.

Thank you, Frank.

Our next question comes from Mike Crai with le Ring partners.

Please proceed with your question.

Hi, everyone.

Thanks very much for taking our questions.

Can you help unpack some of your comments on the project care pilot program and how that's impacting your contribution to growth just between, you know, the traction you're seeing among the 1800 epileptologists outside of level four centers versus you know, any kind of uptick you're seeing in, in patient referrals.

Where is that growth really coming from?

Thanks, Mike.

I appreciate the question.

And so as you know, from a care program perspective, we've really been in the pilot phase and have started to expand that pilot in the second half year of, of 2024 and it was, it's been gratifying here in the third quarter to begin to see a meaningful contribution from that program.

And we're really seeing contribution both from implants within these centers as well as then referrals back into level four centers and, and referrals that then further kind of bifurcate, I think into in two directions.

One we'd kind of expected where when you're out in the community, you tend we, we found that we were uncovering patients that needed phase two management or phase two testing rather and then, and then potentially further care and we get would get referred back to the level four centers.

And we are seeing that, but we're also seeing that centers, care centers who either aren't quite ready to do implants yet or in some cases want to be programming centers.

We refer patients to a level four center to be implanted and then, and then get the patient back and manage them either while the program is getting spun up or they want, they want to do the patient management rather than necessarily the implants as well.

So we're seeing both implants as well as referrals.

And it's again, it's really been encouraging here to see that begin to inflect in Q3.

Got it.

Yeah, I appreciate the color and maybe just as a follow up, you posted a really nice revenue beat in 32, solid sequential growth versus second quarter.

It looks like the updated guidance isn't building in too much additional credit beyond your prior guidance for the fourth quarter.

So are you seeing any specific headwinds you'd call out so far this quarter?

You maybe just walk us through.

What would get you to the lower end of that guidance range for four Q?

Thanks Mike.

Another another excellent question.

So if we, if we just talk about the growth of the business and the rest of the year guidance first, you know, first of all, we're really pleased with the top line momentum that we demonstrated in the third quarter with a particularly strong growth rate at 28% more broadly.

If we look at the first half of 2024 the business grew 21%.

And at the midpoint of our, our raised and increased guidance here, that would, that would also deliver 21% growth for the second half of the year despite increasing comps in the second half of the year of 24 and 21% growth for the full year of 24 as well.

Of note and potentially of interest.

We also, we also grew the business 23% year over year during the six months in the middle.

So Q2 and Q3.

So if you think about the first half of the year, the middle of the year and now our implied guidance for the rest of the year.

Remembering that Q2, Q3 and Q all4 have headwinds from nautilus cases in Q2, Q3 and Q4 of 2023 we've been growing the business at 20%.

Plus in 2024 we see the fundamentals of the business as strong.

You know, the updated guidance for second half and for the full year, I think shows that plus 20% we're focused on continuing that.

And, you know, we may have quarter to quarter variability, but we feel good about the momentum and the direction both of the execution of the business as well as the opportunities that are in front of us here.

So that's kind of how we've been thinking about 24 and how we've thought about both the second half as well as full year guidance.

And, and I, you know, again, just I'd be remiss here of not then mentioning we're getting that level of growth with single digit operating expense increases and that's resulting in significant improvements in our burn rate as well.

And so as as we said in our prepared comments, and of course, we focus on top line growth.

It's the most important thing we can do is topline growth.

But we also believe that with our current projections, we have the cash to fund our operations for the foreseeable future as well.

So we think from a really through the income statement, we're pleased with the quarter from a top line OpEx and cash management perspective.

Awesome.

Thank you.

Thanks Mike.

Our next question comes from Robbie Marcus with JP Morgan.

Please proceed with your question.

Hi, this is Rohan on for Ravi.

Thanks for taking our question and congrats on a nice quarter.

So I appreciate the commentary you gave on just R&S driving the bulk of sales growth today.

