GlobeNewswire

NeurAxis Reports Third Quarter 2023 Financial Results

CARMEL, Ind., Nov. 20, 2023 (GLOBE NEWSWIRE) -- NeurAxis, Inc. (NYSE American: NRXS) (“NeurAxis” or the “Company”), a medical technology company commercializing neuromodulation therapies that address chronic and debilitating conditions in children and adults, today reported financial results for the third quarter ended September 30, 2023.

Recent Highlights:

  • Announced the results of a retrospective comparative study led by the Cincinnati Children’s Hospital Medical Center that was published and featured in the September 19th, 2023 Frontiers in Pain Research. The publication, Percutaneous electrical nerve field stimulation compared to standard medical therapy in adolescents with functional abdominal pain disorders, compared and reviewed the records of 101 adolescent patients with functional abdominal pain disorders (FAPD) treated with IB-Stim™ therapy or standard-of-care medications, amitriptyline (tricyclic antidepressant) or cyproheptadine (antihistamine). The comparative analysis noted:
    • at follow-up, IB-Stim™ therapy showed improvements in abdominal pain (p=0.001) and functional disability (p=0.048) compared to baseline, while amitriptyline showed improvements in abdominal pain (p=0.034);
    • in a comparison of outcomes between groups, IB-Stim™ was more effective than cyproheptadine in improving abdominal pain (p=0.04) and did not differ from amitriptyline (p=0.64). Nausea scores did not differ between groups (p>0.05); and
    • disability scores between groups were only more effective for amitriptyline vs. cyproheptadine (p=0.03). Disability scores did not differ from amitriptyline compared with IB-Stim™ (p=0.21).
  • 4 new publications in the third quarter of 2023 bringing our total publications to date to 11, remaining on track with our target of 13 publications in children with FAPD by year-end, with a total of 16 publications by Q1 2024. This progress places the Company in a great position for expanded payor coverage.
  • Announced the signing of an exclusive option agreement with the University of Michigan for the exclusive licensing of its innovative rectal expulsion device (RED).
  • Announced $3 million in committed financing from affiliates of Inspire Health Alliance.
  • Received new policy coverage from CareFirst BCBS in the mid-Atlantic with 3.5 million members, increasing NeurAxis access to 8.25 million covered lives.

“We continue to execute on our commercialization plan, growing our body of clinical evidence to expand payor coverage and adoption. As anticipated, we are in reach of our overall target of 16 publications, which we now expect by Q1 2024, and we have been receiving positive response from payers on a national level as we close in on all data being published,” said Brian Carrico, President and Chief Executive Officer of NeurAxis. “Our sales and marketing efforts for IB-Stim™ continue to show growth in areas where children’s hospitals have good payer coverage, despite some increased short-term challenges in areas where there is no good written policy coverage combined with some ordering patterns during the third quarter. Our focus remains on growing our body of clinical evidence and accelerating the speed of policy adoption by payers. Additionally, we were happy to announce the exclusive option agreement with the University of Michigan for RED. RED offers a significant market opportunity for us as it aligns with our focus and expertise in the field of disorders of the gut-brain interaction. We anticipate a 510(k)-clearance pathway for RED, targeting commercialization in 2024 and meaningful revenues from RED beginning in 2024. We believe great data leads to strong policy coverage, which in return translates to higher revenues. We look forward to our continuing progress to grow our business, with many upcoming catalysts for growth.”

Third Quarter 2023 Financial Results
Revenue for the third quarter of 2023 was $477.5 thousand, representing a decrease of 23% compared to $618.8 thousand in the third quarter of 2022. The decrease was primarily due to ordering patterns of our major customers.

Gross profit for the third quarter of 2023 was $410.2 thousand, representing a decrease of 26% compared to a gross profit of $551.2 thousand in the third quarter of 2022. Gross margin totaled 85.9% in the third quarter of 2023, compared to 89.1% in the third quarter of 2022. The decrease in gross profit was primarily due to higher cost of goods sold while sales decreased, mainly because of a small amount of devices that were sold below the regular price.

Selling expenses for the third quarter of 2023 were $64.2 thousand, compared to $81.6 thousand in the third quarter of 2022. The decrease was primarily due to lower commission costs, with the commission rate being lowered at the beginning of 2023.

Third quarter research and development expenses were $45.0 thousand, compared to $86.2 thousand in the third quarter of 2022. The decrease was primarily due to lower costs associated with completed pipeline indications.

General and administrative expenses for the third quarter of 2023 were $3,323.4 thousand, compared to $1,586.5 thousand in the third quarter of 2022. The increase was driven primarily due to higher wages and professional fees in connection with our initial public offering.

