ClearPoint Neuro, Inc. (CLPT) Earnings Call Transcript & Summary

Greetings, and welcome to ClearPoint Neuro Third Quarter 2026 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. Comments made on this call may include statements that are forward-looking within the meaning of the 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 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. I would now like to turn the conference over to your host, Mr. Joe Burnett, Chief Executive Officer. Thank you. You may begin.

Thank you, Rob, and good evening to all the investors, analysts and partners joining us for today's ClearPoint Neuro third quarter earnings call. Our company remains dedicated to developing therapies that can help restore function and improve outcomes for millions of patients worldwide living with serious neurological disorders. We are thrilled to have your continued interest and support as a part of this journey. In the third quarter, we continued to make substantial progress with our neuro drug delivery strategy, focused on establishing ClearPoint as the gold standard for cell and gene therapy delivery. We have spent more than a decade building a leadership position in this market, and we are committed to maintaining and expanding that lead. This strategic progress includes pipeline development for our comprehensive and uniquely positioned drug delivery ecosystem, including AI segmentation and modeling tools, periprocedural navigation software and frames, surgical robotics, laser therapy and access drills, cannulas and new routes of administration, focus ultrasound and confirmatory drug infusion software. In addition to our investment in this product portfolio, we continue to expand our ClearPoint Advanced Laboratories drug discovery facility in Torrey Pines, California, adding capacity, new capabilities and services. We also stand ready to support our more than 60 active biopharma partners who continue to announce both data readouts and global clinical trial initiations, including multiple Phase III studies that are either enrolling or expected to initiate in 2027. We look forward to the next regulatory milestones for our partner, uniQure's BLA submission to the FDA for AMT-130 to treat Huntington's disease during the weeks and months ahead, which could result in the very first FDA-approved gene therapy for this terrible disease. To complement the strategic progress, we have made financial progress as well in the quarter. growing overall revenue by 36% compared to operating expenses, which grew 23%, a result that reflects the scalability. This result was possible due to our continued integration activities post the IRRAS acquisition and the reorganization of our clinical field team to get ready for Phase III trials and eventual drug delivery commercialization. In order to fund these hiring activities in support of our clinical field team expansion and the start-up costs of our CAL expansion, we used our existing ATM facility for the first time, generating net proceeds of $22 million and ended the quarter with cash and cash equivalents of $46.2 million. This gives us the balance sheet flexibility to continue advancing our comprehensive drug delivery ecosystem, including robotics and focused ultrasound and to prepare our field team for new commercial product launches that we expect in 2027. I will now turn the call over to Danilo D'Alessandro to discuss our financial results, after which I will provide a bit more detail on our 4-pillar growth strategy. Danilo?

Thank you, Joe, and thank you all for joining us today. Looking at the third quarter 2026 results. Total revenue was $12.1 million for the 3 months ended September 30, 2026, and $8.9 million for the 3 months ended September 30, 2025, which represents 36% growth versus the third quarter of 2025. 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. Biologics and drug delivery revenue increased 11% to $4.9 million in the third quarter, up from $4.4 million for the same period in 2025. This increase is primarily attributable to higher service revenue performed at ClearPoint Advanced Laboratories. Neurosurgery navigation revenue consists of commercial sales of disposable products related to cases utilizing the ClearPoint system, the Prism laser system and IRRAflow. This revenue grew 59% to $5.4 million in the third quarter of 2026 from $3.4 million for the same period in 2025, driven primarily by additional revenues due to sales of the IRRAflow product, which we acquired in connection with our acquisition of IRRAS in the fourth quarter of 2025 and in conjunction with growth of our legacy neurosurgery products. Capital equipment and software revenue, consisting of sales of our reusable hardware and software and related services increased 68% to $1.7 million in the quarter from $1 million for the same period in 2025 due to an increase in the placements of ClearPoint navigation systems, Prism laser units and IRRAflow control units. Gross margin for the third quarter of 2026 was 58%, a decrease of 5 percentage points compared to 63% in Q3 2025, primarily due to overhead costs at the new CAL facility and additional amortization expense of acquired intangible assets, partially offset by a decrease in other cost of revenue. Research and development costs were $4 million for the 3 months ended September 30, 2026, compared to $3.5 million for the same period in 2025, an increase of $0.6 million or 16%. The increase was due primarily to higher personnel costs of $0.6 million. Sales and marketing expenses were $5.5 million for Q3 compared to $3.8 million for the same period in 2025, an increase of $1.7 million or 44%. This increase was due primarily to additional personnel costs of $1.2 million, an increase in travel costs of $0.2 million, resulting from the expansion of our clinical and sales team and additional amortization expense of acquired intangible assets of $0.2 million. General and administrative expenses were $3.8 million for the third quarter, an increase of $0.3 million or 7%. This increase was due primarily to increases in occupancy costs of $0.5 million, information technology and software costs of $0.2 million and general corporate costs of $0.1 million. These were partially offset by a decrease in bad debt expense of $0.6 million. In the aggregate, our operating expenses in Q3 were $13.4 million, a meaningful decrease from the nearly $17 million in OpEx last quarter. As of September 30, 2026, we had cash and cash equivalents totaling $46.2 million as compared to $45.9 million at December 31, 2025. The cash increase was primarily due to the net proceeds of $22 million from the at-the-market equity offering program, partially offset by the operational cash burn of $20.1 million through Q3 2026. I'd like now to turn the call back to Joe.

