NeuroPace, Inc. (NPCE) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the NeuroPace Investor Day. This is our first Investor Day, and we're very excited to have you all with us. A lot of familiar faces in the room. We really appreciate you taking this time to learn more about the NeuroPace story. We have an exciting program for you today. We hope you'll come away today knowing more about the company and being just as excited about our future as we are. So let's take a quick run through of our agenda. In the first part of the day, you'll hear background about the company, our technology, our results in treating patients with focal epilepsy. And then you'll hear from a couple of special guest speakers as well as an individual who is living with the RNS system every day. After that, we'll have some Q&A. We'll have our panel come up. Then we'll take a quick break. And after that, in the second part of the day, we'll be more focused on the future. We'll talk about our clinical product and market development efforts. We'll have another special guest speaker. We will give 2025 guidance and then conclude and lunch will be available outside the room. So let me introduce the folks you'll be hearing from today. We are absolutely honored to have a number of physicians speaking with you today, all of whom are luminaries in the epilepsy field. First, we have Dr. Vikram Rao, epileptologist at UCSF in San Francisco. Vikram has lots of experience treating people with epilepsy. We also have 2 neurosurgeons who will be with us remotely, Dr. Mark Richardson from Mass General in Harvard and Dr. Sameer Sheth from Baylor College of Medicine. And our very own Mike McKenna will share his journey with epilepsy and treatment with the RNS system. You'll hear from members of NeuroPace management. I think many of you know our CEO, Joel Becker, who joined us. Joel joined us about 1.5 years ago with significant executive experience at big name companies that you all know well. I'm Rebecca Kuhn, the company's CFO. You'll hear from Dr. Martha Morrell. Marty is also a luminary in the field. In addition to being NeuroPace's Chief Medical Officer, she is also a professor and epileptologist, seeing patients at Stanford University. We have Dylan St. John, our Chief of Commercial and Development, who is holding on the forward at home back in Mountain View. Katie Keller, our VP of Marketing. Katie is relatively new at NeuroPace. She brings significant experience in developing markets in the cardiac field as well as neuromodulation. And we have Brett Wingeier. His last name is a bit difficult to pronounce. I hope I did that okay. Brett was rehired fairly recently, but Brett was actually one of our early employees who was instrumental in developing the RNS system and analyzing our clinical data back in the early days. So with that, I turn it over to Joel.

Thank you, Rebecca. I'd also like to offer my welcome and appreciation to everybody who's here, some familiar faces and some new faces. Thanks, everybody, for taking the time to be with us. In particular, I'd also like to recognize members of the NeuroPace Board that are here with us today. Frank Fischer, our Board Chair. Thank you, Frank, for being here as well as a couple of very valued advisers from the Board, Rakhi Kumar as well as Uri Geiger, folks we rely on a lot. And so we're thankful for their commitment to be here with us today, too. My plan in this section of the agenda is to lay out the business, where we are today and where we're headed, both currently as well as part of our long-range plan. So that's where we're going to spend the day. We're going to tell you a little bit about the business, but we're going to really focus on where we're headed strategically and what those plans look like and how we're both in a strong fundamental position as a company as well as really well positioned for growth here over the next 3 years, which is the long-range plan period that we'll be talking about today. So with that, we've got a lot to cover. I'm going to jump right in. Of course, starting with the forward-looking statement slide. Please everybody recognize and pay attention to those elements. Starting and talking to the business and introducing NeuroPace, it's important that we start with what is really the foundation of the business and what animates and catalyzes everything that we do, and that's the mission of the business. And you can feel when you talk to folks about NeuroPace, you can feel the sense of stewardship that people have toward what we do to help the patients that really need it and what we can do with the RNS system. It's one of the reasons we're so excited about today is the opportunity to tell you the story about RNS and where we're headed. I was talking with Dr. Morrell earlier, how excited we are for today for the opportunity to tell you that story and it really starts with how excited we are to be able to help fulfill the mission of the business, which is to transform the lives of patients that are suffering from debilitating seizures. And it matters if we do so, and we're in a strong position to get at it. So we've got a lot to cover. I'm going to jump right in. As I mentioned, we start with the business in a strong fundamental position. Those fundamentals have been hard won over a number of years, but are now in place and really address a significant unmet need. So the unmet need that we recognized in the mission of the business discussion is one that is then evidenced here with a large under-penetrated market. So our core market in excess of $2 billion for the patients that go through comprehensive epilepsy centers every year from an incidence perspective and north of $50 billion in the total addressable market when we think about the number of patients that are drug-resistant epilepsy patients and the treatment gap that exists today. You'll hear us talk about the treatment gap. We'll talk about the treatment gap in terms of what that means for patients, what the opportunity is then to help those patients with the business and then what we're set about doing about it in terms of the key initiatives we have underway. And in addition to the solid fundamental of an unmet need in a large market, we have a very solid fundamental in terms of the differentiated unique nature of our technology. We have the only closed-loop brain-responsive neuromodulation system. It's a few long words, but there's a whole lot that goes behind that, and we're going to spend the better part of the day unpacking what that means in terms of technology differentiation, data development and then opportunities that, that affords us. So speaking of unique technology, why do we think it's differentiated? Well, it shows up in the data. The clinical evidence shows, and we've got more of it coming, and we'll spend a whole section here today talking about the differentiated outcomes that we continue to see over time. We'll talk about additional data, some things that we haven't talked about before that you'll hear about today as well as some forward-looking trial work that we're planning on as well. So those are the fundamentals, but the fundamentals are then accentuated with the execution focus that we have in the moment. So we've been generating some momentum, really focused on revenue growth, gross margin and operating expense discipline. We've got the flexibility from a balance sheet perspective to support our operating priorities. And we've got a number of future growth opportunities that we see and that we'll spend time on as well. So as we think about that, where have we been? So most recently, 2024 review, I saw some of you at JPMorgan recently. We talked about some of this, but not all of it. So do pay attention. There is new stuff. And starting with a revenue growth profile in excess of 20% in 2024. We've preannounced the range. We haven't given the full readout yet on Q4, but the range is $79.4 million to $79.9 million, growth in excess of 20%, 21% to 22%. And if we adjust for that, if we hold for the sales in 2023 that we got from the implants associated with the NAUTILUS trial, growth was actually over 25% in the overall business. So a strong growth momentum that accelerated throughout the year. We grew faster in the second half of the year than we did in the first half of the year. And so we've got some good momentum from a top line perspective. And we held on to the discipline with gross margins at the high end of the range as well as operating expenses at the low end of the range. From an operating perspective, we also executed with regard to our market development strategies, new prescribers at record highs for the year and every quarter throughout the year. So we continued to retest increasing numbers of active prescribers, began to demonstrate momentum in the second half of the year with regard to our site of service extension with Project Care. And then it might seem like a while ago, but it was only in Q1 of 2024 that we completed implants in the NAUTILUS trial. And we'll talk a fair bit this afternoon about a bunch of the product development work that we've been doing as well, where we've initiated development with the software in our AI-enabled software tools that we're really excited to tell you more about. So some good momentum in '24 and we're just getting started. And so what we're getting started on is where we're going to spend the rest of the day. And starting with where are we headed. Well, where we're headed with the business, the vision for the business is to be the recognized leader to be the standard of care in the space for drug-resistant epilepsy patients and to fully develop the potential of the system that we have today, both for epilepsy and beyond. So that's where our focus is as an organization. When we think about that focus, there are really 3 key pillars that we want you to keep in mind. One, it's a growth story, both a market expansion, a market growth story as well as a revenue growth story. We've got indication expansion, site of service expansion, patient and referral network expansion as well as increasing adoption and utilization in our current Level 4 comprehensive epilepsy centers that are all drivers that are underway during the plan period. They're all in flight today that are going to allow us to expand our markets and increase our revenue profile. So it's a growth story. But it's a growth story with discipline and financial discipline that you've seen from us in terms of focusing on gross margin improvement, executing from an operating expense allocation perspective and then both investing in our organization, but also getting leverage from that investment as well, in particular, in our commercial team as we expand indications, that same organization and those same call points allow us to expand and get leverage from our commercial organization. And finally, it's an execution story. We are absolutely focused on execution. One of our core values is results orientation. And so we've got a lot of potential in front of us, but we're also very focused on the discipline that goes along with executing on that potential and then operating execution. When we think about the growth initiatives that really support that growth story, we're going to spend time today talking about the 3 areas of development that are underway to really fund that growth. Clinical development, product development and market development. From a clinical development perspective, we're going to talk about some new data. We're going to talk about our post-approval study data in our adult focal population that has now been submitted to the American Association of Neurology for publication and presentation. We're going to give you the first tour of that data today, those of you who are in attendance. We'll talk to you about NAUTILUS and give an update on status with regard to completing follow-up in NAUTILUS. We're also going to talk to you about a new strategy and approach that we have for expanding indications into pediatrics. We haven't talked to anybody about that, but we've got an approach for further expanding into the significant segment of the pediatric focal market that we call our NEST initiative. We also haven't talked about very much and are going to spend time talking about our software development program and our annual cadence that's set up in the plan with AI-enabled software tools, remote programming and our next-generation platform to enable efficiency, easy use and increased efficacy for the platform. Those are all new things that we haven't talked to you about at all. And one of the reasons we're excited about being here today is to tell you about our product development platform that we've been working on as well. And then finally, our market development efforts. Sales force expansion, site of service expansion and direct-to-patient expansion are all things that we'll cover as part of that. When you roll it all up, this is what the plan looks like over '25 to '27, a series of increasing and reinforcing growth initiatives that over the long-range plan, over the period of '25 to '27, we plan and have targeted to exceed 20% CAGR over the plan period. And as you can see here in '25, we've got multiple drivers that we'll spend time talking about, including our core customers, expanding awareness and education as well as new product launches and clinical trial submissions; in '26, expanding on that with launches into IgE and pediatrics as well as further launch into the product development portfolio and then in '27, really accelerating. So further penetration into those segments, launching remote programming as well as enhanced user interfaces and continuing to build on the growth that's in place today. Today's business generated over 20% growth in 2024. We're fixing to continue to do so and to accelerate over '25, '26 and '27. And so we'll spend the balance of the day really putting some color around each of these things for you. In the end, these are our objectives over the next 3 years. To be the recognized market leader with revenue growth in excess of 20% CAGR over the plan period, execution on indication expansion into the meaningful segments of drug-resistant epilepsy patients. If there's a meaningful segment, we want that segment covered by RNS. And we're going to develop the data and the indications to do so, really leading with IgE, idiopathic generalized and pediatrics. Third, the category leader in efficiency and easy use, leveraging both our AI tools as well as remote capability to do that. We have a fundamental opportunity to take the capability of the system and make it more scalable and efficient, both for customers as well as then as I talked about, organizational leverage, what we can do with our own organization to scale penetration of the implants and make support of these patients more efficient, expanding awareness as well as access to RNS through direct-to-consumer campaigns and care. And in the end, doing all that, exiting the plan period with the business in a position of being cash flow breakeven. And that's what we're going to do over the next 3 years and has laid out in this plan and what we're excited to spend the rest of the day telling you about. So with that, I'm going to turn the microphone over to our Chief Medical Officer, Dr. Martha Morrell. Dr. Morrell is a luminary in the field and is somebody you're going to hear from a couple of different times today, and she's going to start by really giving us a solid foundation on the RNS system and what we see in the focal epilepsy population. Marty?