Third quarter net loss was ($4,904.4) thousand, or ($1.35) per common share, compared to ($2,079.7) thousand, or ($1.14) per common share, for the same period of 2022.

Forward-Looking Statements
Certain statements in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are based on management’s current assumptions and expectations of future events and trends, which affect or may affect the Company’s business, strategy, operations or financial performance, and actual results and other events may differ materially from those expressed or implied in such statements due to numerous risks and uncertainties. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. There are a number of important factors that could cause actual results, developments, business decisions or other events to differ materially from those contemplated by the forward-looking statements in this press release. These factors include, among other things, the conditions in the U.S. and global economy, the trading price and volatility of the Company’s stock, public health issues or other events, the Company’s compliance with applicable laws, the results of the Company’s clinical trials and perceptions thereof, as well as factors described in the Risk Factors section of NeurAxis’s public filings with the Securities and Exchange Commission (SEC). Because forward-looking statements are inherently subject to risks and uncertainties, you should not rely on these forward-looking statements as predictions of future events. These forward-looking statements speak only as of the date of this press release and, except to the extent required by applicable law, the Company undertakes no obligation to update or revise these statements, whether as a result of any new information, future events, and developments or otherwise.

About NeurAxis, Inc.
NeurAxis, Inc., is a medical technology company focused on neuromodulation therapies to address chronic and debilitating conditions in children and adults. NeurAxis is dedicated to advancing science and leveraging evidence-based medicine to drive adoption of its IB-Stim™ therapy, which is its proprietary Percutaneous Electrical Nerve Field Stimulation (PENFS) technology, by the medical, scientific, and patient communities. IB-Stim™ is FDA-cleared for functional abdominal pain associated with irritable bowel syndrome (IBS) in adolescents 11-18 years old. Additional clinical trials of PENFS in multiple pediatric and adult conditions with large unmet healthcare needs are underway. For more information, please visit http://neuraxis.com.

Contacts:

Company
NeurAxis, Inc.
info@neuraxis.com

Investor Relations
Gilmartin Group
IR@neuraxis.com


NeurAxis, Inc.
Condensed Statements of Operations
(unaudited)
 
 For the Three Months Ended
September 30,
  For the Nine Months Ended
September 30,
 
 2023  2022  2023  2022 
            
            
Net Sales$477,460  $618,805  $1,928,590  $2,071,653 
Cost of Goods Sold 67,287   67,638   231,000   221,846 
                
Gross Profit 410,173   551,167   1,697,590   1,849,807 
                
Selling Expenses 64,210   81,589   250,933   344,892 
Research and Development 44,950   86,175   171,536   144,239 
General and Administrative 3,323,352   1,586,527   6,316,411   3,746,688 
                
Operating Loss (3,022,339)  (1,203,124)  (5,041,290)  (2,386,012)
                
Other Income (Expense):               
Financing charges    (601,128)  (2,772)  (1,473,892)
Interest expense (102,628)  (100,741)  (453,869)  (161,291)
Interest income 2,103      2,103    
Change in fair value of warrant liability 592,853   (90,628)  791,610   (660,189)
Change in fair value of derivative liability 6,394   (68,032)  198,551   (68,032)
Amortization of debt discount and issuance cost (1,331,030)  (16,029)  (4,881,622)  (28,973)
Extinguishment of debt liabilities (1,058,062)     71,436    
Other income 9,931      11,483   11,956 
Other expense (1,578)     (9,008)   
Total other income (expense), net (1,882,017)  (876,558)  (4,272,088)  (2,380,421)
                
Net Loss$(4,904,356) $(2,079,682) $(9,313,378) $(4,766,433)
                
Per-share Data               
Basic and diluted loss per share$(1.35) $(1.14) $(3.65) $(2.70)
                
Weighted Average Shares Outstanding               
Basic and diluted 3,625,519   1,988,758   2,552,007   1,976,380 
                


NeurAxis, Inc.
Condensed Balance Sheet
(unaudited)
 
 September 30,
2023
(Unaudited)
 December 31,
2022
 
Assets      
Current Assets:      
Cash and cash equivalents$761,249  $253,699 
Accounts receivable, net 132,382   174,399 
Inventories 34,530   48,133 
Prepaids and other current assets 38,693   726 
Total current assets 966,854   476,957 
       
Property and Equipment, at cost: 420,586   405,845 
Less - accumulated depreciation (340,260)  (317,834)
Property and equipment, net 80,326   88,011 
       
Other Assets:      
Deferred offering costs    736,736 
Operating lease right of use asset 78,043   101,382 
Intangible assets, net 110,695   77,558 
Total Assets$1,235,918  $1,480,644 
       
