ClearPoint Neuro Aktie

Greetings, and welcome to the ClearPoint Neuro, Inc. First Quarter 2026 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded.

Comments made on this call may include statements that are forward-looking within the meaning of securities laws. These forward-looking statements may include, without limitation, statements related to anticipated industry trends, the company's plans, prospects and strategies, both preliminary and projected. Besides the total addressable markets or the market opportunity for the company's products and services; the company's expectations regarding the integration, performance and anticipated benefits of its recent acquisition of IRRAS Holdings, Inc. including operational efficiencies and the impact on the company's financial condition and results of operations.

The company's expectation for future development, regulatory approval, timing, commercialization and the market for cell and gene therapies and the anticipated adoption of the company's products and services for use in the delivery of gene and cell therapies, and management's expectations, beliefs, estimates or projections regarding future revenue and results of operations.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they were made. 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 about the company's risks and uncertainties, please refer to the company's filings with the SEC, including the company's recent filings on Form 8-K, Form 10-K and Form 10-Q. All the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com.

At this time, I would like to turn the call over to Joe Burnett, Chief Executive Officer. Please go ahead.

Thank you, Shamali. And as always, thank you to all of the investors, analysts and biopharma partners listening to today's call. We remain both committed to and focused on developing a complete neuro ecosystem capable of delivering various minimally invasive treatments, including cell and gene therapies to the brain. We believe that this approach will finally unlock hope for the patients and their families who are battling these frightening neurologic disorders and who today have very few options to choose from.

This is one of the largest unmet needs in all of medicine, and we at ClearPoint believe we can play a crucial, if not essential role in this exciting future. Our company has started 2026 on a strong note by achieving record revenue of $12.1 million for the quarter, driven primarily by organic devices growth of 25%, which includes our historical drug delivery cannulas, navigation disposables, laser ablation applicators, capital systems and software.

This revenue was complemented by inorganic device growth from our acquisition of the new IRRAflow product line, which pushed our overall growth rate to 43% company-wide. We continue to realize meaningful revenue and cost synergies as a result of our new completed acquisition of IRRAS with the majority of post-merger integration costs now behind us and taking place in Q1.

Importantly, we made progress across all 4 of our growth pillars that are designed to make our unique drug delivery ecosystem more refined and more accessible to biopharma partners, surgeons and to patients globally. We believe that we are truly a unique hybrid device biotech-enabling company that not only has an existing revenue plan of more than $50 million today, but a completely untapped and expansive opportunity in commercial cell and gene therapy delivery built for tomorrow.

Our strategy now includes more than 60 active biopharma partners, more than 25 existing clinical trials across more than 15 different disease indications and more than 10 partner programs that are already under some form of FDA expedited review. That is a significant head start and through both our team and our investment into this portfolio, we intend to extend our lead.

With that, I will turn the call over to Danilo D'Alessandro, our CFO, who will walk through the financial detail, after which I will give a more strategic update on our progress. Danilo?

Thank you, Joe, and thank you all for joining us today. Looking at the first quarter 2026 results. Total revenue was $12.1 million for the 3 months ended March 31, 2026, and $8.5 million for the 3 months ended March 31, 2025, which represents 43% growth versus the first quarter of 2025 and 16% organic growth. Our revenue is made up of 3 components: biologics and drug delivery, neurosurgery navigation and therapy and capital equipment and software.

Biologics and drug delivery revenue includes sales of disposable products and services related to customer-sponsored preclinical and clinical trials utilizing our products. Biologics and drug delivery revenue increased 2% to $4.8 million in the first quarter, up from $4.7 million in 2025. This increase was mainly due to an increase in product revenue of $0.1 million. BNDD service revenue was in line with prior year. Neurosurgery navigation revenue consists of commercial sales of disposable products and services related to cases utilizing the ClearPoint system, the PRISM Laser System and IRRAflow. This revenue segment grew to $5.9 million for the first quarter of 2026, including $2.1 million in IRRAflow disposable revenue.

The growth in this segment was primarily due to our increased installation base and the full market release of our PRISM Laser System and iCT solution. Capital equipment and software revenue, consisting of sales of our reusable hardware and software and related services increased 177% to $1.4 million in the quarter from $0.5 million for the same period in 2025 due to an increase in the placement of ClearPoint Navigation System, PRISM laser units and IRRAflow control units.

Gross margin for the first quarter of 2026 was 64%, an increase of 4% compared to 60% in Q1 2025, mostly related to a decrease in excess and obsolete inventory reserves. Research and development costs were $4.5 million for the 3 months ended March 31, 2026, compared to $3.4 million for the same period in 2025, an increase of $1.1 million or 34%. The increase was due primarily to higher personnel costs of $0.6 million and higher product and software development costs of $0.3 million.

Sales and marketing expenses were $6.7 million for Q1 compared to $3.8 million for the same period in 2025, an increase of $2.9 million or 75%. This increase was due primarily to additional personnel costs of $1.9 million, an increase in travel costs of $0.5 million, resulting from the expansion of our clinical and sales team due to the IRRAS integration as well as additional amortization expense of acquired intangible assets of $22 million.

General and administrative expenses were $5 million for the first quarter, an increase of $0.9 million or 22%. This increase was due primarily to higher occupancy costs of $0.7 million and higher personnel costs of $0.2 million. As of March 31, 2026, we held cash and cash equivalents totaling $35.6 million as compared to $45.9 million at December 31, 2025. The cash reduction was primarily due to the operational cash burn of $8 million in Q1 2026 and $2 million due to payments for taxes related to net share settlement of equity awards. We expect the operational cash burn to decrease in the coming quarters as we complete the IRRAS integration.

I'd like now to turn the call back to Joe.

Thank you, Danilo. We look to build upon a successful first quarter and continue to expect 2026 revenue to be in the range of $52 million to $56 million. We are also pleased to report that our first quarter burn came in on budget from what we were expecting. As a reminder, the first quarter each year has historically been our highest burn quarter driven by annual employee bonuses, timing of FICA taxes, additional withholdings and several once-a-year expenses.

This year, the first quarter also included a number of one-time events related to post-merger integration costs after the acquisition of the IRRAS assets. Additionally, gross margin expanded to 64%. Now although gross margin can fluctuate from quarter-to-quarter, it is encouraging that our first full quarter with IRRAS technology came in slightly ahead of our pre-integration projections. As always, let's now turn to our 4-pillar growth strategy for a bit more detail.

As a quick reminder, our 4 pillars consist of the following segments: number one, pre-commercial biologics and drug delivery products and services; number two, neurosurgery navigation and robotics; number three, laser therapy and access; and number four, neurocritical care and active CSF exchange. These are the 4 markets that we participate actively in today and pretty much 100% of our current revenue is coming from these 4 markets.

In 2026, we expect all 4 of these segments to each grow double digits. For clarity's sake, this does not include any revenue from the commercial launch of cell and gene therapies, which we expect to start in the years ahead upon appropriate global drug approvals. First, let's start with pillar #1, pre-commercial biologics and drug delivery. The team has made substantial progress building out the ClearPoint Advanced Laboratories facility in Torrey Pines, California, affectionately known as the CAL. This new facility will become a common starting point for our relationship with biopharma partners to perform benchtop and preclinical studies as well as troubleshoot workflows to build custom devices and software that are drug and target specific.

Despite the fact that the facility was significantly limited for most of the month of March for planned construction projects, we were still able to perform numerous studies in the first quarter, which included multiple new routes of administration, which were tested for the very first time by the ClearPoint team. This demonstrates not only our ability to co-develop new products with partners, but also shows how we expect our drug delivery portfolio will continue to grow in the future, often with new techniques and new intellectual property that we are building alongside of our partners.

Additional progress was made globally, evidenced by a record number of clinical trial patients enrolled across numerous indications. We also performed our first ever commercial drug delivery procedure using ClearPoint technology in the Asia Pacific region. Our biopharma partners need to know that their therapies can reach patients anywhere in the world, and our commitment to global availability of our ecosystem delivers on exactly that. It's a costly investment, but also a key competitive advantage that reinforces the significant head start we've built in this space.

And as planned, we have begun to integrate the IRRAflow product line into our portfolio. The IRRAflow dual lumen catheter is a flexible multi-day placement catheter that we expect to address a gap in our drug delivery offerings by providing extended access to the brain, a capability that we did not have in our portfolio until now. I can say that we have already had multiple meetings with interested researchers and plan to provide updates later this year on this new option for our partners.

Moving on to pillar #2, which is neuro navigation and robotics, where we have made some tremendous progress recently as well. Our successful launch of the 3.x platform continues in the United States and that expanded to Europe with the very first 3.x case performed there in Q1. The subsequent approval in Canada has also yielded multiple interested parties and our first clinical cases ever performed in Canada are expected here in the near future.

Numerous demonstrations of our prototype ClearPoint robotic platform, which prioritizes cranial procedures have been extremely well received and have repeatedly highlighted our unique understanding of the cranial drug delivery space. It is important to remember that we are leveraging more than 15 years of software development focused on the brain. This historical investment into our best-in-class cranial segmentation and navigation workflow allows us to jump out of the starting gate, especially when paired with an established robotic arm provider using the KUKA LBR Med Robotic Arm.

One highlight to share is that we recently performed our first ever preclinical drug delivery case at our CAL facility using this robotic platform, and the results were better than expected. We plan to offer this system for use in preclinical biopharma studies at the CAL facility to our more than 60 active partners.

For pillar #3, laser therapy and access, our biggest highlight of the quarter was the FDA clearance of the Velocity Alpha MR high-speed surgical drill system manufactured by our partner, adeor medical AG. We believe this drill will be an attractive solution for surgeons compared to our historical hand-operated twist drill. This device operates at more than 75,000 RPM and when using our custom drill bits, we expect to meaningfully reduce procedure times. These efficiency gains were already evident during the very first ever clinical procedure performed with the drill just a couple of weeks ago for one of our partners' cell therapy clinical trial.

Additionally, we are pleased to announce just today that the drill has now received CE marking in Europe as well, which expands the system's availability beyond the United States and provides a scalable pathway to support neurosurgical procedures and therapy adoption globally, including across our European partnered biologics programs.

Our PRISM Laser Therapy system continues to be a highly competitive solution in the market with multiple installs, evaluations and purchases completed in the first quarter. As a quick reminder, our newly expanded labeling now includes both 3.0 and 1.5 Tesla scanners, which has significantly expanded our potential customer base compared to where we were a year ago.

And last but not least, pillar #4, which is neurocritical care and active CSF Exchange is made up of the various IRRAflow assets included in the acquisition of the IRRAS at the end of 2025. This is a completely new market for ClearPoint, but an important one as it fits into our 2-phase strategy perfectly. Number one, it allows us to participate today in an existing $500 million market opportunity with a unique and differentiated product supported by growing clinical evidence.

And number two, it adds a flexible indwelling catheter to our biologics and drug delivery portfolio, a capability we've historically lacked, opening up a new potential pathway for drug delivery to the brand. In the first quarter, we have successfully merged our commercial teams together, including initial cross-training on the devices. With the sales integration now behind us, we expect to continue to grow this business in 2026 and in the years ahead. Having mapped out multiple revenue and cost synergies, we believe that the addition of the IRRAflow assets could potentially be cash neutral for ClearPoint as early as 2027 or next year.

Globally, we now have more than 175 active sites using some form of ClearPoint technology and expect that number to surpass 200 by the end of 2026. This site expansion not only allows ClearPoint technology to be available to more hospitals and patients worldwide, but it also enables the scaling of our business model, including the expert clinical support for which we are very well respected in the neurosurgical community.

With that, I would like to open up the call to any questions.

[Operator Instructions] Our first question comes from the line of Frank Takkinen with Lake Street Capital Markets.

I was hoping to start with one in Pillar 1 and kind of a 2-part question and a little unrelated. So sorry if it's a little lengthy. But part one would be related to -- can you just give us an update from ClearPoint standpoint, the current state of affairs or clinical backdrop at the FDA. Obviously, there's been some headlines around some leadership changes. And I'm just curious how this has impacted some of your interactions. Do you foresee maybe some of those conversations becoming a little bit more efficient in the future with different leadership and anything else that's important there? That's part one.

And then part 2, one of your partners was acquired by UCB or pending acquisition. Just curious if you could provide any updates related to your partner activities ongoing there that you're able to discuss. And sorry again for the lengthy question.

Frank, I expect nothing less than multipart questions for you. So thanks for asking. So the first one relative to the FDA, there's 2 different groups of the FDA that we generally work with, which part on the devices side and then part on the combination devices side, which definitely has a component of biologics to it.

