GlobeNewswire Inc | Nov 10, 2020 04:05PM EST

November 10, 2020

IRVINE, Calif., Nov. 10, 2020 (GLOBE NEWSWIRE) -- ClearPoint Neuro, Inc. (Nasdaq: CLPT), a medical device company with a portfolio of products focused on enabling therapies for neurological disorders, today announced financial results for its third fiscal quarter ended September 30, 2020.

Third Quarter 2020 Highlights

-- Reported record total revenue of $3.5 million, a 20% increase over the same quarter last year -- Increased biologics and drug delivery revenue to $1.5 million, a 162% increase over the same quarter last year, driven by new clinical service relationships -- Supported 200 cases in the quarter

This quarters results, with a return to double-digit growth, underscores the dedication and focus of the entire ClearPoint Neuro team, commented Joe Burnett, President and CEO of ClearPoint Neuro. As elective procedures increased in the third quarter, our manufacturing employees in our Irvine, CA facility and our Clinical Specialist team on the front lines worked diligently to provide best-in-class support. I'm pleased that hospitals have prioritized our teams access to support cases, enabling the best service possible. As a result, I am proud to disclose that we supported 200 cases in the quarter. While there remains uncertainty due to the pandemic, our team is being proactive in redeploying our resources to further our engineering efforts and investing in our people and our pipeline of future products and services.

As we look to the conclusion of the year, we believe that total revenue for 2020, absent a resumption of a partial or full suspension of elective procedures due to the progression of the COVID-19 pandemic, will be in a range of $12.0 million to $12.5 million, which would represent growth over the prior year of between 7% to 11%, continued Burnett. Nonetheless, it should be kept in mind that our case volume currently represents approximately 80% of our pre-pandemic estimates, and, while hospitals are willing to treat very sick patients, many of these patients are in a high-risk category for COVID-19 based on age or other conditions. As a result, patients, rather than hospitals, are more likely to make the decision to postpone procedures.

Third Quarter 2020 Financial Results

Total revenues were a record $3.5 million in the third quarter of 2020, compared to $2.9 million for the third quarter of 2019, an increase of 20%.

Functional neurosurgery navigation revenue, which consists of disposable product commercial sales related to cases utilizing the ClearPoint system, decreased 1% to $1.8 million for the third quarter 2020, from $1.9 million for the same period in 2019. This decrease reflects the continuing effects of the COVID-19 pandemic, in which elective surgical procedures that were postponed or cancelled at the outset of the pandemic have resumed, albeit at volumes that have not yet reached pre-pandemic activity.

Biologics and drug delivery revenues, which include sales of disposable products and services related to customer-sponsored clinical trials utilizing the ClearPoint system, increased 162% to $1.5 million for the third quarter 2020, from $0.6 million for the same period in 2019. This increase was due to the establishment of additional relationships with biologic and drug delivery companies that included period-based retainers for ClearPoint Neuros clinical services in support of such companies clinical trials.

Capital equipment and software revenue, consisting of sales of ClearPoint reusable hardware and software, and of related services, decreased 48% to $0.2 million for the third quarter 2020, from $0.4 million for the same period in 2019. While revenues from this product line historically have varied from quarter to quarter, the Company believes that many hospitals have postponed capital equipment acquisition activities due to the COVID-19 pandemic.

The Company achieved a gross margin of 80% on its sales for the third quarter 2020, compared to a gross margin of 66% for the same period in 2019. This increase was due primarily to a shift in the mix of revenues by line of business that resulted in service revenues, which bear higher gross margins in comparison to other product lines, representing a greater contribution to total sales for the third quarter 2020, relative to the same period in 2019.

Operating expenses for the third quarter 2020 were $4.1 million, a 43% increase from operating expenses of $2.9 million for the same period in 2019. This increase was comprised of: (a) research and development costs, which increased 59% due primarily to increases in headcount and increased project activity; (b) sales and marketing expenses, which increased 40%, due primarily to increases in headcount of the Companys clinical specialist team; and (c) general and administrative expenses, which increased 33%, due primarily to an increase in company-wide share-based compensation, and a reduction of the allocation of shared departmental resources to production due to the reduced manufacturing activity as an effect of the COVID-19 pandemic.

Operating loss for the third quarter 2020 was $1.3 million, compared with $0.9 million for the same period in 2019.

Cash and cash equivalent balances at September 30, 2020 were $14.7 million.