Thank you, Joel. I'll begin by telling you that Vikram, Mark and I are very excited to be able to tell you about the NeuroPace story. And just to share with you how I ended up here. I was an academic neurologist running epilepsy programs when Frank Fischer, our founding CEO, came to me with a wild idea. And that was since patients spend most of their time not having seizures, why don't we treat them just when they do and where they need it. And that made it a lot of sense to me, particularly since I had just come from the room of a patient who we were evaluating for epilepsy surgery. They weren't a candidate, and I realized there was nothing I could do for them. And now I'm in a situation where I can do a lot for my own patients. So I'm going to begin by just talking about epilepsy. So epilepsy is actually not one disorder. It's a group of brain disorders that share in common seizures. And those seizures are unprovoked, they're unpredictable and they're recurring. I think many people don't realize how common epilepsy is. It's the fourth most common neurological disorder. And what we're talking about that makes so much sense is let's treat a recurrent electrical disturbance with electricity. And we also have an opportunity because there's a substantial number of people with epilepsy that aren't responding to antiepileptic medications and really don't have other options. So I want you to think about that epilepsies as falling into 2 broad categories. There's the focal epilepsies, and those are seizures that begin in a focus in the brain and then will often spread. But there's a point, there's a region, there is a network that we can define as being the generator. Those patients, everybody takes antiseizure medications, and they are also, at this moment in time, candidates for neuromodulation. They also -- a very few of them are candidates for a receptive or ablative surgery at a focus in the seizure that is safe to remove. But that is the minority. And the rest of the patients, we have really focused on. The other type of epilepsy is generalized epilepsy, and this occurs when there is a discharge that involves the entire brain. The only therapy for these patients is one medication after the other, after the other. Because in this group, as with focal epilepsy, 30% to 40% do not respond to antiepileptic medications. We have an international organization called the International League Against Epilepsy that really sets the -- discusses what the benchmark and what the goal should be. They define drug-resistant epilepsy as failure of 2 medications that are tolerated. And those medications have not achieved seizure control without life-limiting side effects. This is a different change in practice. It's 2 medications. Two medications, and we know that there's less than a 5% chance that you're going to have a substantial response. So what should we be doing? Well, the standard of care according to the ILAE and our own American Epilepsy Society as you take 2 drugs and then you get referred to an epilepsy center for consideration of nonpharmacologic therapies, including neuromodulation and the RNS. But what is the reality? And this is what we have really had to do. We've had to carry this educational effort, and we've done that. But the reality is that patients take one medication after the other, after the other, after the other even though there's no expectation that they will achieve benefit. And oftentimes, they've experienced 10 to 20 years of intractable epilepsy before they get to an epilepsy center or maybe they never do. So the International League Against Epilepsy also partitions epilepsy into those 2 main categories that I talked about. 60% of the patients have focal onset seizures, those seizures that begin in a focus or region in the brain. And within that group are those who have seizures beginning from 1 or 2 regions or foci, those are the patients for whom we have an indication for use. Patients may also have foci that are multiple, and this is a patient population that everyone, physicians and neuro [indiscernible] have been thinking about is still amenable to our therapy, but in a more regional sense. The other type of epilepsy is where we're spending a lot of time. And those are that 40% of patients that I mentioned have generalized onset seizures. There's 2 categories of very different epilepsies within that group. One occurs in otherwise neurologically normal individuals who have epilepsy arising both -- all of the cortex, all of the brain. And most of these individuals are presumed to have a genetic epilepsy disorder. Those are the patients that we are addressing in our NAUTILUS trial. The other group are individuals who have epilepsy because there's widespread brain injury or problems in development or just dysfunction. Those are the patients that we are looking at for the Lennox-Gastaut study, and we have not forgotten the 15% of patients who are children, and we will talk about that. But the ultimate goal is to have a very simple indication for use. The indication will be for the treatment of epilepsy. Let me talk about the therapy. The basic concept, as I mentioned, is most of the time the brain is fine. So let's have a device that is placed at the seizure focus that's looking at the brain electrical activity all of the time that recognizes when there is a variation from normal that could predict seizures or its characteristic of preseizure activity. Let's provide an intervention and then let's see if the patient needs any more treatment. How do we do this? We do this with the neuromodulation device that -- the whole system is self-contained. So it's placed within the skull, absent signal-to-noise ratio. Patients can't see it. They can't feel the stimulation. Leads are placed according to the region of interest, and then the device is communicated with by a physician programmer or remote monitor that the patient takes home, they hold a wand over the device, upload information from the device. And all of that is sent to a secure data base called the Patient Data Management System or PDMS. This is a treasure trove. I think about it as the library for every individual patient. All of the device behavior, all of the recordings for each individual is there. So I, with a passport, am able to go into PDMS and open up the library for my patient. What does this mean? Well, I finally know what I'm doing. I can see what's happening. And rather than depend on a seizure diary that is often inaccurate because seizures may occur while patients are asleep or they may not remember the seizures as part of it or they just get tired of recording them all. And I can see what's going on and inform my treatment. I can inform how I address programming of the RNS system and Vikram will talk later about other impacts this has on clinical care. Before the patient, I could turn that screen around and show them their information. And Mike will talk about what that means. But it's usually a really profound experience, really a moving experience as patients finally see what it is they've been facing. So let me talk about the kind of data that we get. There's a number of data presentations or representations that come from the device, including samples of the intracranial EEG recorded directly from the brain, directly where the problem is. This includes the samples of the intracranial EEG and also a recording of every time a detection has been made, the detection of abnormal activity and when that has occurred. So we can look at the cadence and the schedule, and Vikram will talk about that. What you see in the panel to the right is an electrographic seizure, where you see the blue recorded directly from the brain. And what you see in the lower panel is the record of every one of those detections. I can look at that hours over the day, days over the week, weeks, months and even years. And that really allows me to see objectively how my patient is doing. So that data is used so that I can be a much smarter physician. I can address interventions according to this data that I see, and I am able to monitor really almost in real time, in real time, how my interventions have affected the patient. So what do we have here? Well, there is no other therapy like the RNS system that really lets you know about the educational effort we needed to do from the beginning. And we have, as you will hear, an extraordinarily solid database that demonstrates effectiveness and safety in rigorous clinical trials. We have a device that can provide individualized care. It can be personalized to that patient's seizure signature, and it can be modified. It can be modified to do what the patient needs. It is nondestructive. We are not destroying brain. We are not taking it away. Also it does not preclude other options. We can continue to treat the patient with the other tools that are available. I talked to you about the therapy and the data, but I didn't talk to you about the flexibility. In our clinical trials, we have experience treating patients in every region of the cerebral cortex, including in the hippocampus of the temporal lobe, which is often an origin for seizures. And now we have increasing experience with treating patients in the thalamus. We are also able to be flexible in what is detected and also how stimulation is delivered. The trials. We began with the first patient implanted in 2004 in the feasibility study for safety and preliminary evidence for efficacy. That was a 2-year trial followed by the randomized controlled trial that led to our approval. That was a 2-year trial, and then patients had the opportunity to enter a long-term treatment trial, which the majority of patients, a significant majority of patients chose to do to continue being treated for another 5 years. You add those up, and that is 9 years of prospective data in this patient population. This was the largest epilepsy trial in neuromodulation ever done, and it's getting even larger because of an FDA requested, and therefore performed, post-approval study that began. Shortly after approval, first patient implanted in 2014, 324 patients at 32 centers across the United States, followed for 5 years. We will present today the primary effectiveness endpoint, which is at the 3-year time point. So how well does this work? Well, imagine, we have a therapy, a powerful technology unlike anything that's ever been used before. So we had to look at each other and say, where do we start? So we selected a starting point and we selected correctly because we found in these patients with really intractable epilepsy that there was a substantial response. It exceeds that of antiseizure medications, 44% reduction in seizures and look at that climb. It almost looks like Joel's figure about NeuroPace up and to the right. We saw an increasing improvement over time with patients having a 75% reduction at the time the trial ended. So what is going on? Well, we got 28% of patients seizure-free for a period of 6 months or more, and these are patients with close to 20-year history of intractable epilepsy. But what happened during this time is us learning and it also what was going on is a unique property of neuromodulation, which is that people get better with time. So let's talk about a more contemporary experience. A group of investigators, including Dr. Rao, who is the principal author of this manuscript, combined 150 patients to say, well, how well is this working in the real world? And the answer is, wow, it's working much better. So we were getting outcomes similar to what we got at 5 years in our clinical trial. And by 3 years, we were getting outcomes that exceeded that, that we saw in the initial clinical trial. And we found that the median seizure reduction was 82% within 3 years, and 1 in 3 patients had a 90% or more reduction. So what do we see here? Better, faster. And we'll talk about why that might be, but the learning curve. I would attribute a lot of it to us understanding what's going on. And much of that was contributed, of course, by the empirical experience in the clinical trials, but much of that is a result of the data. Now a therapy is not really helpful unless it is meaningful in a patient's life. And of course, seizures are a big part of that. But quality of life, function, well-being are critically important or as important. And as part of the studies that we did, we did very rigorous assessments of quality of life, of mood and of cognitive function. And we found that there were improvements in overall quality of life, and you need to have that if you have a meaningful therapy. But really, we were somewhat surprised to see that there were improvements in areas that are often really problems for people with epilepsy, and that includes subjective improvements in cognition and in mental health and depression is a comorbid condition with epilepsy. So let's look at the quantitative outcomes obtained by neuropsychological or neurocognitive testing. We found that there were no negative mood or cognitive effects. In fact, there were improvements in those areas, particularly in areas that are often challenged in intractable epilepsy, and that includes verbal fluency and aspects of memory. So we have a therapy that works and that brings meaningful benefit to patients. And I mentioned the power of the data and really, the tools that this therapy brings to the management of persons with epilepsy, and there's no better person to speak to that than my colleague and friend and frequent collaborator, Dr. Vikram Rao.