On the devices side, we've seen very little change. We've seen incredible cooperation. We've hosted multiple pre-submission meetings with a team that's been pretty well intact. So we haven't seen anything negative at all on that side. It's been very positive for really years now at this point. And that includes conversations we've had with the newly acquired IRRAS assets as well. So if you think about the traditional device part of the business, we have not seen very much difference. If anything, I think it's going smooth.

On the biologics side, we're not always privy to each and every one of these questions. But obviously, you can't read a headline today without understanding that there's been incredible confusion with the FDA, confusion on some of the feedback that had been provided across multiple ClearPoint partners, and I'm sure likely others as well. And I think everyone is looking for really that confusion, I think, to halt more than anything else as the first step. And my understanding is where we are with the new [indiscernible] selection or for both the Head of [indiscernible] as well as the head of the FDA itself, we're still a little bit in a waiting mode here to see what that final decision is.

Now certainly, any appointment to either one of those roles from someone who is not only incredibly competent in the device -- I'm sorry, the biologics space, statistical clinical trial design, et cetera, that would be very, very welcome. And of course, anyone who's gone through the gauntlet of how difficult it is to enroll these incredibly complex clinical trials, I think, would also be viewed as a positive, not just by ClearPoint, but the entire community as well. So we're anxiously awaiting as well to see what those final decisions look like and the sort of the ability to get started.

On the second question relative to -- I believe you're talking about the Neurona acquisition by UCB. Again, that was, I think, a very, very positive. The Neurona team is still very much intact, very much working alongside us. And from our standpoint, we've had a wonderful relationship with UCB for many years now as well. So it's kind of 2 of our partners sort of coming together and getting the benefits of both teams at that time. So we expect to continue to support the Neurona asset as it moves into their Phase III pivotal trial as we speak.

Just one quick thing I would bring up, Frank, because it's a really important question, too. It's kind of getting back to the FDA side of things. We need to remember that not to bucket everything together, there's sort of the rare disease side of things, which are things like Huntington's disease and a number of these very, very rare conditions that sit on sort of one side. And then there's the much higher volume, higher prevalence diseases like epilepsy, Parkinson's, et cetera. So when the FDA given guidance in the past to provide expedited review for these programs to try to accelerate their pathway to market, the larger market opportunities were always in a position where they were going to be doing some form of a pivotal Phase III study. So when this sort of confusion arose to some extent where it was argued that some of the decisions have been changed or some of the guidance have been changed, I don't personally believe that, that's impacted disorders like Parkinson's or epilepsy or Alzheimer's disease or dementia or things like that because the plan was always to do that pivotal trial.

I think the bigger question was on the other side with these rare diseases where it's just incredibly difficult to do one of these randomized sham studies because surgeons are not necessarily comfortable enrolling patients and patients themselves might feel like they're missing a chance to experiment with other studies if they're waiting for one in a situation where they don't even get the experimental drug. They were just given a placebo. So the practicality of some of these rare disease studies is really the thing that was the biggest question that we had seen.

Got it. Very helpful. And then maybe for my second one, just help us through kind of low end versus high end of guidance. What are some of the key variables you're tracking that might push you towards some of those 2 ends?

Yes. I mean I would say the largest factor there is really the continued investment and preparation of the preclinical services that we're providing at the new CAL facility. As you've seen throughout our history, there's always choppiness from quarter-to-quarter. But the thing I would point out there is that we're still very much not fully operational yet and under capacity. And I view that as kind of a positive. And Danilo's comments he made, he mentioned that our preclinical services, our biologics and drug delivery services were flat year-over-year.

What I would point out is sort of twofold. If you think about our new facility, think of it this way. This is not a perfect analogy, but at least gives you some context. We pretty much have 3 floors of that facility. So of those 3 floors, we have only taken control of one of them. And these are all 3 revenue-generating floors for benchtop testing, for analytics, for histology, you name it. So even start the quarter, we only had 1/3 of that revenue-generating space, if you will. And then even if you look at the 1/3 we had, there was an entire month of March where we weren't doing studies because we were finishing completion of some of the construction there, too.

So if you think about estimating capacity of what that facility could do for us, we still came in, in the millions of dollars, but we -- you could argue we were like 2/9 or 20% of what the -- what our actual capacity is. So we're significantly subscale on that as well. And we expect, if you think by the end of Q2, early Q3, we should be getting close to taking the first floor over or the second floor, if you think of it in my analogy. And then by Q1 of 2027, we have the full facility completed. So it's going to be this kind of sort of stable but increase over the next year or so, maybe the next 18 months. And to answer your question, when those facilities and studies get booked is really the biggest driver of that range in guidance.

Our next question comes from the line of Tom Stephan with Stifel.

Maybe as a follow-up to Frank's prior question. Danilo, maybe for you. Can you talk a bit about revenue cadence for the year as we think about the guide? And notably, as we consider, I'd say, IRRAflow synergies that you've talked about? And then as a tack on, can you give us a sense for within your range, how much of the mix is kind of base business versus IRRAflow? And then I'll have a follow-up.

Yes. The way I would think about it is with sequential growth potentially quarter-over-quarter for the coming -- for the remainder of the year. So it will be gradual, but we expect it to be somewhat consistent over the next 3 quarters. With regard to the IRRAflow side of things, we expect it to grow, and it still accounts for that 20% to -- in that 20% to 25% of our total business. That's what we expect between now and the end of the year.

Tom, the only thing maybe I'd add there as well is that as we mentioned at the beginning, in the first half of the year, our European and OUS strategy for IRRAflow has changed a little bit, where we've moved on from certain distributors, and we're going direct to different markets as well. So that sort of paused our European growth to some extent, while the U.S. continues to kind of fire here in the first half. So there could be a little bit of a lag there relative to when sort of outside of the U.S., IRRAflow kicks in because of some of these changes. But again, it's -- I wouldn't say it's just noise. I mean, I think it's real, but it's not something that's going to change the math of our revenue for the year.

Got it. That's great. Appreciate that. And then I guess moving down the P&L, if you will, sort of a 2-parter again. But gross margin, really nice step-up in 1Q. Joe, can you talk about kind of puts and takes specifically around IRRAflow. And I know you mentioned it can fluctuate, but is this mid-60% range potentially sustainable moving forward? And then sort of similarly on OpEx, Joe, you mentioned some one-timers. How much were those? And what's kind of the right OpEx run rate moving forward for '26?

Yes. Quarter-to-quarter, there's definitely going to be some fluctuation. So I mean, it could be down next quarter and then up the one after that. It's nice to get a good one under our belt for the first quarter. But we are still very much subscale in just about everything that we do, including IRRAflow. So if you think about what took place in Q1, we shut down the IRRAflow factory that was in San Diego, and we moved all of their operations and employees over to our Carlsbad facility.

So if you think of something that showed up on the G&A, for example, as an increase, we have an empty building right now that we're in the process of subleasing to go ahead and to -- that's one of those very obvious cost synergies that we've already done all the work to move everything over, and now it's just finding a tenant to take over the lease. So those are the types of things. You multiply that times 10 or 15 different opportunities with redundant vendors with the ability to have some sort of negotiating power with our vendors of just raw materials, putting more and more products through our factory.

And then even on the sales and marketing side to be able to have our clinicals travel less because the volume has increased across our portfolio in different cities with gas prices where they are and travel expenses where they are, that's a very, very meaningful part of the strategy, too, that doesn't hit our gross margin, but it helps -- it's definitely going to help us on the sell side of things.

Our next question comes from the line of Matthew Blackman with TD Cowen.

Well, good to hear your voices. Clearly, a lot has happened since I last had the opportunity to be on a ClearPoint call. And so on that theme, sort of a big picture question, you're now more evolved 4-phase, 5 growth pillar strategy, I think with a combined $500 million long-term revenue target. Here's another multipart question for you. Question one, do you have all the key pieces in place today to hit that $500 million number some time in the future? Or are there still platforms or services you need to roll in to make that number achievable? And part 2 is, is there a way to get to that $500 million target faster inorganically? Are there assets out there that have technology and revenue bases that could help accelerate your pathway? And how do you evaluate that pathway versus getting there organically? And then I do have one follow-up question.

Yes. So the first question was around, do we have all the parts to build this spaceship and get to our destination here. And I think the answer is yes. I would say it in the way that there's still refinements in our portfolio, but we have control of the portfolio. So I'll give you a perfect example of that is our robotics platform. We do not have an FDA-cleared robot today. We have one that we are doing preclinical cases with for pharma partners. So it's functional in the preclinical setting. We have every confidence in this program because of the development that KUKA has put into the robotic arm development in parallel to what we have done over 15 years for our software development.

So it's not that we're dependent on something inorganic or dependent on something that requires invention or luck. These are things that I think are execution. But once we have a robotic platform and arguably become the only company where you have one software that can be done in the MRI using the same frame an iCT and then also with a robot as well. I think that's something that, especially if our pharma partners support it as their robotic choice, I think that's going to differentiate us and give us a right to win.

If you think about other things that are out there inorganically, it's interesting if we're not going to cross into neurovascular and we're not going to go out of the brain or implant something into the brain, which dramatically increased sort of complexity and costs and patient outreach and neurology call points and things like that. There aren't that many assets that are out there. And it's interesting because -- the reason for that is so few patients go through with surgery compared to the sheer number of patients that are out there that need help. And that's really the promise of improvements with DBS, improvements to laser systems and awareness and access, improvements to reimbursement and arguably most importantly, availability, final commercial availability of cell and gene therapies and other drugs that can be restorative and not ablative or not be an implants, which I think patients are very likely from what we understand to pursue first.

So our focus is really getting these therapies across the finish line and then working alongside 50 or 60 pharma partners to educate neurologists, educate patients that they're available, which is something that I think will scale us quite a bit. So that's why I'm saying I don't think we're dependent on something inorganic to get there.

Got it. That's really helpful. And then the follow-up for you as well, Joe. Just on the IRRAflow catheter, look, I appreciate it's still very early days, but feeling any interest from current or even potentially new biopharma partners in using the indwelling delivery option? And then maybe, Danilo, if you could, just how would the IRRAflow catheter even if just in the roughest terms, differ from a business model or economic standpoint if it in the future was co-labeled with a drug versus what you have in place with the SmartFlow cannula. Any help there?

Yes. I think I'd say, yes, we've absolutely had discussions with partners and research centers. We host a meeting called IGNITE every year, and we had a number of different research ideas that came out of that, where the researcher themselves was already planning to execute a study using an off-the-shelf device called an EVD or an external ventricular drain, which is a very, very common procedure. IRRAflow is arguably a next-generation EVD because it's dual lumen and it allows you to actually put some sort of fluid as directed by a surgeon into the brain while it naturally drains instead of just draining and doing a sort of a bolus shot into there. So the product arguably for these [indiscernible] very simple EVD studies is kind of an obvious choice to switch to this as quickly as possible. So it's really an education standpoint.

And as you pointed out, luckily, ClearPoint has spent the last 10-plus years building relationships, not just with researchers, but the biopharma companies that are interested in either funding their own study or licensing these ideas and these technologies out of universities and academic centers. So there is a product out there today that could absolutely -- in our current IRRAflow product line that could absolutely become an immediate substitute in some of these studies. And I think that's a very likely case.

And on the economic side, we expect the IRRAflow margins to still be very healthy. Like Joe mentioned earlier, we're still pretty subscale. As it grows, we think the margins will keep expanding in that product portfolio. I think we already are if you look at even 2026, just given the fact that we've consolidated facilities. From a business model perspective, we're going to work with our partners. It's still very, very early, but we'd like to, of course, pursue similar ways of working that we've had with our -- we test and explore with our existing partners.

And we have reached the end of the question-and-answer session. And therefore, I would like to turn the floor back over to CEO, Joe Burnett, for closing remarks.

Thanks again for joining our call today. Our team feels like we have built an incredible foundation on these 4 pillars today, which will support an exciting future of global commercial drug delivery, which our 60-plus biopharma partners are making progress towards each and every day. We are on a path to helping treat tens of thousands of patients a year who suffer from many of the most frightening neurological diseases imaginable. We are thrilled to have you on our team supporting this vision and supporting us on the road ahead.

Good night, everyone.

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

Greetings, and welcome to the ClearPoint Neuro, Inc. Fourth Quarter and Full Year 2025 Financial Results Conference Call.

[Operator Instructions]

As a reminder, this conference is being recorded.