Teleconference Information

Investors and analysts are invited to listen to a live broadcast review of the Company's 2020 third quarter financial results today at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) that may be accessed by visiting the Company's website at www.clearpointneuro.com and selecting Investors, News / Events / Presentations, Events.

Investors and analysts who would like to participate in the conference call may do so via telephone at (877) 407-9034, or at (201) 493-6737 if calling from outside the U.S. or Canada.

For those who cannot access the live broadcast, a replay will be available shortly after the completion of the call until December 10, 2020 by calling (877) 660-6853, or (201) 612-7415 if calling from outside the U.S. or Canada, and then entering conference I.D. number 413671. An online archive of the broadcast will be available on the Company's website at www.clearpointneuro.com, on the Investor Relations page.

About ClearPoint Neuro

ClearPoint Neuros mission is to improve and restore quality of life to patients and their families by enabling therapies for the most complex neurological disorders with pinpoint accuracy. Applications of the Companys current product portfolio include deep-brain stimulation, laser ablation, biopsy, neuro-aspiration, and delivery of drugs, biologics and gene therapy to the brain. The ClearPoint Neuro Navigation System has FDA clearance, is CE-marked, and is installed in 60 active clinical sites in the United States. The Companys SmartFlow cannula is being used in partnership or evaluation with 25 individual biologics and drug delivery companies in various stages from preclinical research to late stage regulatory trials. To date, more than 4,000 cases have been performed and supported by the Companys field-based clinical specialist team which offers support and services for our partners. For more information, please visit www.clearpointneuro.com.

Forward-Looking Statements

Statements herein concerning the Companys plans, growth and strategies may include forward-looking statements within the context of the federal securities laws. Statements regarding the Company's future events, developments and future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. Uncertainties and risks may cause the Company's actual results to differ materially from those expressed in or implied by forward-looking statements. Particular uncertainties and risks include those relating to: the impact of COVID-19 and the measures adopted to contain its spread; future revenues from sales of the Companys ClearPoint Neuro Navigation System products; the Companys ability to market, commercialize and achieve broader market acceptance for the Companys ClearPoint Neuro Navigation System products; and estimates regarding the sufficiency of the Companys cash resources. More detailed information on these and additional factors that could affect the Companys actual results are described in the Risk Factors section of the Companys Annual Report on Form 10-K for the year ended December 31, 2019, and the Companys Quarterly Report on Form 10-Q for the three months ended June 30, 2020, both of which have been filed with the Securities and Exchange Commission, and the Companys Quarterly Report on Form 10-Q for the three months ended September 30, 2020, which the Company intends to file with the Securities and Exchange Commission on or before November 16, 2020.

Contact:

Harold A. Hurwitz, Chief Financial Officer(949) 900-6833info@clearpointneuro.com

Jacqueline Keller, Vice President, Marketing(949) 900-6833info@clearpointneuro.com

CLEARPOINT NEURO, INC.Condensed Consolidated Balance Sheets

September 30, December 31, 2020 2019 (Unaudited)ASSETS Current assets: Cash and cash equivalents $ 14,665,597 $ 5,695,722 Accounts receivable, net 1,449,333 1,089,917 Inventory, net 3,534,643 3,240,218 Prepaid expenses and other current assets 492,886 357,227 Total current assets 20,142,459 10,383,084 Property and equipment, net 327,055 447,162 Operating lease rights of use 294,583 374,218 Software license inventory 571,800 504,400 Licensing rights 487,640 135,000 Other assets 23,380 82,573 Total assets $ 21,846,917 $ 11,926,437 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 1,064,121 $ 965,783 Accrued compensation 1,210,356 1,408,292 Other accrued liabilities 487,768 328,460 Operating lease liabilities, current 108,923 113,520 portionDeferred product and service revenue 767,969 1,016,892 Paycheck Protection Program loan payable, 73,985 - current portionTotal current liabilities 3,713,122 3,832,947 Accrued interest - 959,659 Operating lease liabilities, net of 205,468 276,669 current portionDeferred product and service revenue, net 108,816 197,862 of current portion2020 senior secured convertible notes 16,848,396 - payable, net2010 junior secured notes payable, net - 2,072,583 Paycheck Protection Program loan payable, 822,015 - net of current portionTotal liabilities 21,697,817 7,339,720 Commitments and contingencies Stockholders? equity: Preferred stock, $0.01 par value;25,000,000 shares authorized; none issued - - and outstanding at September 30, 2020 andDecember 31, 2019Common stock, $0.01 par value;200,000,000 shares authorized; 15,881,404shares issued and outstanding at 158,814 152,353 September 30, 2020; and 15,235,308 issuedand outstanding at December 31, 2019Additional paid-in capital 117,930,011 117,173,984 Accumulated deficit (117,939,725 ) (112,739,620 )Total stockholders? equity 149,100 4,586,717 Total liabilities and stockholders? $ 21,846,917 $ 11,926,437 equity