And I just wanted to get a sense for how you're thinking about this trend versus dixie over time and maybe some preliminary color you can provide on kind of growth contribution into 2025.

Thank you.

Thanks for that question.

And, and yeah, we, we did call that out and, and I just emphasize, we, you know, we got growth across product lines and that's the goal.

And so it's great to see it and, and, and we intend to continue that, but the significant majority of the growth came from R&S and that's where the significant majority of our growth is going to come given the magnitude of that business and the magnitude of the opportunity that's in front of us.

And that's in no way to, to slight the opportunity associated with Dixie.

We, we are really pleased with the growth that we're seeing there too.

But the, the majority of the growth here, the significant majority of the growth came from RNS, but it's just, it's just great to get that growth across product lines and, and have that amplifier both from a financial perspective as we, and then as we've talked about the ability to, you know, kind of deepen relationships and vertically integrate in the diagnostic process makes I think the it's a good combination.

And then I guess a follow up to a previous question just around OpEx and expectations for leverage down.

The P&L obviously G&A came in lower than our expectations and it was a modest 4% growth year over year, as you mentioned.

And I know that you kept OpEx guidance unchanged for the balance of the year.

But is there anything that you can call out specifically in third quarter that drove the better leverage?

And, and obviously, this implies kind of from biomass low to mid 10s, OpEx growth and fourth quarter.

So is there any specific reason why we shouldn't see this kind of single digit OpEx growth continue for the balance of this year and beyond?

I ask Rebecca to put some color on that.

One thing I would, I would mention that we did call out is, you know, within SG&A we're investing on the s and we're being real efficient on the GN A.

So there's a little bit of a tale of two cities there.

But Rebecca, if you maybe wanted to say a little bit more about OpEx expectations and any color in the quarter.

Just to add a little bit of color as you may have seen by about a million dollars year over year or 20% we're clearly making investments in programs that we believe will help drive revenue growth both in the near term and over a longer time horizon.

We're also bolstering our sales and marketing activities.

But as Joel mentioned, those are then offset by lower G&A expenses.

We continue to realize efficiencies within our G&A area.

Some of that has to do with just ongoing experience operating as a public company.

It's just kind of an ongoing focus though to drive efficiency, particularly in, in that area.

So I think that gives you a little bit more.

I will say Q3 expenses can tend to be a little bit lower versus other quarters.

And Q4, we have our AES annual meeting which can contribute to somewhat higher OpEx in the fourth quarter.

Thank you.

I.

Hope that helps.

Yeah.

No, thanks a lot.

Our next question comes from our next question comes from Vic Chopra with Wells Fargo.

Please proceed with your question.

Hey, good afternoon and congrats on a nice quarter.

Thank you for taking the questions.

So I want to follow up on your Q4.

You know, obviously you had a pretty big beat in Q3 and that would imply a sequential step down in dollars in Q4, which hasn't been the case traditionally.

So, is there something that you would call out?

Is it maybe pull forward or any impact from hurricanes or is it just management conservatism?

You're trying to get a better handle on that and then I had a follow up, please.

Hi, Vic.

Thanks for the detailed and thoughtful question thinking about the quarters.

And, you know, we really can't see anything that would say there was a borrowing or any kind of a pull forward of cases necessarily from, from Q4 to Q3.

There, you know, there may have been some of that at the hospital level.

But we, we really, we, we can, I don't think we can really point to anything like that at this point, but it is a little bit difficult for us to know all the individual ins and outs of scheduling.

You know, obviously growth was very strong in Q3 and it was great to see, but it's difficult at this point to know what may or may not have moved around in terms of individual hospital schedules with regard to Q4.

You know, we, we did call out there's obviously the Aes annual meeting in early December, our, our largest meeting of the year and I think as we've talked about previously, that's pretty impactful to the whole field.

So epileptologists as well as functional neurosurgeons and, and folks from our team, et cetera, et cetera.

So, you know, we, we we do expect that there'll be some, some impact in terms of the number of days available in Q4.