Good morning, everyone. Thanks, Marty. It's really a privilege for me to be here to share my experience, taking care of people treated with the RNS system now for over 10 years. But I think I'm going to start this talk on the power of RNS data with a thought experiment that I'll ask you to indulge me. So imagine for a moment, imagine that you're an investor or an analyst and you're charged with picking a stock, but you have no historical information on the past performance of that stock. And any quantitative information that you might have, what little information you do have about that company is probably inaccurate. And yet you have to do some -- I'm not talking about NeuroPace by the way. I just gave you all the heart attack. But you have to do something with information that is inadequate. And that feeling, that unsettling feeling is really what it is to be a clinical epileptologist because epilepsy is, in many ways, a black box. There is no blood test that helps us gauge the severity of epilepsy. When we do short-term recordings of brain activity with EEG, they're often normal. Even people who have poorly controlled epilepsy spend the vast majority of their time not having seizures. And when somebody comes to my clinic and they do the best they can telling me how it's going, how many seizures they've had recently, whether the interventions that we're doing are helping or not helping, do the best they can. And I know that their report is likely to be mostly inaccurate, unfortunately. And yet I have to do something. And I tell our trainees that clinical epilepsy is the art of making incredibly consequential decisions with woefully inadequate information. And that is where data from the RNS system has been truly transformative. As Marty said, this, we call it a window to the brain, which is actually not just a marketing phrase, that is actually true. That is true. This has been kind of a game changer in our field because the RNS system and data from it helps us to learn about a patient's epilepsy to personalize the therapy that we offer to that individual, to monitor in a quantitative way their disease severity over long periods of time. And all of this, by the way, is with somebody in their home environment, normal activities, on medications over months to years. There is no other way in neurology to do that. And so -- this slide really shows a few examples. This is certainly not -- it's a busy slide, and it's not exhaustive. It just gives you a few anecdotes of what we do as clinicians with this data, this really precious data set that we have. In the upper left, you see what happens when we introduce a new antiseizure medication. Sometimes we see a precipitous drop, an immediate drop, in the rate of detections of abnormal activity, like the sparks that the device is hearing suddenly plummet. That portends a favorable long-term response to that medicine. If we don't see a drop like that, that suggests that maybe that medicine isn't the best one for the individual. We talk about tracking seizures, and you might think we could just ask our patients, well, how many seizures are you having and base our therapy based on that. But in fact, it's not that simple. It's a very common scenario in my clinic. When I ask somebody, how many seizures have you had since I last saw you and they say, I've had 3. And I look at their RNS data and say, you've had 30. That happens all the time. But with the RNS system, we can track electrographic seizures. That just means an electrical recording of a seizure that's objective. I can see it in the data. I can count it. I can trend it. I can relate it to interventions that I'm doing, behavioral interventions that I might make, a new medication, a surgery that I might offer a patient. I can track biomarkers of a disease. I can look at the rate of sparks of abnormal brain activity in our patients, for example, and look at interesting trends like day and night variation, so called circadian variation. We can look at cyclical fluctuation in relation to things like menstrual cycles. And all of this helps us to optimally manage a given individual. What do we do before the RNS system? I mean we did something, right? Well, what we did, the gold standard is still bringing somebody into the hospital to a specialized inpatient unit called the epilepsy monitoring unit or the EMU. And this is a place where we glue on some surface electrodes. We record brain activity over a handful of days, usually not more than a week. Insurance companies give us grief if we keep people longer than a week. And we do all kind of things. We keep people up at night. We sleep deprive them. We strip them off their medicines. We shine lights at them. We make them have seizures. And after 4, 5 days, we conclude, okay, we understand what's going on with their epilepsy. And that is really kind of a problem because epilepsy, I would argue, is the most dynamic disorder in all of neurology. And so recording somebody for 4 or 5 days is just a massive temporal undersampling problem. Okay, not to milk the finance analogy too much, but that would be like tracking the Dow for like 4 days and seeing a downtrend and concluding that we're in a recession. I mean that's ridiculous, right? Because you know that this is an intrinsically noisy variable that has to be followed for longer periods of time. And it's actually the exact same in epilepsy. If I have somebody for 4 days in my EMU and I record 2 seizures from the left side, am I very sure that they couldn't possibly have seizures from the other side. Sometimes not. And I think that was really nicely exemplified by this study, kind of a classic study now by one of my colleagues, Dr. King-Stevens. And this is a complicated slide. Let me walk you through this. It's actually simple what they did. They went to the RNS system clinical trials. They pulled out the 82 patients who had one lead wire in each temporal lobe. Why? Because the clinicians who are taking care of them had reason to suspect that this person, these people could make seizures independently from both temporal lobes. So they were implanted bilaterally and then they were followed. And this graph, each bar is one of those individuals, and the length of the bar is showing you the duration of time between when you record one seizure from one side and at least one seizure from the other side, meaning how long did it take to prove that, in fact, yes, they could make seizures from both sides of their brain. And the punchline is that it takes a surprisingly long amount of time. In this study, an average of almost 42 days with 2/3 of people taking more than a week to prove that they can make seizures independently from both sides. Why does that matter? That matters because I just finished telling you that our EMU admissions typically don't extend beyond a week. So again, a temporal undersampling problem. This cartoon sort of makes that point in a different way. So the cartoon characters here are shaded either blue, which means all seizures from the left, purple, meaning all seizures from the right and the shades of color are something in between left and right seizures. The top row is what you saw in the EMU. The bottom row is what you see in long-term real-world follow-up with the RNS system. And the Xs indicate the 7 out of 12 patients where there's a mismatch, where the conclusion that you made during your short-term recording in the artificial circumstance of the hospital is different than what you found in long-term real-world follow-up. Why does that matter? That matters because if we incorrectly lateralize somebody, we might refer them for an incorrect surgical procedure. And once you take out a part of the brain, you can't put it back. So it's a big deal. It's really a big deal. We don't want to make incorrect surgical decisions that don't help people. There's a lot of data that comes from the RNS system. I made this figure a few years back just to summarize some of them. I wish I had time to really tell you about all of the different forms in which data comes to us. And clinicians, if you ask them, always want more data, right? But the response to getting that data usually in my experience, is sort of a biphasic response. First response is, yes, we have a ton of data to look at. Second response is, oh, darn, we have a ton of data to look at. And that is actually the clinical challenge. The challenge is taking mountains of data and distilling from that, the core information that actually helps me manage a patient clinically because I don't need to see everything. I just need to see the most important things. And so what do I do? Well, typically, I manually sort of look through all the recordings, all the data, extract the things that I think are actually useful. And that is fine. There's a certain fun to that, but it does take time. It is not efficient. It's not scalable. And luckily, all of this is about to get much more streamlined. This is the landing page for the patient data management system, PDMS that Dr. Morrell told you about. This is where clinicians go, you fire up a patient's account, and this is where we can go and look at graphical representations of trends of activity. If you're with a patient, you can look at live streaming recordings of brain waves, you can look at a library of stored clips of brain activity data. You can look at current and past programming settings on the device. And the green pane is sort of aspirational or emerging functionality of PDMS. That's called AI-powered seizure trends. And when clinicians click on that box, it will open up essentially a toolkit of things that are going to make our lives a lot easier. One of those tools is a sorting tool. So we have this library of many, many hundreds, sometimes thousands of recordings to look at. And sometimes the only ones that I actually care about are the ones that have seizures. That's really what I want to know. That is the essential information. And I can go through with my eyes and pick out the seizure recordings. I can do that. But it turns out that a well-trained AI-based algorithm can do that as well, maybe better than me. And that has now been validated and soon will be a functionality that with a click of a button, an AI-based tool can pull out all the seizures and show them to me really in a simple way. And we think that, that will not only streamline the process of programming these devices but actually save clinicians a lot of time. Another huge time-saving tool that will be available is shown here. So one of the most, I'll say, tedious, but maybe time consuming is the better term is, teaching the device how to identify seizures. At the end of the day, the RNS system is a computer, which means we have to tell it what to do. And we wanted to detect seizures as early as possible. Why? So that when it detects a seizure, it can intervene and try and stop that seizure. The better we can detect seizures, the more effective the therapy can be. And currently, we configure a variety of computational tools manually to identify seizures with high fidelity. That's fine. That's what we do. But it turns out, again, AI can do that better than me. And through validated algorithms now, there are ways that AI can select the onset of a seizure and do probably a better job and help me treat that seizure earlier than I would have otherwise and also save me a lot of time. I take care of about 150, 160 people treated with the RNS system at my practice. And I would be lying if I said to you that every single one of those people has a fantastic outcome with the RNS system. That is definitely not true. Some people are not doing as well as I would like. That is the reality. But I have to believe that a part of the reason why they're not doing better is that I have not programmed the optimal settings on their device. Why? No lack of effort on my part. It's just that I don't know. This is largely an empiric -- again, largely a black box sort of enterprise here. I don't know what the best settings are for that patient. But now that there are actually thousands of people treated with the RNS system, why not leverage that big data and have an algorithm go and find patients with clinical similarities to my nonresponding patients and to show me patients who are doing better and leverage knowledge from that to apply to my patient. So that seems like a pipe dream that is now actually going to be a reality, deep learning algorithms can mine large data sets. They can extract information that will suggest settings that will be better for my patient, a method called Bayesian optimization. It is just a way to use data from every patient to predict the next best settings for my patient and hopefully achieve better outcomes in a way that I don't have to be any smarter. I can actually lean on the algorithm to guide me. So again, the take-home message from this section really is that the tools that are on the way are not only helping to save clinicians time and make things easier for us with the presumption that the easier this is for clinicians to use, that will drive volume, but also more importantly, to improve efficacy for seizure reduction in our patients. So with that, I'm going to turn it over to my colleague, Dr. Richardson, who I think is joining us by Zoom.