Comments made on this call may include statements are forward-looking within the meaning of securities laws. These forward-looking statements may include, without limitation, statements related to anticipated industry trends, the company's plans, prospects and strategies, both preliminary and projected. Besides the total addressable markets or the market opportunity for the company's products and services; the company's expectations regarding the integration, performance and anticipated benefits of its recent acquisition of IRRAS Holdings, Inc. including operational efficiencies and the impact of the company's financial condition and results of operations.

The company's expectation for future development, regulatory approval, timing, commercialization and the market for cell and gene therapies and the anticipated adoption of the company's products and services for use in the delivery of gene and cell therapies, and management's expectations, beliefs, estimates or projections regarding future revenue and results of operations.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they were made. 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 about the company's risks and uncertainties, please refer to the company's filings with the SEC, including the company's recent filings on Form 8-K, Form 10-K and Form 10-Q. All the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com.

And now I'd like to turn the call over to Joe Burnett, Chief Executive Officer. Please go ahead, sir.

Thank you, Joe. And as always, thank you to all of the investors, analysts and biopharma partners listening to today's call. We remain both committed to and focused on developing a complete neuro ecosystem capable of delivering various minimally invasive treatments, including cell and gene therapies to the brain. We believe that this approach will finally unlock hope for the patients and their families who are battling these frightening neurologic disorders and who today have very few options to choose from. . This is one of the largest unmet needs in all of medicine, and we at ClearPoint believe we can play a crucial role in this exciting future. .

Our company ended 2025 on a high note with the strongest financial quarter of the year, a newly acquired and commercialized neurocritical care product line and genuine excitement of what is to come in 2026. Over the past 5 years, we have invested more than $100 million and built a strong foundation to support our team and our goals moving forward. This foundation is made up of 4 growing product categories, a vetted pipeline of new development programs and expanded manufacturing footprint, a thoroughly audited quality system, a collection of global regulatory approvals and expansive IT portfolio, an installed base of more than 150 global centers and the cash position and investor base to execute on our strategy.

Most importantly, through our unique biologics and drug delivery ecosystem, we have attracted more than [ 5 ]0 active biopharma partners. We are participating in more than 25 active clinical trials, we are exploring therapies for more than 15 different indications, and currently, more than 10 of our biopharma partner programs have now been accepted to some form of FDA expedited review. Our foundation is set and our company has never been in a stronger position than we are right now.

As we look ahead, we have now entered the next 2 phases of our growth strategy. The first phase, which we call Fast Forward is to penetrate an existing $1 billion market opportunity made up of 4 distinct product segments: number one, pre-commercial drug delivery products and services; number two, neurosurgery navigation and robotics; number three, laser therapy and access; and number four, neurocritical management. We expect all 4 of these product lines to grow double digits in 2026 through the expansion of our commercial organization, approval of products in new geographies, additional site activations, generation and publication of new clinical evidence and the execution and launch of new products in our development pipeline.

The second phase which we are entering in parallel is called Essential Everywhere. This phase is different as it requires us not to grow share in an existing market, but to build a completely new market that does not yet exist for commercial cell and gene therapy delivery. This is a market in which we believe that the unique ClearPoint Neuro ecosystem will play an essential role. This ecosystem will include brain segmentation tools, predictive drug delivery modeling, preplanning and navigation software, frame and robotics delivery options, drug loading and mechanized infusion technologies, an array of cell and gene therapy routes of administration and post-procedure quality confirmation software to meticulously track proper delivery. All of these workflow steps will be supported by our talented team of clinical specialists and scientists who will be there in the room assisting our partners when these new-to-world therapies are finally commercialized.

While the only neuro gene therapy approved today for direct delivery to the brain is for a very rare disease, it is important to remember that this drug is, in fact, co-labeled with ClearPoint technology, a trend we expect to continue in the future.

As we look ahead to the full year of 2026, we now expect revenues to be in the range of $52 million to $56 million, which now takes into account a couple of factors, including the latest FDA communications regarding the potential approval and treatment of rare diseases as well as the integration efforts and priorities surrounding our recent acquisition of IRRAS just a few months ago. I invite anyone listening to visit the ClearPoint Neuro website where you can download a new version of our investor deck that should better communicate the vision and scale of our strategy.

I will now turn the call over to our CFO, Danilo D’Alessandro, to walk through the prior year financial data, after which I will provide a bit more commentary on the road ahead. Danilo? .

Thank you, Joe, and thank you all for joining us today. Let me start by looking at the full year 2025 results. ClearPoint Neuro total revenues were $37 million for the year ended December 31, 2025, compared to $31.4 million in the year 2024. Our total 2025 revenue of $37 million includes $1.2 million of revenue from the acquisition of IRRAS Holdings, Inc., which we completed on November 20, 2025.

Our revenue is made up of 3 components: biologics and drug delivery, neurosurgery navigation and therapy and capital equipment and software. We include the IRRAflow product line in our Navigation Therapy segment. Biologics and drug delivery revenue include sales of disposable products and services related to customer-sponsored preclinical and clinical trials. Biologics and drug delivery revenue increased 10% to $19 million in 2025, up from $17.3 million in 2024. This increase was primarily due to an increase in our product sales as our pharmaceutical partners advance their development programs.

Neurosurgery navigation revenue consists of commercial sales of disposable products and services related to the cases utilizing the ClearPoint system to deliver medical therapy to the intended target. This revenue segment grew to $14.8 million for the year 2025, including $1.2 million in IRRAflow revenue. The growth in this segment was mainly due to our increased installation base and the full market release of our PRISM Laser System and iCT solution. Capital equipment and software revenue consists of sales -- consisting of sales of ClearPoint reusable hard and software and related services was $3.1 million for the year 2025.

Gross margin for the full year 2025 was 61%, in line with the year 2024. Research and development costs were $13.9 million for the year 2025 compared to $12.4 million in 2024, an increase of $1.5 million or 12%. The increase was due to higher product and software selling costs of $1.2 million, an increase in personnel costs, including share-based compensation expense of $0.2 million and additional costs due to the consolidation of IRRAS.

Sales and marketing expenses were $16.5 million for the year 2025 compared to $14.5 million for the same period in 2024, an increase of $2 million or 14%. This increase was due to higher personnel costs, including share-based compensation expense of $1.4 million, resulting from increases in head count in our clinical team as well as increased cost of $0.9 million due to the consolidation of IRRAS, partially offset by decreased marketing cost of [ $0.2 million ] and decreased travel cost of $0.2 million.

General and administrative expenses were $16.5 million for the year 2025 compared to $12 million for the same period in 2024 million, an increase of $4.5 million or [ 38% ]. This increase was due primarily to severance expense of $1.4 million in connection with the Iris acquisition, increased prefinal service fees of $1 million, higher personnel costs, including share-based compensation of $0.9 million, higher information technology and software costs of $0.5 million, increased bad debt expense of $0.2 million and additional cost of $0.2 million related to the IRRAS acquisition. Net interest expense for the year 2025 was $1.2 million. Interest expense for the year 2025 was $2.4 million compared with $0.45 million for the year 2024. The increase was due to the issuance of notes payable in May and November 2025.

I will now turn to the fourth quarter 2025 results. Total revenue was $10.4 million for the 3 months ended December 31, 2025, in comparison to $7.8 million for the 3 months ended December 31, 2024. Biologic drug delivery rent increased 23% to $5.2 million in the fourth quarter of '25. This increase is attributable to $1.1 million of higher product revenue resulting from greater demand for disposables as multiple partners progress in their trials, partially offset by lower service revenue of $0.1 million.

Neurosurgery Navigation and therapy revenue was $4.7 million for the fourth quarter of 2025 from $2.9 million for the same period in 2024. The increase is driven by the increased customer base and additional revenues due to the [indiscernible] line acquisition completed in November 2025. Capital equipment product and related service revenue was $0.5 million for the fourth quarter of 2025, a slight decrease compared to $0.6 million in the same period in 2024.

Gross margin was 62% for the fourth quarter of 2025 compared to a gross margin of 61% for the same period in 2024. We Operating expenses for the fourth quarter of 2025 were $13.4 million compared to $10.4 million for the fourth quarter of 2024. The increase was mainly driven by the acquisition in constellation of IRRAS's financials and increased professional services fees. At December 31, 2025, the company had cash and cash equivalents totaling $45.9 million as compared to $20.1 million at December 31, 2024, with the increase resulting from the net proceeds of the notes payables and stock offering of $51.4 million and cash acquired as part of the IRRAS acquisition of $1.1 million. partially offset by the use of $23.9 million in cash for operating activities and $1.9 million in cash paid for taxes related to the net share settlement of equity awards.

Net cash flows used in operating activities for the year ended December 31, 2025, was $23.9 million, an increase of [ $50 million ] from the year ended December 31, 2024. This increase was primarily due to a higher net loss of $6.6 million and the paydown of accounts payable and accrued expenses of $10.6 million. $8 million is related to liabilities assumed from the IRRAS acquisition as part of the purchase price and IRRAS acquisition-related transaction expenses. In addition, we had $1.1 million of operational post-acquisition IRRAS expenses in Q4. We do not expect to incur cash outflows for the payment of assumed liabilities of a similar magnitude in future peers as a pay down of the liabilities assumed in connection with the IRRAS acquisition represents a nonrecurring event.

I'd like now to turn the call back to Joe.

Thank you, Danilo. As you can tell from our fourth quarter results, we ended 2025 on a strong note and with terrific momentum going into 2026. Now I will just spend a few minutes digging a bit deeper into our 4-pillar growth strategy. As a reminder, our 4 pillars consist of the following segments: number one, free commercial biologics and drug delivery products and services, number two, neurosurgery navigation and robotics; number three, laser therapy into access; and number four, neurocritical management. These are the 4 markets that we participate actively in today and pretty much 100% of our current revenue is coming from these 4 markets. In 2026, we expect all 4 of these segments to each grow in the double digits.

In the future, we expect to add our fifth pillar of growth which would be commercial cell and gene therapy delivery as our biopharma partners continue to progress through the various global regulatory processes. To be clear, our existing revenue forecast for 2026 of between $52 million and $56 million does not include any meaningful expected revenue from the commercial drug delivery. So any change to the FDA treatment of rare diseases or approvals of these drugs outside of the United States would be upside to this forecast.

First, let's start with pillar #1, pre-commercial biologics and drug delivery. The team has made substantial progress building out the ClearPoint Advanced Laboratories facility in Torrey Pines, California, affectionately known as the cow. In the fourth quarter of 2025, we performed our very first preclinical study for a sponsor and continue to execute additional studies already here in the first quarter of 2026.

While construction will not be complete until our scheduled grand opening in the second half of the year, we do have the capability now to do smaller studies, and we expect to add full GLP capability soon as well. We continue to support our talented biopharma partners as their cell and gene therapy treatments progress through the development, clinical and regulatory process. We now have more than 60 active biopharma partners. We support more than 25 active clinical trials, and we have more than 10 partner programs that have been accepted to some form of FDA expedited review.

For some perspective, if we look at only the programs under expedited review, which span across 8 different indications, there would be more than 2 million patients in the United States alone that have indications that are being considered for expedited designation pathways. Treating just 1% of those patients or about 20,000 patients a year to deliver approximately $300 million in annual revenue to ClearPoint.

Keep in mind, that modest assumption of procedure volume is not even high enough to treat the newly diagnosed patients each year, let alone provide care to the millions of patients already living with the disease. I can tell you from direct conversations with our partners that their ambition and expectations far exceed that number. I can also share with you that in the last quarter of 2025 and we had the highest volume of clinical trial cases supported by our biologics and drug delivery team in our history. In the meantime, while we are waiting for these first-in-world treatments to successfully win approval, our existing and collaborative biopharma relationships, combined with our unique neuro capabilities should position us to achieve 20% of the estimated $300 million market for pre-commercial biologics and drug delivery products and services.

To say it another way, we are participating in pre-commercial drug delivery today and plan to enter commercial drug delivery in the future, but we do not need these future drugs to be approved to generate meaningful revenue.

Moving on to Pillar #2, which is neuro navigation and robotics. We have made some tremendous progress recently. The launch of our 3.x software platform has been very successful as we have added multiple new installations, especially in sights that are intent on using ClearPoint not only in the MRI, but also in the operating room using CT imaging. The results from our limited market release were very positive highlighting the advantages of our platform in accuracy, procedure time, radiation dose and room turnover rate, which will enable multiple ClearPoint Navigation procedures to be performed in the same room each day. We expect the data from this early experience to be submitted for publication later this year.