Thank you, Danilo. I will now provide some further details organized by our continued 4-pillar growth strategy. Starting with pillar #1, biologics and drug delivery, the most noteworthy headline has been the BLA regulatory submission by one of our partners, uniQure for their AMT-130 program to treat Huntington's disease. We continue to support uniQure on the device-related aspects of the submission and our device documentation is now on file with the agency. Subject to the FDA's review, we expect the next 2 regulatory steps would be: first, that the FDA would formally accept the AMT-130 submission for review; and second, that ClearPoint would submit a companion 510(k) for our product to address its specific use with AMT-130. This is the same pathway we pursued for KEBILIDI, the only other neuro gene therapy that has received FDA approval for administration directly to the brain. The duration of these 2 regulatory pathways would likely take place in parallel with the goal of a simultaneous approval of both the drug and for our device that enables the delivery of the drug. In addition, we expect continued enrollment as well as the initiation of multiple Phase III partner trials in the next year. As a reminder, Phase III and confirmatory trials are often substantially larger from a site initiation and patient enrollment perspective. While Phase I studies may take place in under 15 patients and only at a handful of sites, these larger randomized trials may include up to 200 patients and around 20 sites. As previously mentioned, we have reorganized and invested in a strong clinical support commercial organization, which we are training to be ready for this increase in cell and gene therapy patients. As I will mention later, demand for our navigation systems and capital equipment increased during the quarter, reflecting the growing recognition among neurosurgery departments that ClearPoint is a critical enabling technology for participation in the rapidly expanding cell and gene therapy clinical trial market. Revenue and services directly performed at the CAL facility continued to expand, launching new capabilities through both equipment and the hiring of talent, including PET and SPECT tracers as well as radiopharmaceuticals. We will continue adding equipment and capabilities this year and next as we build a boutique yet comprehensive neuro-focused drug delivery program, which also includes potential BCI partners that we have worked with in prior years. Our goal is to offer a set of neuro focused services that is differentiated in North America once the build-out is complete. For pillar #2, neurosurgery navigation, we saw our largest capital sales quarter in our history. We believe this highlights both the demand by large academic centers to get access to ClearPoint in preparation of drug delivery trials and commercialization as well as interest in our ICT operating room solution that is more practical for routine DBS and biopsy cases. Early experience with our ICT solution was recently published in the Journal of Stereotactic and Functional Neurosurgery and demonstrated both procedural efficiency and targeting accuracy. These findings suggest that with ClearPoint in the operating room, physicians do not need to trade one objective for the other. You can have both speed and accuracy, particularly in bilateral procedures, including DBS and drug delivery. We also continued development of our robotic platform and are increasingly confident in the need for a company like ClearPoint to deliver a dedicated cranial robot where both hardware and software decisions are driven by the requirements of cranial neurosurgical procedures rather than broader surgical applications. We will continue to work closely with both neurosurgeon teams and our biopharma partners to build a system with all the functionality required for fast, accurate, multi-trajectory cases. This also includes unique disposable accessories like bolts and z-axis adjusters that are specifically designed for the required flexibility during the infusion itself. For pillar #3, laser therapy and access, I will focus on one exciting milestone, which we just announced in our press release earlier today. ClearPoint is an industry partner in a 5-year competitively awarded NCI R01 grant led by Dartmouth Health to advance MR-guided laser therapy for spinal metastasis. This program runs from benchtop through large preclinical subject validation and into a clinical trial using the ClearPoint Prism system. ClearPoint contributes technical, software