Okay. Thank you, Vikram. Thanks, everyone, for allowing me to speak to you remotely. Sorry, I couldn't be there in person. But I'm very excited to talk about the RNS system, which I think is literally the most exciting thing there is in medicine. Now obviously, I'm very biased. To give you a little bit about my background. I direct the functional neurosurgery program at Massachusetts General Hospital, which means I do epilepsy surgery and other surgeries to implant devices in people, for instance, with movement disorders or psychiatric indications. I've been here for about 6 years. And previously, I ran the epilepsy surgery program at the University of Pittsburgh. Next slide, please. Okay. Thanks, Marty, for jumping out there and doing that. So there is a huge treatment gap for patients with drug-resistant epilepsy. There are 1.2 million people in the U.S. on medication that is not working, having intractable seizures. Only 50,000 of those are admitted to an epilepsy monitoring unit, a comprehensive epilepsy center. And less than 1% of this total number are treated surgically, only about 6,000 or 7,000. So, here's a little more detail on recent growth in surgical procedures. Epilepsy surgery, it is growing. We're training a lot of people in functional neurosurgery who want to do epilepsy surgery. In both places of established practices where the epilepsy surgery volume was kind of mid-level, it's exploded both times. These patients are out there waiting. Recently, the total -- we'll just stay on that slide for a second. The total number of resections actually declined a little bit, and that's been replaced, to some extent, by laser interstitial thermal therapy or laser ablation. You see the RNS implant numbers are increasing. And I think we're really at an inflection point where this is going to increase quite significantly as we have the same biases against resection and destructive procedures in the brain and just increasing knowledge about how to use the data and how to implement RNS therapy in broader populations of patients. Next slide, please. Okay. So why does this treatment gap persists? Quite simply, it's really hard to treat these people. And many have types of seizures and types of seizure networks that you cannot cure with surgery. And so the traditional way of thinking about epilepsy surgeries, you have to find one spot in the brain or one region and remove it. And a lot of biases against surgery are because there has also been a philosophy in some centers that you do that at the cost of function, in some cases, where the goal is just to make the person seizure-free. So there's some biases against traditional surgery. So examples of those cases are very hard to treat with traditional methods are seizure onsets that start from both sides of the brain. Those that start in eloquent cortex. So that's cortex that you cannot remove without permanently disabling someone's speech areas or motor control areas. They're part of a larger network, so you can remove part of that network, but the seizure still persists. So you put someone through the risk of a traditional surgery without giving them a surgical cure too large for complete resection. And those that are coming from multiple areas of brain or generalized epilepsy. So the reality is that every single one of these patients can be treated with RNS. So all of those 1.2 million patients from the slide before, they can all be treated. Some of those are still going to be best suited for potential surgical cure with the traditional resection. So if you have a family member or a child with epilepsy and they have a spot you can see on MRI or otherwise diagnosed and it's safe to take it out, it should come out and they may be seizure-free for the rest of their lives. But the really rewarding thing that has happened in my practice has been the use of this device to bring huge quality of life improvements in people who otherwise just continue to suffer and suffer because they have a more difficult seizure network. Next slide, please. Okay. So what's changing in epilepsy surgery despite the kind of modest changes in the numbers so far? Why do we have such reason to believe that there's room for really dramatic improvement and soon. And these are the reasons, really paradigm shifts in how we think about epilepsy surgery. These have been driven to a large extent by the RNS device because for the first time in the history of treating any brain disorder, you can put a device in and record activity and make decisions based on that activity. And I should say, this is a safe surgery and easy surgery. So that's another way it's really differentiated from these other techniques. I think that's important for you to know and something we probably surgeons don't talk about enough. The hard part is figuring out the right place to put the leads. And Vikram has a harder job in some ways interpreting the data and using it than I do to put the device in, that's straightforward. So in having increased use of RNS, being able to record and simulate essentially wherever we think is best based on the data we have, we've really changed our thinking first in terms of defining success. So it's really clear that you can absolutely change someone's life without making them seizure-free. You can maximize their quality of life. People can go back to driving sometimes when they have the RNS. They can continue to work. They can reduce the amount of medication they're on. They have some knowledge about their seizure onsets and a likelihood for when they may have a seizure. They have some control. They can exercise some control over their disease. This is huge. These are really big quality of life improvements for the patients. The way we think about the treatment and not having to remove the whole seizure focus, this has brought a lot more patients to epilepsy, a surgery conference than previously, these patients who weren't thought to have a focus that you could resect safely, just wouldn't be presented for a surgical option. It literally wouldn't be discussed.It was, well, there's nothing we can do here. Now the majority of patients that come through our epilepsy conference are complicated patients where RNS is a potential option, if not the main option going in. And this has been a marque change in the past several years in my practice. And certainly, let's say, I started MGH in 2019. And it took a couple of years really for this to kind of turn around. And now the majority of patients that come through whenever we do an intracranial monitoring surgery, if we need to do that, we're implanting parts of the brain that are important for figuring out where we might put an RNS. This ties into this localization goals paradigm shift. So not only are we trying inform our decision for a part of the brain that could be removed, if that isn't an option or if it fails in the future, we need to know where to do neuromodulation because, again, we have the device that can record seizure onsets and stimulate and that's customizable to each patient. It's customizable to the patient's data, including their intracranial data that we can get diagnostically and a diagnostic surgery. Patient management, this is just a massive benefit. Vikram has talked about this, and you'll hear more about this in other talks. Next slide, please. Okay. So this gives an overview of a couple of things. One is the state-of-the-art in epilepsy surgery. And the other is advantages of the RNS system over other systems that aren't closed-loop systems and can't respond to the EEG tracings in the way the RNS device can. So targeted simulation is the way that RNS was envisioned. It's the way that most people began using it. You would put this on both sides of the brain. So bilateral mesial temporal lobe epilepsy or temporal lobe epilepsy in general is fairly common. It's one of those types of epilepsies that everyone knows. You can't take out both temporal lobes, so you can do neuromodulation and other onsets where, let's say, it's a language area, someone doesn't want to take a risk for language dysfunction with a resection or in the motor areas, this is a targeted stimulation. And this works very well. What we found over time in combining the RNS with, I think, 2 categories of approaches. One is in combination with the traditional surgery like a resection or laser ablation. And the other is using the thalamus. So the thalamus is a hub for information flow between cortical areas. And it can put the brakes on seizures when you deliver simulation there. And many types of seizures are recorded very quickly in the thalamus. So you can affect a wide cortical area with simulation in the thalamus, and you cannot do that with traditional surgery to affect such a large cortical area. So you can only do this with neuromodulation. And you don't have to use the thalamus if you have something that's localized to a region in the brain, and it might be better to put recording and simulating electrodes, both at the cortical level. And then these combination therapies, this is something that we do fairly frequently now. There may be large malformations that -- or multifocal types of networks where you can operate with a traditional surgery in one part of the network, but then follow up, but you know that's not going to be curative. So you follow up planned with RNS therapy to address the rest of the network. This is kind of like doing resection to reduce burden in cancer and then following with adjuvant therapy that's going to keep the patient alive for longer after you do the surgical resection. The reason I said that slide also illustrates the advantages over, for instance, deep brain simulation is that you can see through just the schematics on that slide, that you can personalize the therapy to the type of epilepsy. And the way that people use deep brain simulation in epilepsy, it's very generic. It's kind of like VNS. They put the leads in part of the brain called the ANT, it's anterior nucleus of thalamus and you just turn it on. One of those devices now you can look a little bit at the data, but it's -- you can hardly see anything longitudinally like you can with the RNS system in terms of the signal. What the figure on the right shows are the structural connections between 3 -- what we think of canonical nuclei in the thalamus. There are a number of nuclei in the thalamus. These are the big ones that historically been tied to modulation and epilepsy. And you see the A&T connections are in the red, that's connected to about 1/3 of the brain. And these other nuclei that we're using kind of quite often now in RNS still with A&T, but also its intermediate nucleus [indiscernible] are connected to other areas of the brain and have particular use in different types of epilepsies that can be defined and the field is doing a much better job of figuring this out. And this is kind of the basis for the NAUTILUS trial, this idea of this intermediate nucleus being widely connected to areas that are important in generalized epilepsies. The next slide, this is also the reason why you see the RNS data supporting the idea that if you choose the right spot, you can put this anywhere in the brain, and it should work for the type of epilepsy that you're treating. And that's supported by the kind of ongoing data coming out from different groups. And it's in contrast to this extended data from DBS studies that show that the efficacy is just not as good when you use a kind of generic approach to put DBS in just one part of the brain or thalamus. Other advantages are illustrated here. The RNS intracranial data, you can pick up a seizure in any of the areas you implant as long as the hypothesis is correct. So in terms -- it's really interesting. If you have a failure of the RNS device to work, that's very helpful information. You have objective data that shows you where the seizure is not starting, where it's not propagating where neuromodulation is not effective. And it's not that difficult to go in and revise one of these systems and put the leads elsewhere based on alternate hypothesis. So you're kind of never at the end of the road with this device. And of course, if it is working, then the data has been used to guide stimulation settings. Importantly, there really have not been acute or chronic side effects with therapeutic simulation. This could be for a couple of reasons. One is customizable nature. So the programming neurologists can look at the recordings and make sure they're not simulating physiologic signals. The open loop or DBS approach, it's the device just on, it's not discriminatory, and it's simulating whether or not the parts of the brain are doing something that they should be doing or whether or not they're generating a seizure. And I think this probably has to do -- it leads to this problem of a greater report of things like sleep arousal, memory impairments, depression with ANT stimulation, we call duty cycle or open-loop simulation. The device just on all the time. So some of these patients do just fine with that, but others, it's disrupting something in their memory consolidation, their mood regulation or sleep. And these are problems that can be avoided with personalized responsive simulation. Next slide. Okay. The entire field is aware of this gap in treatment. The ILAE, the International League Against Epilepsy, recently included neuromodulation recommendations in their updated guidelines. And this field does move slowly, but things are finally changing. And this is a big deal to point out to epilepsy groups around the world that, yes, if you have a patient who may not be a candidate for resection, but they're medically intractable, they deserve an epilepsy workup because we have neuromodulation. We're seeing this really around the world, certainly in the United States, more and more patients that come to epilepsy surgery conference who are neuromodulation candidates primarily. And this is a big change. And Marty mentioned in her opening presentation that's a minority of patients who you can get a surgical cure with a traditional surgery. And I wish that wasn't the case, but it is. So we're really going to see, I think, think back to that chart in one of my slides earlier that shows the amount of surgeries based by category. We're eventually going to see a big switch there. The vast majority of epilepsy surgeries going to be neuromodulation. It's not going to be traditional surgeries to take out a part of the brain for a cure because those are a minority of patients. Okay. Next slide. So I think this is the last slide. This is the cost of doing nothing. People die and their quality of life is really horrible. One in 150 people with uncontrolled seizures are going to die from something called SUDEP, that sudden unexpected death in epilepsy. The amount of lost productivity and quality of life in these patients when they don't get referred and don't get a treatment is quite, quite significant. So there's absolutely no question that the field is going to continue to address and push and push on this. And it's also quite clear to me that the best treatment we have to do this is responsive neurostimulation for all the reasons that we've talked about here. So I'm obviously very excited to continue this. We have a lot of work to do, but it's really exciting, and it's helping a lot of people. Let's going to continue to do it. So thanks for the opportunity to talk.