Our switch to a new European notified body has been successful, and the CE marking for the 3.x software represents a further step in establishing a successful certification track record under this new notified body. We expect that the 3.x software certification will go a long way toward consolidating our entire installed base under 1 software version to simplify training and to ensure our worldwide customers all have access to our latest software features. At the request of a number of pharma partners, we have now initiated the [ PMDA ] regulatory process in Japan, and expect to perform our first cell therapy clinical trial cases sometime in the second half of this year.

Our recently announced robotic platform is also making development progress and we expect multiple product usability showcases with customers this year. Importantly, we plan to perform our very first preclinical studies using the ClearPoint robotic platform at the new tau facility before the end of this year. Again, given our unique MRI capabilities, our fast, simple and predictable operating room performance, our clear focus on cranial robotic development and our deep relationships with biopharma, which will fuel future volume. We believe that achieving 20% of the cranial navigation market is a reasonable goal to achieve in the years ahead.

For pillar #3, laser and therapy and access, we have made progress as well. In 2025, the PRISM system received FDA clearance, expanding compatibility of the system with 1.5T Power MRI scanners. This clearance gave us access to the other half of the U.S. laser therapy market as previously, we only had clearance for 3.0 Tesla strength magnets. As we look to 2026, we have now installed our first 1.5T sites and have proposals in front of numerous interest centers.

In 2026, we expect additional pipeline progress as we seek European approval for PRISM, submit our Harmony 1.0 software, including numerous PRISM visualization features and publish our first tumor clinical trial enabled by PRISM to help us bridge beyond functional neurosurgery and into neuro-oncology. On the access side of the business, our drill partner, adeor, just this week received FDA clearance for the Velocity Alpha MR conditional power drill, which is designed to reduce procedure time compared to our currently available hand twist drill. We are just now starting our limited market release and prioritizing early drug delivery sites and cases. These cell and gene therapy procedures often require multiple trajectories where we believe the Velocity MR drill will provide meaningful advantages and simplify the overall procedure.

We believe that our laser therapy and access portfolio will continue to grow in popularity, not only because of the many unique and differentiated features, but for the simple fact that the laser ablation workflow with ClearPoint is arguably the most similar workflow to these future cell and gene therapy cases. In both laser and drug delivery, there are multiple different trajectories. There is the delivery of a volumetric therapeutic dose. There's the need for [ periprocedural ] catheter adjustments, and there's a need to include small, minimally invasive access points.

Every laser procedure a hospital does with ClearPoint today is getting their team more familiar with the drug delivery workflow of tomorrow. Practice makes perfect and permanent, and we continue to believe that achieving 20% of this total market is a reasonable near-term goal.

And last but not least, pillar #4, which is neurocritical management is made up of the various IRRAflow assets included in the acquisition at the end of 2025. This is a new market for ClearPoint, but is an important one as it fits our 2-phase strategy perfectly. Number one, it allows us to participate today in an existing $500 million market opportunity with a unique and differentiated product supported by growing clinical evidence. And number two, it gives us another drug delivery option for the brain that fills a historic gap in our portfolio for a flexible in-dwelling option.

The IRRAflow catheter is now being offered as yet another tool in our ecosystem that our biopharma partners can consider and trial for themselves at the CAL facility. The existing market for these intra-clinical procedures is arguably the largest that ClearPoint can participate in today. and our clinical expertise, global reach, commercial footprint and investment pipeline can only improve our chances to earn 20% of this approximately $500 million market opportunity.

All in all, we believe we have an excellent vision and strategy for the future of our company. Phase I to earn 20% of a combined $1 billion market opportunity, generate $200 million in annual revenue and get us comfortably to cash breakeven and profitability; and Phase II to provide unwavering support to our unique -- and our unique ecosystem of drug delivery tools to help our biopharma partners treat the very first 1% of patients living with severe neurological diseases that have therapy candidates under FDA expedited review.

If we accomplish these 2 goals, we will have built a $500 million annual revenue business and helped a lot of patients along the way. These are the 2 phases of our company, and we are just getting started.

With that, I will open up the call to any questions.

[Operator Instructions] And the first question comes from the line of Frank Takkinen with Lake Street Capital Markets. .

And appreciate the comprehensive update. I was hoping to start with a follow-up related to the 2026 guidance. I think you called out some of the most recent FDA communications around rare diseases and then integration efforts and priorities as a reason for tightening that guidance a little bit. Maybe talk a little bit more about each of those elements, what you may have previously incorporated into guidance and now what current assumptions incorporate into guidance. And then as it relates to that big picture, how should we think about organic growth versus growth? Obviously, we can see growth with IRRAS in there. So maybe the right way is just how should we think about organic growth? .

Yes. Thanks for the question, Frank. So starting with the first question, which has to do with what's kind of included in the guidance and where we could kind of go from there. There are 2 things that I cited in my prepared remarks. One was sort of the FDA current condition around rare diseases. And the second one is really digging deeper into the IRIS acquisition and figuring out if the prior priorities are the same as the current ClearPoint one. So on the rare disease side of things, I think as many of our investors are aware, the current positioning that the FDA has communicated to at least 2 of our partners this year has been that sort of a more rigorous clinical trial strategy, which historically has been incredibly difficult to do for rare diseases to execute these traditional Phase III studies.

So based on that information and how it would impact our 2 companies or to biopharma partners, we have effectively taken out any and all revenue associated with the commercial launch of those particular products. and also just the understanding that it might take a while to really get to the bottom if and when the FDA were to change course there. So in the event that some good news is created in the case of uniQure or the case of REGENXBIO, it's possible we would revisit that guidance. But for now, we think the most appropriate thing to do is base our guidance on the information that we have in hand, which is the latest information that those 2 biopharma partners have presented publicly. So that's really where we are on the rare disease side of things.

I think it is important to note, however, that the vast majority of the biopharma partners we were working with on more established and larger markets, sort of less rare diseases and more large volume patient populations. The majority of those patients were already planning to do that same Phase III SHAM study. So this newest FDA guidance, we don't believe it carries over to time lines relative to these larger populations because the expedited review process always included doing a Phase III study what they were often allowed to do with skip Phase II and go directly to Phase III, but that large multicenter geographically expansive Sham study was always in the mix. So that's one half of the equation.

The other one has to do with IRRAS itself. And the biggest thing I can point to then there -- again, it's a very exciting product. We're learning a lot every single day, meeting customers, as I mentioned, they had an existing revenue base last year in that $8 million to $9 million range, give or take. What -- I'd say the biggest change that we've made is really in our European strategy where you kind of hit the reset button as we think about European expansion and very specifically which distributors we want to continue working with versus which ones we like a fresh start with at this point.

So if anything, we maybe took a little bit out of our European revenue piece, just based on this latest information. But again, if something happens on the positive side, we always reserve the right to revisit that guidance in the second half of the year. So that's kind of what's embedded in the guidance itself. And then Frank, what was the second question that you had there? .

Underlying core growth, organic growth. .

Yes, I'd say we expect it to be pretty balanced between the two. I think I did make that comment that we expect all 4 of our segments. And if you want to add capital equipment as a fifth segment, I think all 5 of those, we plan to grow double digits in the year. Now quarter-to-quarter, there might be a little bit of noise here and there. But I think the development pipeline, the fact that our commercial organization today is significantly larger than it was a year ago. I think the fact that new clinical evidence is coming out in each one of those four categories. And I think we're getting familiar with the ClearPoint and IRRAS team starting to work together. Both organic and inorganic growth coming from IRRAS could be relatively balanced, but all in that double-digit range. .

Got it. That's helpful. And then we're hoping to ask a little bit more about the core $1 billion market and pathway to $200 million. If you envision yourself on the other side of the integration of Iris and your back to a point where the business is all integrated. How should we think about the durable growth rate? And what I'm trying to get at is that pathway from today around that $50 million to $60 million revenue range to $200 million? How long could that take? And what kind of growth rates should we expect to see over time? .

Yes. I think if we generally can grow in that 15% to 20%, maybe even north of 20% range for the foreseeable future that assumes that we're taking 1.5% to 2% share pretty much each year across all 4 of those. And again, there could be differences that take place in each 1 of those markets. For example, when we get our GLP capability for the CAL facility, and we earn our very first large GLP study on behalf of 1 of our biopharma partners. A single study could be in that $15 million to $20 million range, right? So we could see a large bump in any given year based on our capability being ready and then a biopharma company hiring us to do that work for them. So we could have a leap 1 year to the next in the biologics and drug delivery side.

Similarly, on the IRRAflow technology, there's a lot of clinical evidence being supported. There's a randomized clinical trial actually supported by IRRAS called the ARCH trial, where we expect the data readout at some point later this year. So that is a very, very large market where IRRAflow is a relatively new technology, where if we had clinical evidence that showed not only patient improvement, but also some economic benefits for a hospital where a patient leaves the hospital sooner or has less complications during the procedure itself.

These are things that can really swing market share pretty quickly because this is not a high intensive training product. This is one where we can ship a pump into that hospital the next day, and we can be training residents 24 hours a day to get them familiar with the technology, right? So it's -- where we can't get to the point where we can outline exactly which one of those will be the primary driver any given year, other than this year, they all growing double digits. We do feel comfortable in that 15% -- certainly 15%, maybe even 20% from an organic standpoint until we get to that $200 million number .

Helpful. And then last one, Joe, just we get a lot of questions on just the attachment uniQure and obviously, the volatility around FDA's communication there. One question I wanted to ask is really focusing on the diversified offering. You've got BlueRock and Neurona's assets coming as the next most likely near-term big market opportunities that should really exemplify the value of a diversified offering. Maybe just talk a little bit more about those assets when they could be on the market. And then coming back to just the value of having so many partners in expected review and kind of deemphasizing the attachment on just one singular asset and what the model looks like over time. .

Yes. So Frank, I don't want to comment on the timing of our partner programs. They give their updates when they prefer to. So I'm just going to stick to what they've said. And if you go to the websites of BlueRock and Neurona, some of these other companies as well, they -- I think they shy away from giving actual timing updates and rather simply provide the status of the current program and what phase of clinical trial they're in. .

As I mentioned a second ago, we have a new investor deck that is just going live today, which I think puts some of that diversity and some of that staging into language that I think our biotech investors will better understand to show the scale of how many programs that we're in and then how many are in phase preclinical versus Phase I/II versus Phase II and even in the place of PTC when that's commercialized. So I'd encourage you to kind of take a look through that. and I think it will provide some feedback there as to where we are.

The other thing I would bring up, however, is that even these Phase III trials can provide meaningful revenue to ClearPoint. So a typical Phase III study that we're seeing or we're participating could be anywhere from 60 to 120 patients that are studied, sometimes randomized 2:1 in the test arm versus the control arm. 120 patients times 5, 10, 15 studies that could be going on at the same time could again be a very meaningful volume, maybe even 1,000 patients a year that would just be still in this clinical trial phase.

So again, we don't count that in that Phase II opportunity of commercial drug delivery, but it is supporting the growth in addition to the cow of that pre-commercial biologics line. And I think, as I mentioned in the remarks, Q4 was the largest volume we ever saw of drug delivery. So patients are raising their hand and enrolling in these trials and we expect many more to start here in 2026.

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

So first, you called out more than 10 partners in expedited review pathways now. So implying at least one new partner pathway since the last call. Could you provide any more color on the indication and population size for this new partner or partners? .

Yes. In some cases, it's been a new indication. In some cases, it's redundant in an existing indication. So the 2 largest ones that are under expedited review today would be Parkinson's disease and drug-resistant epilepsy, MTLE. So those are the 2 that I think the largest existing populations. The one in addition to that or anything from Glioma to Friedrich's Ataxia to Huntington's disease with uniQure, as mentioned before, to a couple of other rare genetic disorders as well. So I think there's 8 total indications and maybe 13 partners that are under FDA expedited review.

So again, we have a little bit of overlap. I think it's 4 or 5 in Parkinson's alone, for example. So it's nice because it gives us much higher confidence if you look at a disease state like Parkinson's with over 1 million patients in the United States that are really waiting for a superior treatment. We have 5, maybe 6 partners that are already under expedited review and maybe that treatment isn't that far away. But just as importantly, we've got 4, 5, maybe 6 of these shots on goal that are under expedited review. So again, maybe every one of them that make it all the way through the regulatory [ goutlet ], but if 1, 2, 3 of them get approved, we could be very successful there.

Okay. Got it. And then you mentioned the first tumor clinical data for PRISM publishing this year, potentially expanding beyond functional neurosurgery and neuro-oncology. How should we think of the time line for this expansion in the [ TAM ] and neuro-oncology versus PRISM's current addressable market? .