development and procedural expertise to the program. This is early-stage research that supports our spine laser therapy road map. We believe spine LITT could represent a meaningful new opportunity for ClearPoint, potentially addressing more than 10,000 patients globally who today may require highly invasive open surgery before radiation. The standard of care open procedure can involve substantial blood loss, reconstruction and a prolonged recovery that may delay systemic cancer therapy. A minimally invasive MR-guided approach could significantly reduce that procedural burden. Prism, while not currently available for spinal use, may be particularly well suited for this application with longer 15- and 25-millimeter ablation windows, a non-cooled platform that simplifies workflow and rapid imaging updates for real-time monitoring and control near this very critical anatomy. While our Prism laser therapy system is third to market for cranial applications, spine could be a very different story where we may have first-mover advantage. If successful, we believe our unique product features will provide a compelling competitive advantage, enabling us to capture a leadership position in this emerging spinal tumor market. We believe the spinal LITT market represents a substantial long-term opportunity and over time, could rival the size of cranial tumor and epilepsy markets for our Prism platform. Finally, pillar #4, our intracranial fluid management. We are now more confident than ever that the IRRAflow product is well positioned to become an important advancement in neurocritical care. We are targeting 5 key product and clinical milestones in 2027. These include launching our Shoreline software, our Dart catheter and our next-generation forward tunneling catheter as well as presenting results from the randomized ARCH trial and pursuing a specific on-label FDA indication for subdural hematoma, one of the largest potential indications for the IRRAflow product. We believe this broader portfolio and supporting evidence will justify the continued measured expansion of our clinical account manager and specialist teams so that these company representatives will be ready and productive by the time these new products and data are released. In addition to the positive direction of our 4-pillar growth strategy overall, the company made financial progress compared to the second quarter growth as well. Revenue grew 36% year-over-year compared to the operating expense growth of 23%, which reflects progress towards our additional scale. The primary drivers of this improvement versus last quarter are: number one, the results of the commercial reorganization, which now prioritizes clinical case support and is reflected in a more than 15% reduction in sales and marketing expenses compared to the second quarter; and number two, the continued integration of the IRRAflow product and team as the synergies start to materialize into our P&L. As Danilo mentioned, we accessed our existing ATM facility for the first time in Q3, and we ended the quarter with $46.2 million in cash and cash equivalents. We believe the time was appropriate to use our ATM for a few reasons. First, the start-up cost to get the CAL facility operational require some front-loaded investment in construction, equipment and hiring. These investments will start to recover once we launch our full scope of services in the months ahead. Second, the continued integration and expansion investment of the IRRAflow product portfolio, including the 5 new product and clinical milestones that we now expect to deliver in 2027, which will unlock significant value. The time to bring these programs to completion was in parallel, not in series, so we wanted to make the investment now to fuel this portfolio growth in 2027 and beyond. And third, the potential of both our robotic and focused ultrasound systems, which this new capital will allow us to invest simultaneously and not have to choose one over the other. As we have said previously, our priority is to maintain our leadership position in neuro drug delivery, which is unwavering and multiple market factors and opportunities require this investment now. The cell and gene therapy market has become exceptionally dynamic with new BLA submissions, confirmatory and Phase III clinical trials, significant program consolidation and continued acquisitions by large, well-capitalized partners and has created a timely opportunity to strengthen our advantage. I will now open the call to any questions from our analyst team.