The next individual is -- this is really a special presentation. Mike Mckenna is going to share wit you his story. He is someone who participated in the trials of the RNS system. He is someone who is living with epilepsy. I ask all my patients to talk to Mike to really understand the patient's perspective. So. Mike [indiscernible].

Thank you, Marty. And thank you, everyone, for being here. So just a little background. As you heard, Mike McKenna. Over 8 years ago, I joined NeuroPace as a patient educator after volunteering as an RNS ambassador for about 2 years. I've seen the importance through the years of patient education for patients who are considering or moving forward with the RNS system and patients and families have been very appreciative of how NeuroPace provides educational resources for them to understand what this device is. As you heard, I've lived with epilepsy for over 35 years -- I mean, 25 years and I have been using the RNS system for over 16 years. During my RNS journey, I've graduated with a graduate degree in social work from both ASU and Mayo Clinic School of Health Sciences and worked as a social worker in Mayo Clinic in Phoenix before moving to Portland, Oregon, where I live today. So I wrote this down so I can stay on track, keeping in the time frame. So as you heard, 25-year plus years ago, I was living a life that I'd loved. I was healthy, recently married, living in a newly purchased home and had just become a partner at a successful construction company building high-end custom homes. Building homes allowed me to be creative and engage my imagination. I had no idea that everything that I loved would soon be shattered by epilepsy, leading me to lose everything. I've lost track of the number of times I've woken up in an ambulance or ER room after someone called 911 because I had a seizure. I was experiencing focal wear and secondary generalized seizures that resulted in broken bones, dislocated teeth -- I mean broken teeth, dislocated joints, torn muscles, lacerations, my heart going in Afib or stopping. I have prosthetic joints and replacements of those joints and just constant mental chaos. Through the years, I've tried different seizure medications. For about 4 years, I tried VNS therapy. I completed intracranial testing to figure out if I was going to be able to have right temporal lobe resection surgery. But during that 14-day stay, they decided that, that was not an option for me because I had seizures coming from both temporal nodes. So I slowly lost my identity and feeling of self-worth. I felt helpless [indiscernible] now my epilepsy diagnosis. I started accepting that my doctors might not find a seizure treatment for me that worked. I found this treatment insight, the motivating factor for me to change my mindset. Instead of me waiting for a seizure treatment to be found, I need to be in charge and advocate for myself and ask questions, finding ways to move forward. My doctors mentioned that there's this new intracranial medical device, the RNS system. So this is a demo device, what the device looks like. Mine is placed right there. It could be placed in different parts of the skull. For reference, it's about the size of your thumb. So if you look at your thumb, that's a computer, a battery, everything is in there. So the doctors told me that this new device could monitor for seizures. It could respond with pulses of stimulation that I won't feel, make EEG recordings of those seizures and report that data to my doctors. I mean it sounded unbelievable. It sounded like something I was really interested in. So I said, yes, to RNS surgery. I was in the hospital for 2 nights. Once home, my recovery was very quick. I was sent home with a remote monitor. That's the way I was able to transfer my data and collect it. And I was instructed to do that once a day and transfer my data over the Internet once every 1 to 2 weeks. It was very easy to do and took about 3 to 4 minutes to do. A little over a month after surgery, I had my first follow-up appointment. In the waiting room, I was super nervous and super excited to see what my new RNS device might have captured. And what I saw was this. My first recorded seizure, my seizure fingerprint. I mean, I was in awe seeing this. These were my seizures that I had always feared the most, the ones that would happen in my sleep. The ones that would result in me dying from SUDEP. I mean look at the time of this -- when the seizure happened. It was at 12:57 a.m. within the first 1.5 hours of me falling asleep. I had an emotional release because I now felt validated that I wasn't just making all this stuff up. I finally felt heard, seen and acknowledged that, yes, I was experiencing seizures. I felt reassured that the RNS system just might help me. I felt empowered. People living with epilepsy many times refer to seizures as their brain on fire. So when I saw this other piece of data related to this recorded seizure, I was just like, wow, like my spectrogram. I'm no expert. So this is my layman electrographic definition. This is a visual representation of my brain activity that shows my brain seizures strength because of that seizure and as it progressed. I guess I could say that this shows where my brain caught on fire. Remember, I mentioned these seizures in my sleep are what I feared the most. Look at the time of this seizure when it happened, 5:56 a.m.. Over the years, my RNS data has shown that my largest seizure happened in the first 1.5 hours of me falling asleep and the last 1.5 hours before waking up. On this ECOG, you can also see where the seizure started and the stimulations that were provided to try to stop that seizure. This data helped guide my therapy and my doctors made some adjustments to my stimulation parameters. This was over 12 years ago, and this was the last time my stimulation settings were adjusted. This was also the last seizure that I ever experienced. Because I'm no longer experiencing seizures, we're no longer making stimulation adjustments. I now only download my data once every 1 to 2 months, more kind of like a maintenance check. When I see my doctors now, it's every 12 to 16 months, and my appointments are about 20 minutes in length. This slide is 16-plus years of all my events, all my data. This shows when my RNS system did something as making an ECOG or providing stimulations based on my seizure detections. My neurostimulator responds with pulses with stimulation within milliseconds of my seizure fingerprint showing up. Stimulation doesn't mean I'm experiencing seizure. It just means that those spots in my brain that have the potential to grow into seizures are being stopped. With these slides showing my RNS data, you've seen my life-changing outcomes such as my seizure reductions. You've seen how my therapy was personalized using those unique seizure ECoGs. And you've seen some empowering insights to seizure trends and cycles. And how these insights help guide optimizing my treatment plan. You've heard today how the RNS system is transforming the lives of people suffering with epilepsy. So I thought it would be interesting to use my all events histogram and repurpose it by adding some of my major health and life transformations from the past 16-plus years. So in 2008, I entered the pivotal study, and I started college and 1.5 weeks after starting college, I had my RNS surgery. I was back in college after 1.5 weeks. In 2012, that was my last seizure. After making stimulation and medication adjustments, lifestyle changes, I became seizure-free. In 2014, this was my last Mayo Clinic appointment. Being seizure-free, I no longer needed to keep seeing my doctors at Mayo. And so we decided it was time for me just to see a primary care provider. In 2014, after 6 years, I graduated master's degrees in social work and was no longer a full-time student. That was really exciting. I was able to read a regular book. And I started planning for a career. In 2015, I moved to Oregon and I bought a small home. No longer needing to live next to Mayo Clinic, I decided to move to a city in Oregon that was more pedestrian-friendly. And with the help of my parents, I bought a small house. In 2016, I started working at NeuroPace. For 2 years prior, I volunteered as an RNS ambassador, helping try and embrace epilepsy and RNS awareness. In 2016, I started providing patient education on a part-time contracting basis before being hired to do it full time, about 8.5 years ago. In 2017, I stopped my SSDI. After working full-time for a year, I decided to call social security and let them know that I no longer needed my monthly disability payments. In 2017, I filed taxes. This was the first time in over 15 years that I earned a salary. On SSDI, I was receiving $1,200 a month and $850 of that went to rent. So you can imagine living on that. In 2019, my credit score became excellent. I mean, this opened up the ability for me to get credit and get a loan if I needed it. Before I started working, my credit score was around 520. In 2019, I got my driver's license reinstated. This was a major life milestone. I regained a sense of independence by not having to rely on others to go anywhere. And then I just started thinking about my future investing and planning for retirement one day. Living with uncontrolled epilepsy, this was never in my thoughts. So how am I doing today? My epilepsy journey continues today, but what's different since the start of my journey over 25 years ago, is today, I'm in charge of my journey. I decide who I am, what I'm going to do. Yes, I still have epilepsy. Yes, I still take one medication at a low dose once a day. And yes, I use the RNS system. But I've been seizure-free for over 13 years. Today, I live a pretty normal life. Is it the same life that I lived 25 years ago? No, but it's so much better. As a NeuroPace patient educator, I get the chance to help patients and families who have questions about using the RNS system as one of their treatment options. These life and education opportunities have given me a reason and a purpose as to what I went through all those years living with uncontrolled seizures. And in closing, this is just a photo of a small group of people. They're all living with the RNS system who have been able to start living their better lives and find and enjoy their life milestones too. So thank you, everyone, thank you.

Thank you, Mike. Thank you for sharing your amazing story. Now I'd like to invite our panel, our speakers from the first part of the day to come up and we'll do a Q&A session. We'll take some questions from the audience. So Vikram, Marty, Joel, we'll have Dr. Richardson.

Great. Thank you, Rebecca. Thanks, Mike and Mark and Vikram and Marty. And so we would like to -- we are a few minutes behind, so we'll try and move with alacrity here but take a few questions. Anything from the audience? Mike Kratky?

Sorry. Joel, did you mention accelerating growth between '25 and '27 as part of the LRP? How should we think about the cadence of growth within that? And then I have one more?

It's a great question, and we do see the cumulative effect of the work that we're doing across the different clinical development, product development and market development. All given us more shots on goal from a growth perspective. And so I think if you think about the growth that we're delivering today and you think about all that, we do see ongoing opportunities to accelerate growth over the plan period. We're not guiding beyond '25 today, but we do absolutely see where -- we're building a portfolio of growth opportunities here that we think will contribute to that.

Got it. Understood. And maybe one for Dr. Morrell. Can you talk a little bit about your level of confidence in the NAUTILUS study from a scientific rationale standpoint, what gives you confidence that this is going to be a study that can be effective and successful based on some of the things you mentioned earlier?

We're going to talk about the NAUTILUS this afternoon. And so let me hold on some of that. But I'll tell you that we know epilepsy and we know how the RNS system works. There are sufficient publications that FDA decided they grant us a breakthrough designation. And then I'll show you where we are and how we are looking at expansion using a really good clinical trial data.

Thanks so much for taking time, everyone. Rohin Patel from JPMorgan. I guess the first question I had for you, Joel, was actually about your LRP targets for cash flow breakeven. Just wanted to clarify, is that 2027 comment over your revenue CAGR LRP? And also if you could just walk through some of the levers there and what's driving the operational leverage over the period?

It is. When we think about cash flow breakeven, the point for us is to exit the long-range plan period in a position to be in cash flow breakeven. So we'll march our way toward it over the plan, but '27 being that period of time where we expect to maintain a cash flow breakeven status for the business. And the most important thing, and many of us have talked about this, the most important thing we can do to improve our cash burn rate is to grow the revenue line. With gross margins where they are, it's a growth story. And it's a growth story with gross margin discipline and operating expense allocation optimization. That's what we've been doing. We made a fair bit of progress on changing cash, and we see that continuing over the plan period. That said, we have not hesitated and we will not hesitate to invest in the growth opportunities that we see in the business. We think they're real and they're in flight. And so you got to invest to take advantage of those and we're going to. But, so yes, it's a growth story. And to Mike's earlier point, accumulation in my affectionately referred to, we call it the ramp slide, that growth is what really drives the change in the cash profile of the business with then good operating discipline along the way.

Got it. And then I guess the second question I had was for Dr. Rao. Thanks for sharing all that exciting information about some of these AI software tools. Just kind of I was hoping if you could elaborate a little bit more on some of the applicability for those tools outside of the traditional kind of epilepsy clinical manifestation. Maybe if you could provide a specific example or maybe something that's where the anonymized data is valuable outside of an area that RNS targets today?

Well, that's a good question. One example that comes to mind is -- and it is still in the epilepsy space, but I think it speaks to something broader which is, there are patterns in the data that we have seen by virtue of the chronicity of the recordings. If you do a 1-week study, that's one thing. If you look at brain activity that unfolds over months to years, you see something very different. We can see that there is actually a temporal structure and an organization to the data that we never really knew existed. And that enables all kinds of things like, for example, anticipating when a person is likely to have their next seizure. This, by the way, is not a functionality of the RNS system in its current form. This is research. But I think it speaks to something broader and an ability to predict or to forecast as we say, when somebody is going to have their next seizure or be at risk of a sort of significant event. We've never really been able to do that. So that's one example. I don't know if that really gets to your question.

Yes, I was thinking more like outside of epilepsy, outside of seizures.

Yes. We will be talking about that this afternoon, Dr. Sameer Sheth, who does a lot of research outside of epilepsy, will be discussing that. And I will also be talking about a use of the data in a collaboration with an early pharma company to demonstrate target engagement, which provides us an opportunity to really think about utilizing this data in a way that is a benefit to NeuroPace and benefit in therapeutic development.