Yes, I'd say it's really just a strength of our commercial team and how we're growing and evolving as well. if you think about the laser therapy market, it's historically been split between epilepsy and tumor. With functional neurosurgeons, maybe doing the epilepsy procedures and neuro-oncologists doing the tumor procedures. Now we are participating in tumor procedures today, but because of our navigation history, because of our biopharma partnerships, we've always been a little bit heavily weighted towards functional neurosurgery and movement disorders.

So having a publication that's looking directly at our laser performance in a group of very 6 tumor patients, I think, puts us in a situation that we can look customers in the eye and say, yes, we're taking this very, very seriously, and we're going to be participating in multiple clinical trials moving forward. Even if it's a customer base that we haven't had quite the same experience as we have with functional. .

This concludes the question-and-answer session. I'd like to turn the call back over to Joe Bennett for closing remarks. .

Well, thanks again for joining our call today. Our team feels like we have built an incredible foundation, which will now serve as the launch pad for our 2 parallel strategies. We are on the path to helping treat tens of thousands of patients a year who suffer from many of the most frightening neurological diseases imaginable. We are thrilled to have you on our team supporting this vision and supporting us on the road ahead. Goodnight. .

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

[Audio Gap] comments made on this call may include statements that are forward-looking within the meaning of securities laws.

These forward-looking statements may include, without limitation, statements related to anticipated industry trends, the company's plans, prospects and strategies, both preliminary and projected, the size of total addressable markets or the market opportunity for the company's products and services, the company's expectation for future development, regulatory approval, timing, commercialization and the market for cell and gene therapies and the anticipated adoption of the company's products and services for use in the delivery of gene and cell therapies, and management's expectations, beliefs, estimates or projections regarding future revenue and results of operations.

You are cautioned not to place undue reliance on forward-looking statements, which speak only of the date on which they were made. 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 about the company's risks and uncertainties, please refer to the company's filings with the SEC, including the company's recent filings on Form 8-K, Form 10-K and Form 10-Q. All the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com.

I'll now turn the call over to Joe Burnett, Chief Executive Officer.

Thank you, Paul, and thank you to all of the investors, partners and analysts joining us on today's exciting call.

2025 continues to be a strategic transformation for ClearPoint Neuro. Over the past few years, we have built an incredibly strong foundation for this company through new product development, biopharma partner acquisition, modernization of our quality system and manufacturing, global regulatory approvals, expansion of our commercial reach and reliable funding from capital markets.

We built this foundation from the ground up and expanded our strategy through our 4 pillars of growth: biologics and drug delivery, neurosurgery navigation, laser therapy and access and in achieving global scale.

In 2025, we have now exited that funded and foundational phase, and we have entered 2 new chapters of ClearPoint, which will continue to be our guiding strategies over the next decade. The first strategy phase, which we refer to as fast forward, involves ClearPoint launching new, unique and disruptive products into 4 existing markets that total more than $1 billion in aggregate today. Here, we will continue to earn market share each year and offer a credible path to cash breakeven and meaningful profitability.

The second strategy phase, which we call Essential Everywhere, involves ClearPoint building a new $10 billion-plus addressable market in the neuro drug delivery hand-in-hand with our pharma partners. Here, the complete ClearPoint ecosystem, including our team, will play an essential role for predictable quality drug delivery at high-volume specialized treatment centers around the world.

These next 2 chapters, one where we penetrate an existing market and one where we build a new one, will take place in parallel, leveraging the same product portfolio, the same operational infrastructure and the same commercial channel to allow us to achieve global scale.

I am therefore thrilled to announce the merger agreement that was just signed, whereby ClearPoint Neuro will acquire IRRAS with the target closing date in the coming weeks. This is an incredibly exciting merger of 2 like-minded companies who have been successful not only in product development and regulatory approvals, but also in completing some of the hardest work in medical technology, which is bringing cutting-edge products to market, establishing a sales channel, generating clinical evidence and building an installed base of early adopters.

We both expect to be leaders in the neurosurgery market and have a very similar razor-razorblade business model. The IRRAS team should be congratulated on developing the IRRAflow platform and generating an estimated $9 million run rate with a September year-to-date growth rate of 83% and gross margins in the mid-50s today.

We are in a very similar stage of growth and feel like the 2 teams have a lot in common. We plan to integrate swiftly, and we look forward to welcoming IRRAS to the team once the merger formally closes.

There are 3 important strategic rationales that make the IRRAS team and portfolio a perfect fit for this next phase of ClearPoint Neuro.

First, the IRRAflow catheter, a proprietary disposable dual lumen catheter, will immediately give ClearPoint access to a large existing market in the treatment of intracerebral hemorrhage, chronic subdural hematoma and other conditions requiring intracranial fluid management. It is estimated that these clinical presentations represent up to approximately 400,000 procedures annually in the United States alone and close to $0.5 billion existing market opportunity, which ClearPoint now gains access to.

Second, the design of the indwelling and flexible IRRAflow catheter provides us with a launching point for the design of longer duration infusion cannulas that may open up additional biopharma partners, especially in the oncology space, who often require a device that allows multiple infusions over an extended duration, potentially in an outpatient setting. Our goal is to become a true one-stop shop for cell, gene and other therapy delivery that are directed by our same biopharma and neurosurgery call points.

Third, the combined entity is expected to immediately gain operational scale with an expansive commercial team, including marketing, sales and clinical specialists that will now include more than 40 added professionals across the United States. This merger with IRRAS will deliver a new pillar of growth for the company and is expected to extend our lead in neuro drug delivery.

I will now turn the call over to Danilo to discuss the Q3 financial update, after which I will spend time detailing the next steps of this 2-part ClearPoint strategy. Danilo?

Thank you, Joe, and thank you all for joining us today. Let me start by giving some further details about the proposed merger and the key transaction terms.

Upon closing, ClearPoint Neuro will deliver a closing consideration of $5 million in cash and 1,325,000 shares of ClearPoint Neuro's common stock, subject to customary working capital adjustments. The agreement also provides for ClearPoint Neuro to pay a revenue share on net sales of certain IRRAS products above defined annual thresholds for the year 2026 through 2028.

The closing of the merger is subject to a number of conditions, including approval of the transaction by IRRAS shareholders, and the closing is expected to be completed in the fourth quarter of 2025.

In parallel with the signing of the merger agreement, we entered into an agreement to access an additional $20 million in funding under our existing note financing arrangement with Oberland Capital, conditioned upon the closing of ClearPoint Neuro's transaction to acquire IRRAS Holdings, Inc. and other customary closing conditions. We expect to use the additional funding to support integration activities, enhance working capital and fund the new growth initiatives for our combined business operations.

Now looking at the third quarter 2025 results. Total revenue was $8.9 million for the 3 months ended September 30, 2025, in comparison to $8.1 million for the 3 months ended September 30, 2024, which represents 9% growth versus the third quarter of 2024.

As a reminder, our revenue is made up of 3 components: biologics and drug delivery, neurosurgery navigation and therapy and capital equipment and software.

Biologics and drug delivery revenue includes sales of disposable products and services related to customer-sponsored preclinical and clinical trials utilizing our products. Biologics and drug delivery revenue stayed relatively consistent at $4.4 million in the third quarter.

Service and other revenue increased $0.7 million due to new studies performed for our partners in the 3 months ended September 30, 2025, offset by a decrease in product revenue due to timing of the pharmaceutical partners' clinical and preclinical trials.

Neurosurgery navigation therapy revenue consists of commercial sales of disposable products related to ClearPoint Navigation System, our SmartFrame OR product and PRISM Laser Therapy disposables. This revenue segment grew 20% to $3.4 million for the third quarter, driven by higher sales of PRISM Laser Therapy and the introduction of our 3.0 operating room navigation software.

Capital equipment and software revenue, consisting of sales of ClearPoint navigation hardware and software in the PRISM Laser System and the related services increased 25% to $1 million in the third quarter from $0.8 million for the same period in 2024.

Gross margin for the third quarter 2025 was 63% as compared to a gross margin of 60% for the third quarter of 2024. The increase in gross margin was primarily due to higher margins on service revenue and mix of products sold.

Research and development costs were $3.5 million for the 3 months ended September 30, 2025, compared to $3.3 million for the same period in 2024, an increase of 4%. The increase was due primarily to higher product and software development costs.

Sales and marketing expenses were $3.8 million for the third quarter compared to $3.5 million for the same period in 2024, an increase of $0.3 million or 8%. This increase was mainly due to additional personnel costs as we expand our commercial reach to support and accelerate our product launches.

General and administrative expenses were $3.6 million for the third quarter compared to $3.1 million for the same period in 2024, an increase of $0.4 million or 14%. This increase was mostly due to higher headcount costs, professional fees and IT costs.

With respect to our cash position, as of September 30, 2025, we held cash and cash equivalents of $38.2 million compared to $20.1 million as of December 31, 2024, with the increase resulting from the net proceeds of the note payable and stock offering of $32 million, partially offset by the use of $11.8 million in cash for operating activities.

With that, I'd like to now turn the call back to Joe.

Thank you, Danilo. Now one part of the commentary that I want to make sure is clear from the financials is the impact that the transition to our new ClearPoint controlled CRO facility in Torrey Pines had on the quarter.

First, our overall revenue growth for the quarter was lower than in prior quarters, but the source of that reduced growth rate came from the fact that the same team that would normally be supporting biopharma studies and our partner drug pipeline was temporarily reprioritized to transition out of the prior facility and to open the new facility.

This effort includes a onetime and significant coordination of moving people and equipment, setting up standard operating procedures and then obtaining all of the necessary certifications with appropriate federal and state agencies.

The fact that our lease was signed in June of this year and in just 3 months, we were already certified and running preclinical studies for our partners is a huge testament to the capability, effort and focus of this team. We expect that the biologics and drug delivery pillar will return to double-digit growth here in the fourth quarter and accelerate further in 2026 and 2027 as we are already bidding on large partner studies for the coming years.

Now let's dig into our 4-pillar growth strategy a bit further. And I will start with one important note for those of you who have been following our 4-pillar mantra since we started about 8 years ago. We will be adjusting the definitions a bit given the announced acquisition of IRRAS and our 2-part strategy that we have transitioned to here in 2025.

Pillar #1, we now define a little differently, and we call it pre-commercial biologics and drug delivery. We have renamed this segment because we want to differentiate between the future commercial drug delivery market that is still in its infancy with the current and existing pre-commercial drug delivery market that ClearPoint Neuro has access to today.

We estimate that this pre-commercial market is approximately $300 million annually across preclinical studies and services, co-development contracts and clinical trial products and support for our more than 60 biopharma partners. Today, we have less than 10% share of this existing market with plenty of room to grow.

Pillar #2 is also defined a little differently as we now call it neurosurgery navigation and robotics. This is reflective of our recent announcement of plans to enter into the cranial robotic space and to become the only company that would offer one preplanning and software workflow that could be deployed by surgeons using 3 different techniques: one, single-use frames in the MRI; two, single-use frames in the operating room with CT; and three, multi-use robotic systems that guide other ClearPoint products to target. This strategy is important for both our biopharma partners and neurosurgery customers.

For biopharma, we plan to solve a commercial problem. Pharma companies prefer not to be overly prescriptive in the way that our cannula is navigated to the target and want to provide some level of flexibility to surgeons, so they can use a technique they are familiar with. However, pharma also realizes that this crucial surgical technique will never become fast, efficient and predictable if they allow hundreds of different navigation options without some level of consistency.

Think of a lean manufacturing line with pods all around the world. There is a huge benefit to each one of those pods doing the same procedure with the same technique and the same equipment. Our navigation strategy will enable one preplanning software and one step-by-step workflow to always be used, but the surgeon will still maintain choice across our 3 hardware solutions, finding a balance between control and flexibility.

For surgeons and hospitals, we plan to solve a slightly different problem, which is that of time and training. There are many different ways to perform both cranial and spinal navigation surgery, and the market is incredibly fragmented across multiple companies and products. For a hospital to invest not only their capital, but also their training time of their staff, they need to make sure that the technology is versatile and can be applied widely.

Again, enter ClearPoint, where we plan to have the best cranial navigation platform uniquely positioned to support biopharma, but also capable of standard minimally invasive cranial procedures like deep brain stimulation, lead placement, biopsy sampling, laser ablation therapy and stereotactic EEG.

The hospital team will be able to learn a single software interface and deploy that across pretty much all cranial procedures, including the new cell and gene therapy procedures that are coming. We believe this is an efficient and productive investment of their time.