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

I've got two. I'm going to ask them both upfront and then hop in queue as I'm on a few calls. Joe, maybe the first one, obviously, you've got a lot of partners with different assets and development on different time lines. I was hoping maybe you could help us kind of stack and rank some of those upcoming catalysts. I'm sure it's a conversation for a longer call, but maybe thinking through kind of like first half '27, second half '27, what are the important milestones that were -- that we should be watching for from your partners to better track the biologic and drug delivery opportunity? And then as my second question, you've talked about in the past kind of some front-loaded investment expected from the field in anticipation of some of these drugs getting to market. Can you maybe talk through if any of that has started to materialize or if you're starting to hear anything in the market about some of those investments?

Yes, absolutely, Frank. Thanks for the question as well. So I'll start with the first one. I do want to provide an important caveat here is that ClearPoint, the way that we work with our partners, we take our confidential information very, very seriously as well. So we really don't want to be the primary resource for folks to get an understanding of where our partners happen to be in their regulatory process or their development process. It puts us in a position where we are then tracking 60 different companies and have to figure out private, public, disclosed, undisclosed, what information that we want to share. So our primary reference is always going to be pointing just right to our partner to simply say, hey, whether it's on their website or if the information is in some sort of public document or a press release, that's always going to be the go-to for us. What I would tell you to your question about what's happening in the near term and what we sort of are expecting here, there's 2 that really -- 2 buckets, I'd say, that really materialize the most. The first one is, again, the uniQure BLA submission, which took place almost 2 months ago at this point. And there have been a number of clinical updates that have taken place since then. We do still expect a decision to be made by the FDA at some point here in the next month or so, where they would either formally accept or reject or in some fashion, delay that BLA submission. If in a best case scenario, the BLA would be accepted. As we mentioned, at that point, we would submit our companion 510(k). And if you look to the limited experience we have with the FDA in these neuro gene therapies, the expectation would be a final formal decision sometime 6 to 8 months after the acceptance of that BLA, again, if everything went perfectly. So that would put a potential approval for the very first neuro gene therapy to treat Huntington's disease sometime middle to second half of next year, again, if everything went according to plan. So that would obviously be an incredible milestone, I think, for the entire gene therapy space, the Huntington's community, certainly for uniQure, certainly for ClearPoint as well. And as we mentioned, we have resources that we are hiring and training now to prepare for such an event, whether the product is commercially approved next year, and we're supporting those cases or if there's some delay to that time line, as I mentioned there, putting us in a position where that same clinical team is supporting potentially a uniQure parallel confirmatory study, which they've announced could be up to 200 patients, all the way to supporting all of the other Phase III trials that are either enrolling today or we're expecting to enroll in the future. So that's really the second bucket I would consider, Frank, is that independent of a commercial drug delivery of a large population gene therapy like AMT-130, there's also numerous partners that have either started or will start initiating their Phase III trials in the next 12 to 15 months. What's important about a Phase III trial is, again, you're going from maybe 3 to 5 sites up to 15 to 20 sites. And it's interesting, we have a number of different partners. I'll use Parkinson's as an indication. I think epilepsy would be another one, where it's a very, very large underserved patient community that's looking for a better treatment than is what is available today. They -- if you're a hospital, a leading clinical trialist center, you can't accept clinical trials for 5 or 10 different Parkinson's studies. It puts you in a situation where now any Parkinson's patient that comes in, as a hospital, you have to start playing favorites as to which one of these trials you're going to enroll them in. So some of our partners are now looking for many new sites from which to install ClearPoint, get access to the technology and use that new site as an enrolling center for their Phase III trial. So that's one of the things that we have very clear examples in our capital sales results in the third quarter as well as our capital sales funnel that we expect in Q4 and for the duration of 2027, where it is these new sites that have realized, hey, I probably need ClearPoint to participate in some of these existing studies. And it's no longer just the functional neurosurgeon reaching out to ClearPoint. It could be the chair of neurosurgery. In some cases, it could even be the C-suite that's helping to move the process along. So big picture for us is we're -- we never want to be the bottleneck with the advancement of this technology. So we're hiring, we're investing now so that our installed base grows and we have a great clinical specialist support team out there that's trained not just in navigation, but also in drug delivery broadly so that in any circumstance that the site needs ClearPoint's help, we can support not just the partner, but the hospital itself. So sort of long answer for the first question, but I'll move on to the second one, which is some of the investments that we're seeing. And part of it is really tied to -- I'll give one example anyway that's tied to what I was just discussing in drug delivery, and that has to do with robotics. If you go to a hospital today, it's very common, you would walk through the hallway and you might see 2 or 3 different neurosurgery robotics that are there that are used possibly for different indications or at different times or sometimes and many times, just very underutilized today. If we were just developing another neurosurgical robot, we wouldn't be as excited as we are for the ClearPoint version that we're in development right now. And the reason for that is a couple of different points. The first one is that we are focused pretty much 100% on cranial workflows, meaning things that are done in the skull itself versus many of what I would say our future competitors' focus seems to be on is spinal applications. So there are absolutely concrete decisions you would make if you're building a cranial robot versus a do-it-all neurosurgery robot, including spine. And because spine historically has been the largest part of a neurosurgery budget, it's natural that some of these large robotics companies would maybe do a new software release that's 90% improvements for spine and 10% improvements for cranial. We've sort of flipped the script there where we are making all of our design decisions on exactly what our pharma partners would need to do to speed up these multi-trajectory cases, preload them with trajectories that are specific to some of our workflows, complement them with multiple accessories, as I mentioned, z-axis adjusters, different bolts to provide flexibility during the infusion, so that we would actually have a unique solution that is available when these new drugs start to come to commercialization and are looking for a way to scale beyond just the MRI suite that most of our procedures are done in today, right? So that's one example where an investment -- we're making the investment because we feel we have a true right to win in this space, not just to make another me-too product. The second one I would point to is on focused ultrasound, which is a combination with our robotic platform. Our goal here is to move drug delivery for using focused ultrasound and blood-brain barrier destruction out of the MRI suite entirely and into the operating room and to an infusion clinics. To do that, we need to manipulate our transducer in a way that's very different than other focused ultrasound systems that are available today. And our robotic platform is the mechanism for software navigation, targeted movement, anything you need to operate within the CT space. So this one investment, we believe, is not only going to unlock faster, simpler, scalable procedures for drug delivery, but it's also going to unlock focused ultrasound for us, which these things we can, in fact, start to monetize preclinically at the CAL well before we ever get FDA clearance for these things. So that's -- if you think about preloading investment, that's an example of when I can at least share with you today, Frank.