So you have to come back after the break Rohin. Mike?

Mike Polark, Wolfe Research. Probably for the doctors, jump all. A question on let's assume a successful NAUTILUS study and indication expansion into generalized. Within neuromodulation, how do you think about segmenting the patients, VNS versus RNS. My understanding is VNS technically doesn't have a generalized label in the U.S., but is used frequently off-label. And I think [indiscernible], there is some specific regulatory language. So is there overlap in those patients? If so, how much you see it? And relative to your practice today, VNS versus RNS, again, assuming a successful NAUTILUS study, what does the VNS/RNS mix look like in 3 to 5 years?

Yes, I'm going to answer by -- again, telling you to come back after lunch. We can kind of show in our post-approval study, how practice patterns are changing with RNS coming first. But I think Mark Richardson, would be a really good person. Mark, how do you decide whether you want to use VNS, the standard fixed anatomic target continuous stimulation DBS or RNS.

There we go. For our group, this is pretty straightforward now. I mean, we basically never put in a VNS because we think it has the least chance for efficacy and you can't report any data. So I describe all the options for the patients, but I tell them that's my least favorite for those reasons. Very rarely, someone will choose a VNS. We have -- if you look at how quickly the NAUTILUS trial enrolled, there is a real desire to give these generalized epilepsy patients this therapy and a therapy that's better than VNS because even in centers that do a lot of VNS, the reason they do a lot is because there is no other option. They'd rather do that than nothing. We, for instance, flipped our pediatric group here who used to do a lot of VNS for things like tuberous sclerosis, other pediatric generalized disorders. Now we go to RNS first. When you combine the ability to get the data and customize the therapy, you can cover a wide range of these generalized epilepsies without flying blind like you do with VNS. And VNS -- it's not in the brain. It's not without side effects. It can be painful. It can affect people's voice and so on. When you explain to patients the difference in potential efficacy, it's really, really rare for someone to say, well, I'd rather you put this thing in my neck then do the brain surgery and they understand the brain surgery is really safe and really personalized. So this is a very easy decision for us. And I think you see this trend continue.

If I can just comment, one second, Joel. I just looked at our 2024 numbers, and we removed more VNSs than we implanted for all the reasons that Mark described?

Oh, yes, I definitely remove more VNS than implant for sure.

Sorry, Joe, go ahead.

Not at all. We are up against it here. I appreciate all the questions. We are going to take a 10-minute or just maybe a little bit less break, and we'll come back in and start as close to 10:30 as we can. So thank you. [Break]

And we'll invite Dr. Morrell to kick off the second part. Here you go.

Okay. We've been promising all the earlier new data and I get to deliver it now. So I'm going to talk about our newer clinical trials, and I'm going to talk about other applications for the RNS System relevant to questions that were asked before the break. So we are in clinical discovery mode in two areas. One is to collect data to expand indications for use. I'll share with you the primary efficacy endpoints for the Post-Approval Study. You know about the NAUTILUS study. NIH has funded a study in a very devastating symptomatic generalized epilepsy, Lennox-Gastaut, I'll share that with you. And exciting news about a true collaboration and partnership with FDA to understand how to use the real-world data that is accumulated in pediatrics. We'll also talk about what AI is doing. We invested in AI before it was popular over 5 or 6 years ago, understanding that our database was so massive that there was no way we could figure it out. We are finding objective neural biomarkers. And we're using those biomarkers to be really smart about programming, detection and stimulation and also tracking the patient's response. So the Post-Approval Study is the largest FDA required prospective Post-Approval Study. It is a really tight study design. This is for patients newly implanted with the RNS System. The first enrollment being in 2015 and the final implant 5 years later. We have the final patient to 3 years. So we've been able to look at the primary effectiveness endpoint submitted to FDA, and it was accepted in December. We will be presenting the results at the American Academy of Neurology in the spring. And -- but you're going to hear them first. So let me talk about the patients who enrolled in this trial. 271 of them stayed in the trial for 3 years, which is pretty impressive because they were living their lives and moving and starting new jobs, and they stayed in this study. For context, the average frequency of seizures when patients enrolled was 5.7 per month, similar to the pivotal trial, we had a majority of patients who had more than 1 focus. We had patients with seizures everywhere, neocortex and also mesial temporal lobe and then a number of patients who had onsets in both areas. We found that about 1/3 of patients did not have intracranial monitoring before they were treated in the RNS System. Similar to our pivotal study. But here's a big difference. And they talked about RNS moving earlier in the treatment paradigm. So whereas in the pivotal trial, 1/3 had been treated with a prior epilepsy surgery, largely resection. That's down to less than 20% in the Post-Approval Study and look at the drop in use of vagus nerve stimulator, 32% of patients had been treated with VNS. And in our more recent study, it's down to under 8%. And, here are the results. We have data out to 3 years, and I'm showing it to you in 6-month increments. You'll see the sample size. And in purple, you'll see the median percent change. In parentheses is the response of the upper quartile and the response of the lower quartile. You will recognize that we're seeing very impressive responses really early in the course of treatment. And we are seeing that those improvements accelerate pretty quickly. In the upper quartile, we have over 90% reduction with 42% of patients seizure-free for at least 6 months and we're up to nearly a quarter of patients who were seizure-free for at least 1 year. For the lower quartile, I am so optimistic about the opportunity to drive this further, given our continuing clinical experience and the value of the AI. But getting to this flexible placement and benefit everywhere, the dark blue is the improvement in all patients, and you'll see in the build in -- blue, the patients with -- actually the open blue patients with mesial temporal epilepsy, the filled in blue, neocortical patients and stippled, patients with onset in both areas. And so it is clear that the RNS System works for anyone with focal epilepsy. So let's contrast this, and I'm going to talk about Medtronic Registry for Epilepsy, and that's using DBS. These are not comparator -- head-to-head comparator studies. But it is a similar to patient population, prospective, and they also had retrospective data. All of our data was prospective. But the difference is, and this is peer-reviewed literature for the more registry are pretty striking that the median percent reduction from year 1 to year 3 is not what we see with the RNS System. And this represents current contemporary medical practice. These publications from, on the MORE registry are very recent there from 2024. So -- did I skip ahead. Now there we go. So what can I say in summary about this? Well, we continue to see that efficacy improves over time. And we have a home run in a substantial number of patients. 90% reductions within 6 months are possible and seizure freedom at 3 years. Why are things better? Well, you have a sense of all that we have learned. We have learned what should be detected. When we started out, we waited until patients were well into their seizure in order to intervene. And now we recognize that we aren't -- it doesn't work best if you do -- use it as a seizure stopper, it works better as a neuromodulation device. We understand better where to put the leads and where to provide stimulation, and we know where to start with the stimulation programming from the very beginning, and we know how to fine-tune based on what the patient comes into tell us. When we say how are you doing, they describe that. So we use that. That's really important, but we also have the biomarkers, and we understand how to move forward with treating according to biomarkers. Now I told you we haven't forgotten about the 15% of children who have focal epilepsy. And we -- some years ago, started the RESPONSE study. That really shows our commitment to advancing our indication for use to a pediatric population. FDA required a prospective open-label trial. And frankly, in contrast to any study, NeuroPace has ever done. We've had challenges in enrollment. And this is very typical for any company that's trying to do a pediatric study for a therapy that is widely available to adults, and for which physicians are providing according to the practice of medicine, not everywhere, but some. So in the meantime, people are publishing all these publications about patients treated, children treated with epilepsy. And we became aware of a database Pediatric Epilepsy Research Consortium a 10-year old database or 10-year long database of children treated according to the practice of medicine across 27 pediatric epilepsy centers. So when we put that together and we add to it, support from advocacy groups. In fact, a demand that children have official access to this. We were able