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

Joel Becker: That’s a great question. And we think about that patient population in particular as part of our focus on what we call telling [ph] the modern RNS story, where in particular in the Level 4 comprehensive epilepsy centers. In the past, I think in many cases, people would have thought about traditional patient identification and selection as the classic kind of first line therapy of resection surgery and then maybe a little bit of an either or with neuromodulation. And the reality is about 20% of patients are really ideal candidates for resection surgery. And that’s not mutually exclusive in particular with RNS. And we do hear of examples and have examples of where, for example, folks were going to do a resection procedure, put the RNS device in first, and that really then informed further either not going to resection or the area in which they were going to resect.

And so we do see a hybrid approach as a key component of that modern RNS story where number one, kind of the classic focal patient population. Number two, network stimulation for patients who may be multifocal in origination, but then also a hybrid approach to resection therapy using RNS plus or to inform resection surgery. So that’s absolutely something that we see and something that we talk about with folks when we’re talking about patient identification and selection with RNS.

Ross Osborn: Great. And then in terms of CARE [ph] you mentioned an implant activities are accelerating. Is it fair to assume that we should see revenue coming into the model during the second quarter or should be thinking more second half of this year?

Joel Becker: Yeah, I think what we’re seeing is we’re seeing implant activities underway and we’re seeing referral as well for patients that either do need to be referred to Level 2 or Level 4 centers for Phase 2 monitoring rather, or for centers that are just getting underway, aren’t completely ready to do implants yet, but are referring patients they identify for implant as well. So we do expect that both our activities in terms of the pilot program activities as well as rep impact and effectiveness will expand as we go throughout the year, in particular in the second half of the year. And so that’s really what we’re, what we’re watching and focused on is those activities and the impact of those activities in the second half of the year.

Ross Osborn: Got it. Thanks for taking our questions.

Joel Becker: Thanks, Ross.

Operator: Thank you. And your next question comes from the line of Michael Polark from Wolfe Research. Please go ahead.

Michael Polark: Good afternoon. Thank you. I just have one topic on DIXI. It’s kind of more than annualized into the model now. We had a good steer as to how big it was when you did the deal. I’m not asking for the disclosure in the quarter or the guidance for the year, but I am asking about what is the long term expectation for the DIXI product itself. Do you expect to grow this? Is this a focus of your sales force or is it likely to run at this level? And this is good. And then if it’s supposed to grow, what would be the building blocks of that growth? Is kind of the use case of these electrodes increasing? So the market’s growing or you think you’re taking share any color around that would be good because admittedly I kind of – I had a good sense following this first kind of 18 months, but now I’m wondering what kind of the 3 year vision for DIXI might be. Thanks so much.

Joel Becker: Well, I won’t comment specifically on guiding for the next 3 years, Mike, but I will offer you some perspective here on my expectations for DIXI. And those expectations are really born out of the strategy behind having the product in the portfolio. And what we’ve seen in terms of clinical response and customer utilization. We absolutely expect to continue to grow DIXI as part of our growth story. We see the use of SEEG as a growing and emerging trend in comprehensive epilepsy centers as they pursue the Phase 2 monitoring of these patients. And we see the opportunity both to grow and develop that market as we look to leverage our presence in centers where there’s significant neuromodulation presence. And we can help tell that story of SEEG usage as well as take share in places where folks are using other products for SEEG.

SEEG, we think DIXI has a great story to tell in terms of the products and the performance of the products. And then when we think about the leverage that we can get from places where, you know, we have a strong presence and strong presence with those centers and those customers, clinically, you know, that’s an opportunity for us to be in talking about SEEG and in places where the DIXI product line has a strong presence, we also look for places then where that’s an opportunity for us to be more present with RNS therapy as well. And so I think the overall strategy here has been that it’s a great product for us to have in the bag, both in terms of products available to sell, but also in terms of the ability to kind of vertically integrate into the diagnostic process, move further upstream in terms of patient identification, and then leverage both places where there’s a strong RNS presence to having a stronger DIXI presence, as well as with then strong SEEG centers that provide an opportunity for us to both grow our market as well as take share from an RNS perspective.

So we think there’s a lot of points of leverage there and we expect to grow DIXI.

Michael Polark: Thank you.

Operator: Thank you. And your last question comes from the line of Drew Ranieri from Morgan Stanley. Please go ahead.

Drew Ranieri: Hey, Joel. Hey, Rebecca. Thanks for taking the questions. Maybe just on your R&D strategy. Understand, not a list wrapped up, it’s in follow up now. R&D spending has like, ticked up over the last few quarters, but maybe just talk to us about, like, what else you’re spending your money there from a clinical development standpoint or even just a product development standpoint?

Joel Becker: It’s a great question. Thank you, Drew. And as you mentioned, within R&D, our investments in clinical research as well as in product research and product development. So, you know, and you just mentioned, you know, we’re in the middle of the – we’re in the middle of NAUTILUS. We’ve wrapped up the first part of NAUTILUS, but we’re in the follow up stage now. And obviously that study is a significant investment for us, as well as the Lennox-Gastaut study that we’re involved with as well. And then I didn’t comment about it here today, but I did, in our last call, mention investments in and focus on from a research and development perspective that we’re engaged with from an AI and data monitoring and management perspective as well.