Our next question comes from Mathew Blackman with TD Cowen.

Can you hear me okay?

Yes, I got you, Mathew.

Great. Maybe I'll start with a question for Danilo. I just want to put a little bit finer point to the extent you're able to share. Obviously, healthier balance sheet. You've got a lot of stuff to invest in. Can you just give us a sense of how we should, in at least general terms, think about sort of the burn trajectory over the next 12 months, even if not an absolute number, maybe just sort of relative to what your traditional burn has been? And then I've got one follow-up question for Joe.

Yes. No, I think, Mat, so we obviously have some of these investments that Joe laid out. There is going to be in the coming 12 months more related to something that we didn't have in the past, which was a little bit tied to CapEx. So there will be some capital expenditures related to the CAL that we expect in the coming 12 months, and that will land. In terms of the operational burn, like also Joe mentioned earlier, we're targeting now to continue on the path of operating leverage where we see that the revenue outstrips the growth of the OpEx so that we can continue to gradually reduce the burn in the coming -- quarter-over-quarter in the coming 4 to 6 quarters. I'd say when you look at, in particular, the first half of this year, it was a little heavier than usual, just given the activities related to the IRRAS integration, which were, in many cases, one-offs that we had to take. Imagine contracts that were not cancelable and all of those kind of things where we were just working to get the synergies in place. And already in the third quarter, we see that our OpEx has been reducing meaningfully compared to the OpEx in Q1 and Q2 of 2026.

Okay. So -- and these are my words, I'm hearing maybe a little bit more burn than what you've done historically over the last -- the next 12 months, but certainly nothing of significant magnitude. You're not going out like drunken sailors is kind of the message I'm hearing.

Yes. We don't drink.

And then, Joe, I was intrigued by the spine LITT update. I was hoping maybe just 10,000 cases worldwide. Can you just remind us what the revenue per case as we think about however far down the road this may be, what the revenue opportunity for ClearPoint could be? And then on the regulatory side, to get a label, I would assume you would need a label to commercialize. Can you use any of the data from the NCI study to support a label? Is it something you have to do independently? Just any sort of help on sort of the pathway to get a label for spine metastases -- for spine tumors.