to partner with NEST, the National Evaluation System for healthcare Technology that is funded by FDA in order to promote the use of real-world data to expand indication for use, particularly to underserved population. And we are a perfect project for NEST. And as part of this, we are able to collaborate with FDA with several meetings per month, sometimes with over 25 individuals from FDA in attendance to discuss how we can use all of these data sources to support an expansion for indication for use. We are well along in this process. NEST uses a group of epidemiologists. There is a set process by which this is done, which includes looking at the data sets and understanding whether they contain data points that would that FDA would be able to accept and design then a fit-for-purpose study to access that data set, including a feasibility in the concept protocol, which is where we are right now. We are getting very close to the official NEST mark of approval. And what that means is FDA has agreed in principle that the data is available and that they will accept that as sufficient. We then execute on that. We implement, we do data analysis along with NEST, and provide that data to FDA. It has moved along since the data already exists. We believe that, this will go very quickly and that we will be able to submit in the second half of this year. Now there is some interest in NAUTILUS idiopathic generalized epilepsy. I mentioned this epilepsy before, and told you that this happens in otherwise neurologically normal individuals. Medication is the only option. There is not an option for surgery. The risk for sudden unexpected death in epilepsy is particularly high in this population because these patients have generalized tonic-clonic seizures, which are the seizures that put people at particular risk. We -- based on the literature, elected to provide treatment in the centromedian nucleus of the thalamus. We are moving ahead with an indication for use as an adjunctive therapy. FDA allowed us to enroll 12 years of age and up. This is a randomized controlled trial prospective, multicenter, sham-stimulation controlled. And Mark Richardson alluded to the -- how rapid the enrollment was, 100 participants enrolled quickly, 87 implanted across 23 centers. This -- the image to your right, is pretty profound. We didn't know whether we could detect seizures in the thalamus. And so what you see right there is the RNS System detecting a seizure in the thalamus, really establishing the feasibility of this approach. Here is the time line by providing the publications and experience to FDA, we were granted a breakthrough designation. Many are not all of -- or probably all of you understand that this really speeds up the regulatory path. Our first enrollment was in 2022. Our last enrollment was within 18 months. That's a year faster than I had predicted, really speaking to the interest and need. The final patient will complete the 1-year endpoint, which is when we look at our primary effectiveness and safety. And I would love to be able to provide those results in March of 2025, but there's a whole lot of work that happens after the last visit to the time that we are able to submit to FDA. And I've listed some of that work. I will just, in the interest of time, to tell you it is a great deal. However, we're optimistic that we will be ready to submit to FDA and the second half of 2025 about the time that we submit for pediatrics. We will continue to follow these patients to 2 years, but the primary endpoints are at that 1-year time. We mentioned Lennox-Gastaut, This is the worst type of epilepsy. It happens in childhood and parents are faced with a child who develop progressive encephalopathy, really deteriorates in front of their eyes and has multiple daily seizures. We were able to receive a very sizable Grant from National Institutes of Health to fund this entire study. It is being conducted at 6 clinical sites and in addition, at a site that is in charge of the neuroimaging part of this study. It is also the study is funding biomarker investigation. All 20 patients or implanted safety is very acceptable at this point. This is a 5-year Grant. The Grant completes 2026. And at the end of that, we will have a very good idea about safety, which is the primary endpoint in this feasibility study. We'll have information about efficacy. We'll understand about biomarkers that we can use to drive treatment in this patient population. And we will know ahead of time about where to put the leads using computational methods that we are developing as part of this effort. So I want to tell you about all the data that we have. We have over 6,500 patients that are being treated. And it's like an oil well. Every day, there is more data. This slide is out of date, every time I show it. There's over 19 million stored samples of intracranial EEG. And what we have, we have samples when the patient is at baseline, meaning that, when we look at it, we don't see anything happening, samples when there are epileptiform discharges and we have samples when patients have electrographic seizures. I will tell you that what we discovered is each one of these types of intracranial EEGs are telling us something. And the algorithms we have developed are giving us biomarkers that will let -- that correlate with patient-reported seizures. And that those biomarkers are what are going to drive our innovation in the application of the existing technology. And I'll just show you one example. And treat to clinical seizures, let's treat to biomarkers. And so what we started out is using machine learning tools to look at in the top panel, you'll see year 1 to year 7 in individuals with mesial temporal lobe epilepsy. The X-axis is the frequency of epileptiform spikes, the Y-axis is a frequency spectrum or the frequency domain. In the top row, you see patients who did really well. And in the bottom row is patients who didn't do well. They've stayed a 25% reduction. What we see is that everybody started out the same way in frequency and epileptiform by experience, patients got better and better and better. They had fewer epileptiform spikes. This tells us that we should treat epileptiform spikes. We then developed deep learning capabilities, and now we're using vision transformers very recently to understand whether we could go deep, and identify those patients who are going to be responders and those who are having a less robust response. And it was very clear that going down 50 levels in this analysis, which was using a convolutional neural network that very clearly distinguish that there are differences in these patients. So this is another window to the brain. Well, can we use this data in general, it has some value. It has value to us because of all of the information it provides us about patients. These are my two patients. And where you see the little round M, that's the patient swiping a magnet to tell me that she has had a seizure. And the green bars are when I actually see seizures. So you see that when this patient tells me she's having a seizure, she is, but she's not able to tell me about all of them, but it's a pretty good indicator. The patient on the bottom is a patient that has been so hard to treat because she has no idea when she's having seizures on. And I've been treating her for 20 years blindly. With RNS System, I now know when she has seizures that she doesn't know about. And in January 2022, I found better detection stimulation programming. And now when she has them, it's when she decides she's not going to take her medication. So what is our data telling us? Well, we look at different types of data. And in the upper left panel, you'll see one intracranial EEG that showing that the patient is having prolonged epileptiform activity. It's not a seizure, but the device is detecting a number of abnormalities. To the right, you see that there is an electrographic seizure. There's a buildup in these discharges, the patient doesn't know that this is a seizure. And then the bottom panel is an electrographic seizure that the patient has symptoms with. So the patient knows. We have looked at all of these types of recordings and have found that those long episodes, upper left panel are strongly correlated with the patient's clinical experience. And this is an example then how this can be applied to drugs. So to the left, you'll see the spike rate, that's the middle line for a patient who's being treated with the RNS System and was started with a new anti-seizure medication. And we could tell, as is demonstrated in the graph to your right, within 1 to 2 weeks, whether that drug was going to work or not. That relieves patients of the burden of drug trials that can go on for 6 to 12 months. But it also was very interesting to a company called Rapport, this is a Janssen spinoff. It's a company with a very interesting compound that binds specifically to proteins on AMPA receptor that are very prevalent in the mesial temporal lobe well, guess who has a lot of patients with mesial temporal lobe epilepsy. Now this company wanted to perform the very first study in people to see if there is target engagement. And based on that experience to make the decision about whether to invest in clinical development, they came to us and said, we understand from your publications that long episodes or biomarkers for patient clinical response. And we want your long episodes to be the endpoint of our study. This is a whole new paradigm in very early drug development. So that's very exciting. And we've had a few people ask about potential future applications. And I'm going to ask Sameer Sheth, who is an extremely forward-thinking, thoughtful, brilliant neurosurgeon at Baylor to talk about how he views these opportunities. Sameer, there you are. I see you. And I'm going to advance your slides.