And then of course, we've got the normal holiday as well as, as yearend scheduling.

But our guidance allows for all that.

And again, what we, what we've seen and I think is reflected in the guidance is that the business has been growing 20% plus in the first half of 24 and also in the middle of the year.

And our guidance reflects 20% plus growth for the second half of the year and full year 24.

So we think that's a, you know, a good place to be from a guidance perspective.

We're focusing on delivering that 20% for the year and continuing it and, and then building on the momentum the business has got.

Okay.

Thank you.

And then my follow up question, I mean, obviously you're starting to see some impact from project care which you called out for Q3.

But as we think about our models for next year, how should we think about the impact on project care in 2025?

Thank you.

Thanks V&I know you've, you've been very much focused on, on care and I appreciate that.

We, we see care and the expansion of service opportunity in 25 as an important opportunity for us to continue to grow and expand the business.

Again, strategy of increasing access to RNS therapy that we have underway really has the three planks that, you know, we've been focused on increasing adoption utilization within the level four centers, that's preponderance of the business and the preponderance of the growth that we've been getting.

Primarily, the growth has been coming from implants and level four centers, we now can layer expanding site of service and continuing to expand pilot activities and then really incorporating care more fully across the field, organization and across our customer group in 25.

And so, you know, we'll begin to expand those efforts and expect care to expand in 25 as well.

And then thirdly layering on indication expansion on top of that, pending the successful clinical trials.

So these things all work together.

We're seeing the impact of adoption and utilization in level four center focus.

We're beginning to see expansion of care and we're going to be focused on expanding all three planks of that strategy and working to build momentum.

Our next question comes from Ross Osborne with Cantor Fitzgerald.

Please proceed with your question.

Hi, Congrats on the core and thanks for checking our questions.

So starting off, sounds like project care.

Starting to take off nicely.

Would you provide some color on what you're hearing from new accounts outside of all force centers on a level of difficulty or having when launching their programs?

Thanks, Ross.

Yeah.

And I think and I think we've talked a little bit about this previously.

I think, you know, accounts are at a kind of different places on the spectrum.

You know, some counts that.

And of course, this is all part of our targeting exercise.

But some accounts are, are really quite experienced with regard to, you know, functional neurosurgery as well as their epilepsy programs.

And in particular may have people who have prior R&S experience from other institutions or their training, et cetera.

And so for those folks that, you know, the turn on the turn on and turn key processes is relatively quicker in some parts of it.

Whereas for others, they, you know, they may be a part of the target program because they have a particularly robust epilepsy population or in areas where there hasn't been as much earnest penetration from a level four perspective.

And so some of those, some of those folks can take some more time to kind of get up and running from a training perspective.

So we see people kind of along the continuum, but that's where as well.

I think what we're finding is the way we're approaching the program and the flexibility that we have with the program really allows people who are ready to go to, to more quickly get into doing implants and following and programming patients within their own center with folks who are going to be ready to go, we can get them trained and ready to program and they can be referring people out in the interim while they get ready to do implants.

And then for some others, if they want to be referral and programming centers, we can also accommodate that.

So I think we see people at different points on the continuum.

We also see different ways that increasing access to RNS therapy can allow people to kind of tailor and target integrating R&S into their practices in different ways too.

Okay, great.

And then any update on the R&D projects for software tools using A I and data.

Analysis?

Thanks for asking.

Yes, we did mention in part of our discussion around investment and operating expenses here in the quarter.

The, the, the work that we're doing with regard to A I software tools and data development, as well as next generation platform work.

We're particularly excited about a lot of that work that's going on and that, that's one of the reasons why we've also decided to, to host an Investor Day.

We realize that it's, it's probably been a few years or at least a little while since we've updated people on our market development, product development, clinical development pipelines.

And we want to provide folks with some additional insight into what we're doing there is you, as you mentioned with regard to A I and software programs that are in particular focused on efficiency and easy use as well as as increasing efficacy from the insights they can provide and then more broadly our market development and clinical development pipelines as well.