CLEARPOINT NEURO, INC.Condensed Consolidated Statements of Operations (Unaudited)

For The Three Months Ended September 30, 2020 2019 Revenues: Product revenues $ 2,333,550 $ 2,594,428 Service and other revenues 1,185,637 333,038 Total revenues 3,519,187 2,927,466 Cost of revenues 718,787 983,042 Research and development costs 1,209,048 761,881 Sales and marketing expenses 1,492,948 1,063,143 General and administrative expenses 1,369,900 1,029,929 Operating loss (1,271,496 ) (910,529 )Other income (expense): Other income (expense), net (11,491 ) 728 Interest expense, net (201,245 ) (213,167 )Net loss $ (1,484,232 ) $ (1,122,968 )Net loss per share attributable to common stockholders:Basic and diluted $ (0.09 ) $ (0.08 )Weighted average shares outstanding: Basic and diluted 15,724,401 14,053,508

For The Nine Months Ended September 30, 2020 2019 Revenues: Product revenues $ 6,030,005 $ 6,952,575 Service and other revenues 3,082,558 1,053,807 Total revenues 9,112,563 8,006,382 Cost of revenues 2,276,927 2,899,837 Research and development costs 2,860,877 2,044,224 Sales and marketing expenses 3,915,920 3,246,912 General and administrative expenses 4,013,493 2,991,305 Operating loss (3,954,654 ) (3,175,896 )Other income (expense): Other income (expense), net (5,360 ) 8,100 Interest expense, net (1,240,091 ) (726,292 )Net loss $ (5,200,105 ) $ (3,894,088 )Net loss per share attributable to common stockholders:Basic and diluted $ (0.33 ) $ (0.31 )Weighted average shares outstanding: Basic and diluted 15,556,231 12,477,790

CLEARPOINT NEURO, INC.Condensed Consolidated Statements of Cash Flows (Unaudited)

For The Nine Months Ended September 30, 2020 2019 Cash flows from operating activities: Net loss $ (5,200,105 ) $ (3,894,088 )Adjustments to reconcile net loss tonet cash flows from operating activities:Depreciation and amortization 170,057 105,310 Share-based compensation 762,488 576,012 Amortization of debt issuance costs and 855,598 523,969 original issue discountsAmortization of lease rights of use, 74,734 76,871 net of accretion in lease liabilitiesIncrease (decrease) in cash resulting from changes in:Accounts receivable (359,416 ) (895,189 )Inventory, net (323,075 ) (908,413 )Prepaid expenses and other current (135,658 ) (150,589 )assetsOther assets 59,193 11,899 Accounts payable and accrued expenses 59,711 1,506,279 Accrued interest (959,661 ) - Lease liabilities (70,896 ) (82,448 )Deferred revenue (337,969 ) 746,682 Net cash flows from operating (5,404,999 ) (2,383,705 )activitiesCash flows from investing activities: Purchases of property and equipment - (10,190 )Acquisition of licensing rights (441,341 ) (150,000 )Net cash flows from investing (441,341 ) (160,190 )activities Cash flows from financing activities: Proceeds from issuance of 2020 seniorsecured convertible notes, net of 16,757,871 - financing costs and discountProceeds from issuance of Paycheck 896,000 - Protection Program loanProceeds from private placement of - 7,427,848 common stock, net of offering costsProceeds from stock option and warrant - 387,426 exercisesRepayment of notes payable (2,837,656 ) (2,137,344 )Net cash flows from financing 14,816,215 5,677,930 activitiesNet change in cash and cash equivalents 8,969,875 3,134,035 Cash and cash equivalents, beginning of 5,695,722 3,101,133 periodCash and cash equivalents, end of $ 14,665,597 $ 6,235,168 period SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for: Income taxes $ - $ - Interest $ 1,399,182 $ 82,621