Liabilities      
       
Current Liabilities:      
Accounts payable$566,649  $1,592,116 
Accrued expenses 280,063   834,062 
Notes payable 194,249   202,834 
Current portion of operating lease payable 45,194   33,395 
Notes payable - related party    58,051 
       
Notes payable - convertible notes, net of unamortized discount of
$0 and $3,327,213 as of September 30, 2023 and December 31,
2022
    228,342 
Customer deposits 68,972   59,174 
Share liabilities 934,256    
Derivative liabilities    1,735,700 
Warrant liabilities 168,269   2,234,384 
Total current liabilities 2,257,652   6,978,058 
       
Non-current Liabilities:      
Operating lease payable, net of current portion 39,353   76,199 
Note payable, net of current portion     
Total non-current liabilities 39,353   76,199 
       
Total liabilities 2,297,005   7,054,257 
Commitments and contingencies (see note 14)      
       
Stockholders’ Equity (Deficit)      
       
Convertible Series A Preferred stock, $0.001 par value; 1,000,000
shares authorized; 0 issued and outstanding as of September 30, 2023
and 506,637 as of December 31, 2022
    507 
Convertible Series Seed Preferred Stock, $0.001 par value; 120,000 shares authorized;
0 issued and outstanding as of September, 2023
and 115,477 as of December 31, 2022
    115 
Common stock, $0.001 par value; 100,000,000 shares authorized;
5,149,340 issued and outstanding as of September, 2023 and
1,963,322 as of December 31, 2022
 5,149   1,963 
Additional paid in capital 42,178,570   28,355,230 
Accumulated deficit (43,244,806)  (33,931,428)
       
Total stockholders’ equity (deficit) (1,061,087)  (5,573,613)
       
Total Liabilities and Stockholders’ Equity (Deficit)$1,235,918  $1,480,644 
        



NeurAxis, Inc.
Condensed Statement of Cash Flows
(unaudited)
 
 For the Nine Months Ended September 30, 
 2023  2022 
Cash Flows from Operating Activities       
Net Loss$(9,313,378) $(4,766,433)
Adjustments to reconcile net loss to net cash used by operating activities:       
        
Amortization of debt discount and issuance cost 4,881,622   28,973 
Depreciation and amortization 30,290   25,047 
Provisions for losses on accounts receivable 6,380   42,795 
Non-cash lease expense 23,339   19,945 
Non-cash interest expense 260,777    
Stock based compensation    27,319 
Extinguishment of derivative liability (71,436)   
Issuance of common stock for non-cash consideration 2,550,000    
Finance charges 2,772   1,473,892 
Change in fair value of debt liabilities (198,551)  68,032 
Change in fair value of warrant liabilities (791,610)  660,189 
Changes in operating assets and liabilities:       
Accounts receivable 35,637   (247,738)
Inventory 13,603   (18,141)
Prepaids and other current assets (37,967)  (481)
Accounts payable (1,025,467)  359,652 
Accrued expenses (415,181)  256,184 
Customer deposits 9,798   7,762 
Operating lease liability (25,047)  (20,686)
Net cash used by operating activities (4,064,419)  (2,083,689)
        
Cash Flows from Investing Activities       
Additions to property and equipment (14,741)  (11,390)
Additions to intangible assets (41,000)   
Net cash used by investing activities (55,741)  (11,390)
        
Cash Flows from Financing Activities       
Proceeds from issuance of common stock, net of issuance costs 5,464,642    
Offering costs in advance of sale of common stock (2,417,185)  (87,694)
Principal payments on notes payable (3,487,578)  (122,265)
Proceeds from notes payable 159,831   122,000 
Proceeds from convertible notes, net of fees 4,908,000   1,870,000 
Net cash provided (used) by financing activities 4,627,710   1,782,041 
        
Net Increase (decrease) in Cash and Cash Equivalents 507,550   (313,038)
        
Cash and Cash Equivalents at Beginning of Period 253,699   320,858 
        
Cash and Cash Equivalents at End of Period$761,249  $7,820 
Supplemental Disclosure of Non-cash Cash Activities       
Cash paid for interest$192,015  $118,391 
Cash paid for income taxes     
Supplemental Schedule of Non-cash Investing and Financing Activities       
Fair value of warrant liabilities of warrants from convertible notes$2,446,502  $1,822,435 
Fair value of derivative liabilities of conversion feature from convertible notes 2,375,378   1,518,092 
Relative fair value of shares issued with convertible notes    3,365 
Deferred offering costs in accounts payable    606,830 
        


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