Our goal is that every hospital can choose their favorite corporate partner for spine procedures, but that they will prefer the unique ClearPoint solution for their cranial procedures. In fact, our vision is that one day to have a dedicated ClearPoint room for those cranial patients. We believe that the Neurosurgery Navigation and Robotics segment represents an existing market worth more than $125 million. And again, ClearPoint has less than 10% share today and plenty of room to grow.

Pillar #3 remains unchanged and focuses on laser ablation therapy and access products, including OR and MRI Power Drill components for cranial procedures, applicator introducers and cranial access bolts. We estimate this total existing market to be in excess of $75 million, and you guess it, we have less than 10% of the market today and plenty of room to grow.

Finally, for our anticipated Pillar #4, which we will begin with the planned closing of our acquisition of IRRAS in the neurocritical care space. This pillar will be named cranial irrigation and aspiration. As detailed in today's press release, the IRRAflow system is used today to treat patients with intracerebral hemorrhage, chronic subdural hematoma and other conditions requiring intracranial fluid management.

The IRRAflow platform is unique and potentially disruptive today in that it enables both irrigation and aspiration of these fluids in a controlled systematic way. This technology has been evaluated in multiple peer-reviewed articles, highlighting the device's clinical advantages, including reduction in catheter occlusions, the potential to reduce infection rates and shorter treatment times, which may equate to lower hospital costs as well.

Today, we estimate the existing market for this intracranial fluid management space to be in excess of $500 million, and we estimate that the IRRAflow system currently has less than 5% market share today and plenty of room to grow.

I think you can sense a theme building for this initial fast-forward strategy. We are talking about an expected aggregate $1 billion-plus existing market where we currently have less than 5% total market share, and we have plenty of room to grow into it.

It is important to note that we believe the portfolio we have available today and the pipeline of products we plan to launch in the next few years are capable of increasing our share and delivering that growth.

In pre-commercial biologics and drug delivery, we expect to participate in numerous new and larger clinical trials alongside our biopharma partners as well as increase our preclinical capacity, begin doing higher-value GLP studies and provide additional services at the cow to serve our pharma partners more comprehensively.

In neurosurgery navigation and robotics, we will continue the full market release of our 3.0 software into the operating room. And we anticipate the launches of our next-generation DUET Frame, our 4.0 Harmony software and our robotic platform, all against the backdrop of a much larger sales organization and global regulatory approvals.

In laser therapy and access, we will continue the full market release of the PRISM system, which now includes 1.5 Tesla labeling, and we'll plan for the releases of the 4.0 Harmony software, compatibility with our robotic system, CE mark expansion and an MRI conditional velocity drill to speed up procedures inside the MRI suite.

In our anticipated fourth pillar, cranial irrigation and aspiration, we will continue to leverage the peer-reviewed clinical data that highlights the use of the IRRAflow system now with a much larger ClearPoint sales organization, and we'll also add our cranial access bolt, a more intelligent system control software and a forward tunneling device in the next couple of years.

And we were able to do all of this using our much larger combined sales organization of more than 50 commercial team members and an existing installed base of more than 150 combined customers after the anticipated closing of the IRRAS acquisition.

If we can grow our share of this combined and existing $1 billion market by just a couple of percentage points each year, then we can achieve 20% overall share, a $200 million revenue run rate at 70% gross margins and a meaningfully profitable business.

And remember, this does not include arguably the largest opportunity that we have in front of us, which is the commercial cell and gene therapy delivery. This is part 2 of our strategy, which we call Essential Everywhere and involves building a new multibillion-dollar market around our ClearPoint drug delivery ecosystem, which is commonly referred to as the gold standard in this space. We have worked very hard over the last decade and have built a significant head start.

When these cell and gene therapies are launched, we expect to offer not just a single product, but rather a complete drug infusion ecosystem, including co-labeled cannulas and routes of administration that are written into the label of the drug itself, flexible navigation platforms that include MRI guidance, CT guidance and robotic guidance, AI predictive modeling and monitoring software to ensure efficient high-quality infusions, and in delivery.

We did the same way across these specialized treatment centers, so we increase quality, lower costs and make these procedures more predictable. When these cell and gene therapy programs achieve FDA clearance and CE mark approval, our team will have already been working with these partners for years in advance. We will no longer be viewed as only an extension of their development team, but as an extension of their commercial team as well.

In some cases, our products will be sold directly to hospitals, but in other cases, we believe our products may be sold directly to our pharma partners and then provided as a kit to the hospital alongside the drug. This way, the pharma partners can ensure supply and consistency of these essential products and can even maintain an inventory of their own to further derisk their drug delivery supply chain.

Many of our existing partners, including uniQure, Blackrock, AskBio and Aona have all updated patients and investors on their progress over the past few months. We obviously must let our partners take the lead for any updates on the status of their programs. However, we continue to work side-by-side with them as we navigate the clinical regulatory pathways and prepare for eventual commercialization.

Now let me provide a bit of perspective on this market. We are effectively pre-revenue in this phase as there is only one available neuro gene therapy that is approved in the United States and the European Union. The drug is, in fact, co-labeled with the ClearPoint SmartFlow cannula and is designed to treat a very rare childhood disease called AADC deficiency syndrome.

Nonetheless, this is a very important strategic proof point of our capability even if this rare disorder is a smaller revenue opportunity and is just getting started.

As you are aware, we are now supporting more than 20 different clinical indications across our entire portfolio, which include more than 30 million existing patients in the United States alone. That is often too large a number to make meaningful, so let's get a little bit more specific.

Let's forget about the 60-plus partners that we have today, and let's focus only on the 9 that are now working with the FDA through the expedited review process. Also, let's forget about the 20-plus total indications, and let's focus only on the 7 indications that are currently accepted under FDA expedited review, meaning they are the furthest along in the neuro regulatory pathway.

These indications under expedited review include AADC deficiency, Hunter Syndrome, Huntington's disease, drug-resistant epilepsy, Parkinson's disease, frontotemporal lobe dementia and Friedreich's Ataxia. They have a total patient population of approximately 2.1 million patients diagnosed and symptomatic here in the United States alone, where our commercial infrastructure is the strongest.

Now if we only looked at a fraction of our partners and only looked at a fraction of our partner indications that are under FDA expedited review and only looked at the United States where our commercial team is the strongest, and then we only treated 1% of the patients that could potentially benefit from these therapies each year, we anticipate that this would amount to approximately 20,000 annual procedures or about the same number of DBS, laser ablation and stereotactic procedures performed annually.

At current ASPs used in the clinical trials, this would equate to approximately $300 million of additional annual revenue if you believe those assumptions. While the drug development and regulatory process have proven to be inherently hard to predict, our strategy is built for this uncertainty as number one, we do not have the same binary risk as pharma because we have a portfolio of multiple partners, multiple indications and often redundancy with multiple partners that are pursuing the same indication.

Number two, while we might not have the largest per patient revenue upside as the cell or gene therapy drug itself, we also do not have the high cost of executing the clinical trial for the therapy. In fact, we are able to sell investigational products and generate revenue during the preclinical and clinical trials themselves.

And number three, we have the benefit of a parallel device strategy that is generating revenue today and as discussed earlier, has a credible path to profitability.

Our long-term vision is to have these 2 strategies merge together into a company generating $500 million a year in revenue with a single commercial and operational infrastructure generating scale. This is the path that we are on, and we have an incredible team here at ClearPoint that plans to see it through.

Now instead of looking to the horizon, let's quickly look at the steps directly in front of us. Although there are still many moving parts, including the CAL expansion status and the completion of the IRRAS merger and planned integration this year, we are narrowing our full year 2025 revenue forecast to between $36 million and $38 million, which is still within our prior guidance.

We also currently expect total revenue of the merged companies in 2026 to be between $54 million and $60 million, but we will provide an additional update in mid-January after we have closed the IRRAS transaction and integrated the 2 commercial teams together.

With that, I would now like to open up the call to any questions.

[Operator Instructions] Our first question is from Frank Takkinen with Lake Street Capital Markets.

Congrats on the agreement in the quarter. It sounds like a lot of exciting developments. I was hoping to start with one on market sizing around the neurocritical care market. I heard the comments around $500 million market, 400,000 procedures. Maybe just bring us a little bit deeper into that, if there's any subsegments you can talk to, where you think you can focus, how much of that market you can penetrate over time?

And then it would be interesting to also hear about competitive landscape, what you're going up against and how you feel the device will fare in the marketplace?

Yes, absolutely. Thanks for the question, Frank. Yes. So when we think about the U.S. market for this neurocritical care, we're talking more specifically about where these external ventricular drains or EVDs would be located. It's a market that's pretty much looks like it did 20, 30, 40, 50 years ago with a very underserved population and a very simple solution today, which is effectively a gravity drainage system to pull excess blood and clot out of the brain. And in many cases, surgeons will inject a bolus of some kind of antibiotics or anticoagulant drug like TPA to go ahead and break up the clot and facilitate the drainage a little bit more.

Despite all this time passing, there really hasn't been that much innovation in that sector. And IRRAS is a company that has really decided to focus and provide a truly next-generation and disruptive solution there.

So what the IRRAS system can do is not only drain the system actively or drain this excess fluid out of the brain actively, but it also aspirates by providing a continuous flow into the brain that would allow the surgeon to administer saline to break up the clot or to administer any of those other drugs that I mentioned. So I think about 75% of estimated use cases involves the delivery of some type of drugs into the brain as well.

So the early peer-reviewed data and registry data that's been performed seems to show that by doing this type of active irrigation and aspiration, that facilitates the early release of patients by a significant margin. It seems to reduce the amount of clogging, which is one of the most annoying things neurosurgeons have to deal with when an EVD clogs in the middle of the night and they're the ones that are on call that has to deal with it. It seems to trend towards fewer shunt placements.

And there's a meta-analysis going on right now of all of the published data, which I think will provide some very, very interesting insights on the technology. So when we think about anything an EVD might be worked for, this is where we're going to start operating. And we estimate there's probably around 400,000 or so EVD type procedures that are here in the United States and obviously, more globally.

Now this is a premium product, so the ASP is higher than a typical EVD system would be. So you could argue the market should be higher than maybe that $500 million number here in the U.S., but we're really just getting started, and we haven't begun the integration yet. So we're trying to err on the conservative side.

Got it. Very helpful. And then I was hoping to ask one about the pro forma business that you laid out $54 million to $60 million revenue guidance for next year. Maybe help us understand kind of what portion of that is related to ClearPoint versus IRRAS here for 2026? And then as a second part to that, how should we think about gross margin profile and burn profile?

Sure. Yes. I think our -- I think we mentioned in the commentary that the IRRAS gross -- I'll start with gross margin. The IRRAS gross margin is closer to that mid-50s range. And as you heard from Danilo's comments, the ClearPoint gross margin in the quarter is around 63% Obviously, both companies are still subscale. We've got a lot of additional product we could put through our factory today.

And I think the eventual consolidation, given that IRRAS is based here in San Diego, and we would plan to bring the facilities together would actually immediately increase margin just on the simplest form. But at scale, there's no reason to believe that IRRAS would be any sort of drain on our current gross margin trajectory.

And we feel, given those assumptions I mentioned in that sort of pro forma estimate of gaining 2% share each year kind of thing, we could -- we believe that we have a clear path to 70% plus gross margins across both sides of the portfolio.

And the IRRAS system itself, as I mentioned, it is a razor-razorblade system. So there is a capital component. However, more than 90% of the revenue from IRRAS at least today is on the disposable side. So we imagine that the capital component is probably going to be trending down from 10% to 9% to 8% to 7% over the years as well.

Okay. And then...

What was the first part of that question? Yes.

Just any thoughts around kind of burn profile and then of that $54 million to $60 million break out ClearPoint versus IRRAS?

Yes. Danilo, do you want to cover the kind of the cash burn side?

Yes. So Frank, we were going to have obviously some integration costs in the first quarter. We estimate the burn to be in the single digits, mid- to high single digits in the first year. And obviously, as we grow and combine the entities, we expect to reduce that burn meaningfully and significantly over time. So we may have just some additional integration and transaction costs here in Q4 and Q1. But other than that, we should work swiftly to reduce the burn of the combined entity.

Okay.

And Frank, one way to think about the commercial side of things is that we were going to have to expand our commercial footprint to prepare for not just our own sort of device growth, but also prepare for these larger clinical trials and eventual commercialization of cell and gene therapy. So we were going to continue to do some of the hiring into that commercial organization.