Okay. Can you hear me, okay?

We can.

Okay. Wonderful. Well, thanks a lot, Marty, and thanks to everybody. Sorry, I couldn't join you all there, but very exciting, I'm really happy to be here. Next slide, please. So maybe we'll skip to the next one. This is kind of an overview of everything which I want to come back to. Can we go to the next...

I'm sorry. This is my slides, Sameer.

Yes, do you want to talk about this part, Marty? Yes, okay. Yes.

I jumped ahead, but that's okay. You stay on for this. So, I've told you...

As we do Marty, and Dr. Sheth, thank you just for everybody's benefit here.

Actually, Joel step up to talk...

No, I'll add just real quick. So I spent a little bit of time earlier talking about focus and execution and everything that we're talking about today has to do with epilepsy. Except this piece here, and I don't want anybody to be confused as to whether we're confused as to how important that execution is to us. At the same time, and the question came earlier today, Rohin, around applications of the RNS platform. And so we wanted to take a minute to give you some perspective for not even so much things that we're initiating, but supporting. But what are some of the external vectors that the field you're seeing, and is pursuing by way of an understanding of the unique nature of the differentiated technology with R&S and how they see it being applied. So the reason we have this section here today is to give you a little bit of a window for the things that we see when we talk with people in the community, and the work that's going on. Not distracting us from making sure that we're doing everything we can with epilepsy, but speaking to the potential and the value of the RNS System. So just that little blinking value-added caveat there. And Marty, please get us started here.

Thank you Joel for protecting us here. Yes, let me assure you, we have a relentless and consuming focus -- all consuming focus on epilepsy. But it's impossible to ignore the potential of the platform technology. And if we think about the -- what the RNS System brings. Well, first of all, there's a huge safety data set. And evidence, demonstration of really impressive efficacy. We are able, as we've shown you, to monitor brain electrical activity. And we can do so anywhere in the brain. And therefore, theoretically for any type of brain disorder, the device lends itself to targeted and personalized therapy. And of course, there is this really exciting and very fast discovery in the area of biomarkers. And then, of course, you don't want to wait until a patient is sick to treat them. We want to treat them before they have the symptoms of their disease. I mentioned that it's impossible to ignore, and it's impossible to ignore because we are participating in collaboration sometimes as co-investigators, sometimes in a more distant rule for externally funded studies in disorders other than epilepsy. And they fall within two main categories. So I'm going to group them into neuropsychiatric disorders. And you'll see the list of -- again, this is externally funded research, mostly NIH, in depression, impulse control, loss of control eating and PTSD. And the other category falls in the area of memory and cognition. So restoring function. These are also NIH funded. Many of them have to do with memory in the domains of navigational memory, also cognitive assessment, understanding brain plasticity, understanding memory. And also there is a trial in autism disorder. So all of this is happening bringing -- people bringing things to us and us able to support them with our enthusiasm, often our data science and our device. But there are opportunities for providing responsive stimulation. And now I'm going to introduce Dr. Sheth again to share how he views this.

Yes. Great. Thanks very much. So just in the way of framing, I'm going to talk about sort of two framework level organizations in terms of the types of disorders outside of epilepsy that we might think of as being opportunities to use RNS. I'll spend a little bit of time on this first one and a bit more time on the second one. So the first one, really, are those with -- actually, are these out of order. Can you just check see what the rest of the -- what the next one is? Yes.