NeuroPace, Inc. (NASDAQ:NPCE) Q1 2024 Earnings Call Transcript

Vik Chopra: Okay. And then the follow-up question I had was on Project CARE. Maybe just help us understand where you are with the pilot programs and what metrics you’ll be providing for us to track the progress? Thank you.

Joel Becker: Hi, Vik. Thank you. That’s a great question. Thanks for bringing up that topic. So just in terms of the specifics of some of the programs, we’re initiating programs really in two buckets of activities right now. One is in professional education activities. So when we’ve – as I discussed in previous calls, we’re taking a targeted approach here to initiation of activities with the pilot program. But within those targeted accounts, we’re initiating professional education programs including educational symposia and webinars. I mentioned earlier in the question about new users and our plan and training for new users, we were engaging in professional education activities on some of those same topics here with these centers in terms of the foundations of RNS as a neuromodulation therapy and then the process and practice of including RNS as one of the treatment options within their practices.

So they learn to understand patient selection as well as patient management, programming, reimbursement, all of the things that go along with really establishing this as part of their program. So clinical as well as practice development, and professional education as well as then peer-to-peer activities. So with peers who are experienced in using RNS and they can help guide centers through the early startup process. So that’s then matched with a number of commercially related activities as well, including some initial work here from a social media perspective related to digital marketing and targeted geographies as well as then center contracting activities. And then I had mentioned we made a fair bit of progress here with regard to the hiring and initiation of training for the incremental expansion of our commercial organization.

So getting those reps trained and in position and targeted care geographies as well have been some of the commercial activities that we’ve been executing on as well. So those are some of the activities and the major buckets. With regard to some of the metrics, its really – the way I think about it is really the building and development of the pipeline within each of these centers and then the ability to track our way through that. It really starts with everything from some of the activities that I just mentioned, starting and pacing off of initial contact and sales call processes to then the contracting timing and contracting throughput. We also measure the education process and the completion of the education and training process and then obviously patient identification and then moving patients to implants.

So we track and measure all of that up through and including referrals of additional patients who may not be good direct to RNS patients outside of Level 4 centers but can be referred into Level 4 centers as well as then implant rate over time in these centers. So I think it’s maybe a helpful way to think about it, just the development and then execution pipeline in each of the steps along the way for each of these targeted centers. And that’s how we’re managing it internally.

Operator: Thank you. And your next question comes from the line of Robbie Marcus from JPMorgan. Please go ahead.

Unidentified Analyst: Hi, this is Lily on for Robbie. Thanks for taking the question. Anything you can share on how we should be thinking about cadence for this year and any puts and takes that we should be keeping in mind for second quarter through fourth quarter? I think for second quarter, the street was at about $18.2 million. Is that sort of a fair place to be? And then I had a quick follow-up.

Joel Becker: Well, thank you for the question. We’re not guiding quarterly. But I could maybe comment a little bit and then invite Rebecca to comment as well on kind of the balance of the year. We’ve talked about in the past that we don’t see in this business, maybe some of the traditional calendarization and cadence that you might see in some others, but we do tend to see a couple of times during the year where there is some seasonality impact. We see some seasonality associated with summer vacations and summer holiday slowdowns in particular, kind of customer vacation times that can sometimes be toward the end of Q2 and beginning of Q3 kind of, some of the summer holiday breaks. And then the other kind of period of cadence and calendarization that we pointed out in the past is we have just like with the holidays for many, but for this business, we kind of go from, we go from Thanksgiving, and then in between Thanksgiving and Christmas, we have the biggest epilepsy society program of the year for us, the AES meeting, the American Epilepsy Society meeting.

That’s the first week in December. So we kind of go from Thanksgiving to AES and then not too long, kind of right into Christmas. So the second half of Q4 can be a little more impacted, excuse me. I guess the thing that I mentioned kind of on top of that, though, is even though those kind of calendarized and cadence based events have been there at different times, there are obviously different things going on in the business that can kind of cover [ph] some of that up. So I recognize that that may not be entirely helpful in terms of building your quarterly model, but the mid-summer holidays and kind of the Thanksgiving AES, Christmas period of time in Q4 for us tend to be some of the times it can be impacted a little bit more from a cadence perspective.

Unidentified Analyst: Got it. Okay. And then just some replacement revenues. I think I heard you mention that you expect those headwinds to be strongest in the first half of the year. So should we expect those headwinds to moderate in the second half and beyond? Any color on how you’re thinking about that line item growing would be helpful. Thank you.

Rebecca Kuhn: Sure. You’re a very good listener. Yes. For the year as a whole, we do expect that the trend in reduced replacement revenue will continue, but that that will be more pronounced in the first half of the year and likely to be less so in the second half of the year. You know, I’m not sure what I can add to that exactly, but that is basically, we’ve shared that before and continue to believe that that’s true.

Unidentified Analyst: Got it. Thank you.

Operator: Thank you. And your next question comes from the line of Ross Osborn from Cantor Fitzgerald. Please go ahead.

Ross Osborn: Hey, guys, thanks for taking our questions and congrats on progress. So in terms of your patient population, would be curious to see if you’re seeing any traction with the hybrid [ph] use case of your RNS offering for patients that have undergone surgery.

Joel Becker: I’m sorry, Ross, could you please just repeat that question? We broke up a little bit there.

Ross Osborn: Sure. I’m just curious if you’re seeing any traction with the hybrid use case of your RNS therapy for patients that have undergone surgery.