So we, we think all that is you know, everything that's underway there, we expect to continue to accelerate the trajectory of the business and we want to have an opportunity to more kind of give you kind of more of a fullman review of that.

And that's part of what we've got planned for our Investor day.

We'll have more kind of more information to come there.

Okay, great.

Looking forward to the best of your day.

Congrats again on the quarter.

Thank.

You, Ross.

Our next question comes from Michael Polark with Wolf Research.

Please proceed with your question.

Good afternoon.

Thank you.

Can I ask on the investor day timing?

Would you have us think about that as something that could align with maybe initial top line view of the Nautilus trial?

So it's a good question, Mike.

Thank you.

And, and there are a number of different factors to consider there from a timing perspective.

And so more to come on that as you might imagine, as much as there is going on in the business, there's always, there's always a lot to consider with regard to timing.

We are going to try and have it be, you know, a good nexus of a number of things coming together with regard to the different activities in the business.

And depending on where we're at with with study and, and with nautilus as well as depending on different, different activities that we've got going on in the business, we're going to try and coordinate that specifically.

But we'll, we'll have more on, on dates here shortly and then you'll be able to plan around that.

Appreciate that.

For my follow up, I want to ask about the two smaller revenue lines replacements in this Pharma collaboration on replacements.

The the question is just, I know the numbers are very small here.

What does that curve look like in 25 off of a low, low base?

Could replacement revenue be up or would you have us think about similar zip code to where it currently is?

And then on Pharma collaboration, I know we know the lifetime value of that arrangement.

My question's been on my question is on timing.

Is it, is it linear?

Is it kind of smooth quarter to quarter over the expected period or has it been a little bit lumpy?

I want to make sure we don't have, you know, tough comps on that saying next year versus this year.

Thank you so much.

Thanks Mike.

I'll ask Rebecca to talk a little bit about each one of those.

She's, she's real close to following both our replacement cycle as well as on the revenue recognition site for reports.

So, Rebecca.

So what we've shared with regard to replacement revenue is that we believe that really all of the prior generation devices have been replaced.

And so what we're seeing now is, you know, the beginning of a current generation device is being replaced.

Some of that is opportunistic.

But we're, you know, we've, I think we've reached, we can at least say that we've reached the trough.

We're not going to go too far just yet.

In predicting 2025 we'll have more to say about that later.

So, if we can ask you to just be a little patient until we're ready to talk more about 2025 we can at least, you know, confirm that we're kind of at the end of that downturn.

Now, with regard to pharma revenue, as you know, it is relatively small.

We've shared that we expect up to $3.7 million over the course of nine perhaps nine plus quarters.

Not a lot of fluctuation there, of course, there are some fluctuations quarter to quarter, but I'll just.

Say not dramatic.

So, but, you know, considering revenue recognition criteria, which is always a fun topic.

There are some fluctuations but maybe not to the extent that you would worry about.

I hope that's helpful.

It was helpful.

Thank.

You.

Thanks Mike.

We've reached the end of our question and answer session.

I would now like to turn the floor back over to Joel Becker for closing comments.

Thank you.

Thanks everyone for joining us today.

We're pleased with the strong revenue growth of 28% in the third quarter.

We're pleased with the where we're at from a guidance perspective and, and what we're seeing in the second half of the, of the year as well with growth in excess of 20% continuing and and continuing our demonstrated operating expense, leverage reduction in cash burn and projection that are current cash position that can support our operating activities for the foreseeable future.

So, we're excited about all that.

We're excited about the fundamentals of the business and the nature and trajectory of the opportunities that we see in front of the business as well.

Thanks for your interest in and support our neural pace.

We look forward to keeping you up to date here on the execution of the strategy as we progress and, and hope to see it either at AES or our upcoming investor day.

Thanks again.

Good afternoon.

This includes today's teleconference.

You may disconnect your lines at this time.

Thank you for your participation.