Now it's as if we get a huge bolus of that personnel all at once, along with another product that helps support the cost of that personnel. So I think our individual hiring plans will actually flatten out compared to the growth that we would expect in the future. So it's almost like we're getting some of these people a couple of years early. So that's where a lot of the burn will come from.

Got it. That's helpful. And then if I just have one more on the current quarter. Congrats on getting the CRO site set up and launched. Maybe talk through potential orders in that space. It sounds like you're already having some of those conversations now, but magnitude, how large could those orders be and when could they come?

Yes. So there's sort of 3 vectors of growth that we expect to get out of the new facility. One is a simple one, which is just excess capacity. We were only able to do smaller studies at our prior facility because we were effectively leasing space inside of another CRO that was dedicated to the neuro work that we were doing.

We currently -- in the new facility, we estimate that we could do studies that are 4 to 5x the size of the largest study we did in the past. So if we were doing work in the past, maybe our largest pilot studies would be 1.5. I don't know that we did any individual ones more than $2 million at the old facility. Here, we are bidding on projects that are $5 million, $10 million, even $10-plus million for a single study. And that's a combination of the study being larger as well as our plans to be performing GLP studies.

We believe we've got a lot of the kind of the paperwork and standard operating procedures in place, and we should be fully functional and able to execute our own higher-margin GLP studies next year, which is kind of like a more -- think of it as a more rigorous testing protocol that's used for FDA and CE mark submissions. So those are 2 -- 2 of those vectors of growth. Again, one is higher capacity; two is higher value GLP studies.

The third one is with the excess space that we've got as well, we're going to continue to add additional sort of services to handle our pharma partners a little bit more comprehensively. So these could be imaging technologies. These could be hostology (sic) [ histology ] technologies. We've got a few additional ones that we're looking at as well. So we're not ready to unmask the entire plan at this point. But certainly, by early in Q1, I think the vast majority of our pharma business are going to be able to sort of appreciate everything that we can bring with the touch of it all being neuro focused with ClearPoint expertise.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Joe Burnett for any closing comments.

Well, thanks again, everyone, for joining today's call. This is an incredibly exciting time for our company. We have a clear vision, a comprehensive strategy, a competitive portfolio and the right team in place to not only win in all 4 markets that we play in today, but to also prepare to become essential and everywhere as we get ready for the commercialization of neuro cell and gene therapies in the coming years.

Thank you, and good night.

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

Greetings, and welcome to the ClearPoint Neuro, Inc.'s Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

Comments made on this call may include statements that are forward-looking within the meaning of securities laws. These forward-looking statements may include, without limitation, statements related to anticipated industry trends, the company's plans, prospects and strategies, both preliminary and projected, the size of total addressable markets or the market opportunity for the company's products and services, the company's expectation for future development, regulatory approval and the market for cell and gene therapies and the anticipated adoption of the company's products and services for use in the delivery of gene and cell therapies and 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, and the company's quarterly report on Form 10-Q for the 3 months ended March 31, 2025, both of which have been filed with the Securities and Exchange Commission, and the company's quarterly report on Form 10-Q for the 3 months ended June 30, 2025, which the company intends to file with the Securities and Exchange Commission on or before August 14, 2025. All the company's filings may be obtained from the SEC or the company's website at www.clearpointneuro.com.

It is now my pleasure to turn the call over to Joe Burnett, Chief Executive Officer. Please go ahead.

Thank you, Kevin, 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 3 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 approval and commercialization, many of which have already been selected for some form of expedited review by the FDA. This now includes the very first U.S.-based commercial cases for neuro cell and gene therapy that have ever been performed as announced just last week.

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 proven effective. Both our 3.0 ClearPoint ICT navigation software for the operating room and our PRISM Laser Therapy system have been excellent new product introductions and living up to this mantra of fast, simple and predictable.

And third, we will expand our global installed base and generate scale to enable more patients around the world access to the ClearPoint ecosystem that will be used for these novel treatments. ClearPoint technology is now available at more than 100 centers around the world and has regulatory clearance in 36 countries and growing. As previously announced, we have now successfully secured the foundational funding necessary to execute on the strategy for many years to come. This capital in the form of both debt and equity has provided -- has been provided by our new partner, Oberland Capital. Oberland has demonstrated that they very much share our vision of securing ClearPoint as the true gold standard for neuro cell and gene therapy delivery and extending that lead for years to come.

I will now turn the call over to Danilo D'Alessandro, our CFO, to discuss the financial details of the second quarter, after which I will provide additional commentary on our progress in these 3 Fast. Forward. initiatives here in the second half of 2025. Danilo?

Thank you, Joe, and good afternoon, everyone. Looking at the second quarter 2025 results, total revenue was $9.2 million for the 3 months ended June 30, 2025, and $7.9 million for the 3 months ended June 30, 2024, which represents 17% growth versus the second quarter of 2024. As a reminder, our revenue is made up of 3 components: biologics and drug delivery, neurosurgery navigation and therapy, and capital equipment and software.

Biologics and drug delivery revenue includes sales of disposable products and services related to customer-sponsored preclinical and clinical trials utilizing our products. Biologics and drug delivery revenue increased 10% to $4.7 million in the second quarter, up from $4.3 million in 2024. This increase was fueled by a 12% increase in biologics and drug delivery product revenue as multiple pharmaceutical customers progressed in their preclinical and clinical development and an 8% increase in service revenue.

Neurosurgery navigation revenue consists of commercial sales of disposable products related to cases utilizing the ClearPoint system, the PRISM Laser System or SmartFrame OR. This revenue segment increased 33% to $3.4 million for the second quarter of 2025. The revenue growth is primarily attributable to our new product offerings and our new recent additional placements.

Capital equipment and software revenue, consisting of sales of ClearPoint reusable hardware and software and of related services increased 11% to $1 million in the quarter. The increase was driven by an increase in service revenue.

Gross margin for the second quarter 2025 was 60% as compared to a gross margin of 63% for the second quarter of 2024. The decrease in gross margin is primarily due to higher excess and obsolete inventory reserves for the 3 months ended June 30, 2025.

In the second quarter of 2025, our operating expenses were $11.2 million compared to $9.7 million for the second quarter of 2024, an increase of 16%. Specifically, research and development costs were $3.8 million for the 3 months ended June 30, 2025, compared to $3.1 million for the same period in 2024, an increase of $0.7 million or 23%. The increase was due primarily to higher product and software development costs as we invest in expanding and upgrading our product offering. Sales and marketing expenses were $4 million for the second quarter compared to $3.8 million for the same period in 2024, an increase of $0.2 million or 5%. This increase was due primarily to additional personnel costs, including share-based compensation, resulting from increases in headcount of $0.4 million, partially offset by lower travel costs and other marketing costs of $0.2 million.

General and administrative expenses were $3.4 million for the second quarter compared to $2.8 million for the same period in 2024, an increase of $0.6 million or 23%. This increase was due primarily to a higher bad debt expense of $0.4 million and higher personnel costs, including share-based compensation of $0.2 million. At June 30, 2025, the company had cash and cash equivalents totaling $41.5 million as compared to $20.1 million at December 31, 2024, with the increase resulting from the net proceeds of the note payable and stock offerings of $32 million, partially offset by the use of $8.7 million in cash for operating activities. Our operational cash burn in Q2 was $2.6 million, broadly in line with the operational cash burn of the second quarter of 2024.

With that, I'd like now to turn the call back to you, Joe.

Thank you, Danilo. The team has continued to deliver strong results here in the second quarter, both financially and strategically. From a financial perspective, we achieved record revenue, benefiting from sales contributions across all 4 of our growth pillars. Strategically, we were able to achieve key milestones that give us confidence that we will see continued growth across our entire portfolio. This is an exciting phase for the company, which, again, we've called Fast. Forward.

It's exciting because we now have multiple growth vectors taking shape all at the same time. These various vectors include: the expansion into the operating room using both MRI and CT, the expansion into the laser therapy and access market, the expansion of regulatory clearances into new geographies, the addition of multiple new biopharma partners, the addition of new products and services to offer those biopharma partners, the expansion of our site capacity for larger preclinical and GLP studies, and the progression of pharma partners into larger Phase III clinical trials and eventual commercialization of these new-to-world cell and gene therapies.

All of this is taking place against the backdrop of our strongest cash position in years and the confidence to use that capital to move each and every one of these growth vectors forward. As always, let's dig a bit deeper into this progress with regard to our 4 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 delivery. 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 successfully entered a long-term lease for our new expanded preclinical research facility and began construction late in the second quarter in preparation of adding capacity and offering new capabilities to our network of biopharma partners. We believe that this expanded facility in Torrey Pines, California, will be operational here in the second half of 2025. In addition, numerous partners have enrolled patients in global regulatory trials, including those partners who have been accepted into one of the FDA expedited review programs.

In the second quarter, we submitted our 510(k) for the SmartFlow Cannula for use with REGENXBIO gene therapy RGX-121. This submission is once again a cross-labeled combination product is being reviewed in parallel with the REGENXBIO BLA, which the company announced was accepted by the FDA for review. RGX-121 is intended for use in children with MPS II, also known as Hunter syndrome. The PDUFA date is scheduled for November of this year.

Another one of our partners, Solid Biosciences, has also communicated that they have earned expedited review status by the FDA and will begin renewed clinical strategy discussions with the FDA in support of an eventual BLA submission to treat another debilitating disease called Friedreich's ataxia, which is estimated to impact more than 5,000 patients in the United States alone. This brings the total number of ClearPoint neuro-related programs that have been accepted to the FDA expedited review up to 9.

In addition, the ICD-10 Coordination and Maintenance Committee has included new neuro infusion-specific ICD-10-PCS codes, which will be effective October 1, 2025, and will assist in tracking commercial use of the SmartFlow Cannula and eventually other device technologies directly to the brain. ClearPoint submitted the application for these new codes earlier this year.

We also announced a record number of cell and gene therapy infusions in July performed either commercially or as part of registered clinical trials, including 17 global patients treated across 11 different drug platforms. This demonstrates the continued progression of our more than 60 active partners through the regulatory approval process. We believe that additional cell and gene therapy platforms with significantly underserved patient populations have the potential to be approved within the next 2 to 3 years. ClearPoint Neuro has established or is actively collaborating with multiple partners to establish commercial supply agreements to ensure readiness for the launch of these new therapies.

Next, let's talk about pillars number two and number three, which today represent neurosurgery navigation and laser ablation. Our goal for this segment is to introduce new products that are not only precise and accurate, but are also fast, simple and predictable so that we can help hospitals increase throughput and create capacity for these future drug delivery patients. This segment saw our single-use consumables grow 33% in the second quarter, primarily driven by the introduction of our new 3.0 operating room navigation software and gains in laser ablation market share with our PRISM Laser Therapy system.

The 3.0 navigation software has been very well received during the first 3 months since FDA clearance, and the products moved into full market release here in the second quarter. This has been the fastest technology deployment in our history. And as of today, the 3.0 navigation software is already available in 35 new or existing sites here in the United States. The product is delivering on our promise of fast, simple, predictable procedures and the early clinical performance is combining accuracy with efficiency as seen in the data collected during our limited market release.

So far, we have seen average radial errors less than 1 millimeter and average skin-to-skin procedure times of around 2 hours even for bilateral deep brain stimulation procedures. This is all despite the fact that these cases were often the very first experience for these surgeons with our operating room product, and we expect additional time savings with workflow familiarity and optimization. Yet again, this efficiency is being achieved without sacrificing accuracy and precision. Also impressive was that the cumulative radiation dose of these efficient bilateral procedures was less than that of a single full diagnostic head scan. One of the surgeons even commented that with this level of efficiency and predictability, it would be possible to schedule 3 surgeries in a single day.

Another exciting theme was the early release of 3.0 surrounds the clear and unique flexibility of the system to work in both the MRI suite and in the operating room. In the second quarter, we had multiple examples where the preplanning for the surgery had taken place inside the ClearPoint software. However, the MRI magnet went down with the patient ready for surgery. In years past, the patient may have been sent home or treated with another operating room navigation system, meaning ClearPoint would have lost the case. In these examples, the ClearPoint procedure simply pivoted out of the MRI and into the operating room, leveraging all of the preplanning and preparation that had already taken place. These are cases that ClearPoint does not have to lose anymore when an issue arises with the MRI magnet.

