NeuroPace, Inc. (NASDAQ:NPCE) Q4 2022 Earnings Call Transcript

Michael Favet: Yes. Thanks for the question. So we finished last year 2022 with the 156, 156 implanting centers for the year, during the year. That was up from 150 centers the prior year. Most of the growth in our revenue — initial implant revenue last year came from increased utilization within those centers. As we head into 2023, we’re taking some steps to expand the opportunity for access to the RNS system within the United States and expect that we’ll continue to add sensors through the year. So building off that 156 as we move through the year. As we go forward, I expect I’ll be able to provide some additional clarity about what that means in terms of number of centers. But expect that, that’s going to continue to be a driver for growth for us.

That being said, primarily, we’re expecting the increase in adoption of the RNS system to come from increased utilization within the center. So, we’ve got this base of 156 centers, getting more patients being treated through those centers. But some things that we’re working on to be able to make RNS available more — even more broadly within the U.S.

Operator: And thank you and one moment for our next. And our next question comes from Drew Ranieri from Morgan Stanley. Your line is now open.

Drew Ranieri: Maybe just to put some math around 2023, but if I kind of take your comments on replacement revenue, I think you have 56 patients remaining. Your DIXI commentary, it looks like new patient implant growth for the year might be in the high teens kind of given your initial guide here. So just kind of curious you’ve kind of talked about getting back to like low to mid-20s in a normalized environment. Is that still the case? Do you think that you can do that in 2023? Is it more about just stability? Or do you need to see EMU visits get back to 2019 levels to truly kind of grow new patient implants at that growth rate?

Michael Favet: So we have — thanks for the question, Drew. We have a lot of opportunity to continue to take more of the patients coming through the epilepsy centers and get them treated with the RNS system. So the taking share of patients coming through the epilepsy centers that we’ve been talking about. With that said, there’s obviously an impact of the market growth that can contribute and expect over time that, that will contribute positively to that. And that’s the — with that, if we can get back to a point where epilepsy monitoring unit admissions are increasing, then that provides opportunity for those numbers to grow more quickly. We’re not banking in significant changes in epilepsy monitoring unit admissions to the guidance that we provided.

So that provides some opportunity for upside if we’re able to see that through the year. So just being cautious, if you will, about what’s happening within the market overall and understanding that there’s a lot that we can and expect that we will do to be able to execute on taking share of patients coming through the EMU, whatever that volume is.

Drew Ranieri: Got it. And maybe just two high-level questions, but you’re talking about a lot of excitement on the NAUTILUS study and the potential there and generalized epilepsy. So maybe as you’re having centers come online, having patients even interested, is it driving at all any halo effect maybe on the focal side as more interest in epilepsy or treating epilepsy through RNS is growing? And then second, just with DIXI, how it’s giving you another revenue stream? Do you foresee any additional partnership opportunities in ’23 to augment revenue?