Similarly, our PRISM Laser Therapy system workflow got a boost with the new 3.0 software, making planning and imaging more compatible with both the ClearPoint navigation system and other common workflows like robotics. We have made gains in market share despite being limited to only 3.0 Tesla-powered scanners, which we estimate represents about 1/2 of the available market today. We have since submitted the data required by the FDA to achieve compatibility with 1.5 Tesla scanners and expect to have access to the other half of the market sometime in the second half of this year. Our laser therapy case volumes continue to increase. And after 1 year of full market release, we estimate to have achieved between 5% and 10% of the neuro laser therapy market here in the United States.

And finally, moving to our fourth pillar of achieving global scale, we continue to make significant progress expanding our installed base and hospital support infrastructure as well as pursuing global regulatory clearances. In the second quarter, we activated 2 additional new sites. As mentioned last quarter, our priorities in the first half of 2025 have been executing the 3.0 and PRISM launches at existing accounts where we already have familiarity, specialist coverage and customer service enabled. In the second half, we plan to once again accelerate new site activations here in the U.S. We continue to expect total 2025 activations to be between 15 and 20 new sites, which would equate to between 11 and 16 new sites activated here in the second half. For perspective, we have already added 2 additional sites here in the third quarter and still have 7 weeks to go in Q3.

At present, we have approximately 30 potential customers in our near-term capital funnel, which we believe have a chance to activate before the end of the year, and we estimate that we can activate about half of those targets by December 31 and the rest in 2026. ClearPoint currently has regulatory clearances supporting 36 countries around the world, and this does not include additional countries where the regulatory approval process has been initiated, including Canada, Japan and China. The global reach is another significant sales tool that helps ClearPoint extend our lead in drug delivery as this expansive global product placement is yet another significant barrier to have to replicate.

Our operating expense growth in the quarter mirrored our revenue growth with an operating burn almost identical to Q2 of 2024. As a management team, we will continue to balance scalable financial performance with the appropriate investments required to build a moat around ClearPoint as the gold standard for neuro cell and gene therapy delivery. Our plan is to continue to extend our lead and be responsive to our active pharma partners who again are telling us that it's time to get ready.

With that, I would like to open up the call to any questions.

[Operator Instructions] Our first question today is coming from Frank Takkinen from Lake Street Capital Markets.

I was hoping maybe I could start with some more color around the biologic partner opportunity. Clearly, you're making good progress across the board there. I was hoping you could refresh us more on kind of revenue contribution from KEBILIDI and how that may work into the model? And then a second part to that, just thoughts around uniQure, what should we be looking for in the back half of the year in advance of that? I think it's a Q1 2026 decision date that is expected.

Yes. Yes, happy to -- thanks for the question, Frank. This very -- the first 2 opportunities that I think we have, one being KEBILIDI here in the United States and globally for that matter, as well as the REGENXBIO platform, which could be approved later this year. Those are still incredibly rare single gene mutation disorders that have very, very great results when it comes to being treated with this type of therapy, but are very, very small and remote patient populations.

It's possible that these populations are underdiagnosed, meaning that once awareness is created that there's a treatment out there that more and more patients may get the blood test done to confirm if they have one of them. However, from a modeling standpoint, we do not see those as massive revenue drivers in the near term. If anything, they're symbolic and very important milestones to kind of prepare us as we enter hospitals, as we work with pharmacy, as we make sure the pharmacists have the equipment to file these drugs appropriately. So it's kind of like a dress rehearsal for some of the larger market opportunities that follow, the first of which are an important one of which that you just mentioned being uniQure and their treatment for Huntington's disease.

So to put things in perspective, these first 2 rare disorders, the number of patients around the world are measured in the tens or maybe the hundreds compared to something like Huntington's disease, where it's estimated there's 70,000 patients in Europe and sort of Western Europe and the United States alone. And these are the patients that are actually in their 30s and 40 years old that have become symptomatics. That's not even counting the 130,000 estimated patients that are carriers of the Huntington's gene that would still be -- end up being candidates, but maybe are not symptomatic yet. So the scale, obviously, is significantly higher for something like uniQure in their particular disease state.

The other thing to consider when you think about Huntington's disease as being the next large opportunity for us is that it's sort of a race for these patients to get treated as quickly as they can. The 2-year data that uniQure has presented showed a halt in the progression or relative halt in the progression, meaning you're not necessarily restoring function that you've lost, but you're kind of stopping it from getting worse.

So as a patient, if you hear that, you think to yourself, wow, I don't want to wait 6 months or a year where the disease continues to progress and then we halt it. I want to get this done as quickly as we possibly can. So one of the things that we're working with hospital centers and regional treatment centers right now is to, again, find this extra capacity so we could add 1,000, 2,000, 5,000 additional patients as quickly as we possibly can to be able to kind of open the gates and make this happen.

To put that in perspective, it's not a daunting number. You think about 5,000 and what it would take. The math behind that is you need 20 hospitals or 20 academic centers that are each capable of having a ClearPoint room that does 1 procedure a day. So 20 hospitals times 1 procedure a day gets you to that 5,000 number. So we're not talking about an incredibly heavy lift, but it is time for these hospitals to start thinking about it because it's getting a lot closer.

And then as far as some of the other programs that are in expedited review, including Friedreich's ataxia, frontal temporal lobe dementia, Parkinson's disease, epilepsy, et cetera, those are all represent significantly larger opportunities than again, these rare childhood disorders that we're working with today.

Got it. That's very helpful. And then maybe on ClearPoint 3.0, it sounds like you're having strong receptivity to that as well. Where do you stand in maybe rolling it out to the rest of the installed base? And maybe any metrics you can provide around the contribution that this has driven to the model and the margin impact of that would be great to understand.

Yes. So I don't -- as of today, I don't believe there's any margin impact. So it's still a very profitable procedure to us. The capital component is significantly less. So if you think about a new hospital that wants to start using ClearPoint for the first time, but maybe historically, they didn't have access to an MRI magnet. The only piece of capital they need is the ClearPoint workstation and the ClearPoint software. You don't have to purchase titanium instruments. You don't need new head coils, you don't need an MRI monitor.

So the lift to get that in is significantly less, and it allows us to start using the disposables or consumables right away, which again, those margins are very much in line with the MRI ones. In fact, it's the exact same MRI kit that now is labeled with both MRI and CT compatibility. So from an inventory standpoint, a hospital can carry that one product on their shelf and do an MRI case one day and a CT case the next day with that same car level inventory. So that's been very well received.

I would say, I think we have 35 is what we announced, 35 sites that now have the 3.0 or 3.01 software installed. And of those sites, I believe there's 21 or 22 that have already done procedures. So again, it's our -- kind of our fastest deployment that we've ever seen. And again, we're also targeting these very high-volume academic centers so that we can increase -- move -- maybe move some of their DBS procedures out of the MRI and into the operating room with this product so that, again, we're creating capacity for these clinical trials of drug delivery and eventually the commercial cases as well.

Next question is coming from Anderson Schock from B. Riley Securities.

Congrats on all the progress.

Thank you.

Yes. So first, on your cell and gene therapy partners, will all these therapies be delivered under live MRI? Or can they also be delivered in the OR under CT guidance?

Yes, I would say it depends. So not all of them will be done under live MRI guidance. And it's important to recognize that there's a number of different products in our ecosystem that we're selling into these procedures. right? You've got the cannula itself. So this is the route of the administration, which is touching the blood of the patient. It's touching the drug. It has very, very precise and controlled and studied flow rates, viscosity rates, et cetera. So all of those things are crucial.

What we have seen so far is that the combination devices group at the FDA or other notified bodies have seemed to establish that they plan to approve the drugs and the cannula as combination products. So what I mean by that is if you look across those 60 partners, our expectation is that pretty much all 60 of them would be using ClearPoint technology at least in the form of the cannula, which likely would be approved as a combination device. So that's one element of what we provide.

The others are, I think, a little bit more technology and location dependent. So we have some of those partners who really want to maintain control of the surgical process. I think most pharma companies recognize that one of the biggest risks that we have here is to not only get approval for the drug, but once the drug is approved, to make sure that we don't go too fast and too loose here, where 1 or 2 surgeons that are using a specific technique can potentially cause a disruption for the entire market because they don't get the results and for a drug that could cost hundreds of thousands, maybe even millions, insurance companies are going to ask a lot of questions if they've paid for these procedures and they're not getting the results that they expect.

So there are many of our partners that have said, "Hey, at launch, we want to have as detailed a surgically controlled process as we can." And that comes often with the ClearPoint MRI guidance because you don't only have the consistency of ClearPoint preplanning and software and hardware during the procedure. But again, you can actually see the drug being infused and it becomes an important part of the quality control process, right? So that is one element. And I'd say a good portion -- I don't want to put a percentage on it, but it's -- many of our partners, at least at this stage, are planning to use some form of MRI guidance with ClearPoint.

There are, however, additional partners who maybe don't feel that they need the MRI guidance right out of the gate or they want to study the ability to do it within the MRI in one subset and in the operating room with another subset. And most commonly, it's not gene therapy programs, it's cell therapy programs where you're injecting fewer -- a lot less volume. So it's harder to see the infusion on MRI, in which case, if you're not getting as detailed a quality control sort of measurement at the very end of that, then maybe the speed of being able to do it in the operating room is a little bit more appropriate.

So we really have a mix, but these companies are our partners not just for navigation, they're for the cannula, they're for our clinical support, they're for our preclinical research that we do, they're for our GLP capabilities that we're adding, they're for our predictive modeling software. So even if someone chooses not to use the navigation portion of the portfolio, there's still many other products that are certainly being reviewed and could potentially be sources of revenue.

Okay. Got it. That's helpful. So I guess with the majority -- it sounds like the majority will be using MRI guidance. I guess, how should we think about the bottlenecks of MRI suite availability and how that will impact the launch of these therapies?

Yes. It's kind of what I was mentioning around Frank's question as well is how do we create the capacity inside of the MRI scanner. So one key approach for us is to do exactly that, to create faster, more efficient procedures in the operating room today that still allow a hospital and a team to be familiar with ClearPoint. So as a quick reminder, if you're using the ClearPoint software in the operating room, it is the same hardware and the same software as you would use in the MRI.

So every case that you're doing today in the operating room your entire team is practicing for what that procedure is going to be like in the future in the MRI using drug delivery. So it's kind of like a proving ground. It's a way to increase hospital proficiency and to streamline those procedures where a typical MRI procedure in the past might be 3 hours. As I mentioned on this call, we're getting it down to 2 hours here in the operating room. If someone does 100 of those procedures, can we get down to 1 hour or 90 minutes or something like that. So improving efficiency to not only create more MRI time and operating room time, but also more physician capacity to do the procedures is one key element.

Another key element is the expansion of MRI capabilities. I mean there are absolutely more MRIs being installed. Siemens, for example, has a Free.Max system, which is a half Tesla magnet that is much easier to install in the hospital. There's much -- a lot less shielding required. We have done all of our preliminary testing on this kind of next-generation lower-cost magnet. And it gives us all the confidence that we need that we can perform ClearPoint procedures in that. So in the future, if you're building out a new wing of a hospital to do these types of things, it's possible and practical to have these sort of lower power, lower-cost magnets that still can perform what we would need them to do. So that's another element where these launches and these kind of big iron companies are sort of listening to this need as well.

And then the third one is to say, well, how do we make sure that if we treat a patient in the operating room without MRI guidance that we can still give them the best possible chance for success. And this is everything we're doing with our AI platforms, including Maestro, including our partnership with New England Scientific in biophysical modeling, where we can actually take our predictive model of our software compare it directly to the actual results of the MRI-guided procedures that are used in the clinical trials. And if we can show that the model, in fact, predicts with a very high correspondence of what the drug did in those first 100 patients as part of the clinical trial, then you can actually say, "Hey, yes, we can do it in the operating room, because we understand where the drug is going to spread." Provided we still get that sub-millimeter accuracy that we do with ClearPoint. So there's kind of 3 different ways we're working right now to go ahead and expand the capacity and make sure the MRI itself is not a bottleneck.

Okay. Got it. That's very helpful. And then do you have any updates on the timing of GLP compliance at your expanded preclinical research facility?

I think we'll have a good sense of that pretty quickly. So I'm not ready to commit to the GLP portion. It's possible that we could do our first GLP study this year, but I think it's going to be kind of close if it happens December time frame or in Q1 of next year. But what I would say is we've hired the people required. And now we are really just getting the facility and getting the quality system for this new facility up and running so that it meets all the necessary accreditations to be doing this kind of preclinical work.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Well, thanks again to everyone for joining today's call. We have spent the last 10 years building a strong foundation. And in 2025 is 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 with these new technologies. Good night, and thank you for your attention.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.