Good afternoon, and welcome everyone to the Summer 2024 Investor Summit. We have here joining us today, Jeff Thramann, Executive Director and Chairman of Aclarion, Inc., and we are thrilled to host him. We will hold a Q&A session towards the end of the webcast. You can ask a question at any point during the presentation. Your mics are muted, so it is necessary to type your question into the Ask Question box on the left side of your screen for the team to address. So Jeff, over to you.
Okay, thank you. Thanks everyone for your interest. My name is Jeffrey Thramann. I'm the Executive Chairman of Aclarion. My background is that of a neurosurgeon turned serial entrepreneur and inventor. I've taken six companies now from really founding to exit. Two of those I've sold to public companies, three to private equity roll-ups, and one to a private company. I'm the named inventor on somewhere north of about 130 different patents. I got involved in Aclarion because the company's addressing a major problem in the low back pain space with giving surgeons additional information that they can use to improve the clinical care that they provide to those patients.
When I was in practice, I was a spine surgeon. It was a big part of my practice of what I did. So what Aclarion is doing is we're essentially a technology company that has created this augmented intelligence algorithm that we use in combination with data that comes in from an MRI, particularly an MRS sequence, and then we're able to identify biomarkers and tell surgeons whether a disc is likely to be painful or not painful. Surgeons are able to use that data to refine their treatment plan and get better clinical results. I'll walk you through the deck, and then I'll answer the questions at the end.
This is our standard disclaimer that goes over some of the risks of forward-looking statements that I'm sure you have seen before. The problem that we're addressing that I mentioned is really what disc do you operate on, or where do you do your operation when a patient comes into you with low back pain? Although you can get an MRI, and that's what this is, this image is here that you're seeing, this is an MRI of the lumbar spine. You see the structures, but there's nothing really here that tells you where the pain is coming from.
So what would be very helpful to surgeons is if there was a technology, particularly a non-invasive technology, where you could get the information from that technology, that would give you a little better idea of what is happening. So that's essentially what we do with our solution. So we, with our technology, a surgeon would be looking at an MRI like this, and they're trying to decide where is the pain, and our technology would measure these biomarkers, and we would send back a report to the patient that essentially labels which discs are not a problem and which discs are potentially a problem. This allows for a much more focused and personalized approach to the treatment plan. That might not be what you were gonna do if you didn't have this information available to you.
That's really the main benefit that we provide. To prove this out, the first thing we did was a big clinical study back in two thousand nineteen with a surgeon by the name of Matthew Gornet. In this study, we had 73 patients that went to surgery, all for low back pain. All the patients had our technology done on them, which is called the NOCISCAN. Dr. Gornet did not have the NOCISCAN information available to him, so he treated the patients like he normally would treat them without this data and made his surgical decision that way. What we did after the surgery is we broke the patients up into two groups.
In one group, we looked at where the surgery matched up to the discs that our technology, that NOCISCAN, said were painful. In that group, 97% of the patients hit the criteria for significant clinical improvement at one year, and then that was durable at two years for 85% of those patients. In the other group, where there was a mismatch, so here the surgeon did a different operation than perhaps he would have done if he had NOCISCAN data available to him. In that category, only 55% hit the criteria for significant clinical improvement at one year, and that extended out to 63% at two years. Both of these studies were published in the European Spine Journal, one in 2019, and the two-year data in 2023.
So the big opportunity here is to improve those outcomes of the patients that are getting, essentially, what might be the wrong operation. So we went out to evaluate, well, how much savings does that provide to the healthcare system? And we did an evaluation called the EVAL study. This was looking at the economic analysis of what it would look like, how much we would save the system in the United States if the treatment results in that we were able to identify the Gornet study were applied to the patient population in the United States. And you can see that we would save approximately $1,700 per patient, and we would significantly improve the clinical success rates, significant amounts of healthcare dollars.
Now, to where do we go from here is putting out doing a study called CLARITY, which is a prospective, randomized, multicenter trial. In this trial, this is kind of the gold standard that surgeons look for to understand whether technology is going to improve patient outcomes and whether they should adopt it in their practice. This trial is being headed up by the Head of Spine at Johns Hopkins, a surgeon by the name of Nicholas Theodore, and we are currently evaluating 14 different sites to get into the study. We expect to have our first patient enrolled in the fourth quarter of 2024.
While this study is going on, we are pursuing additional studies that are faster and get more data out into the marketplace, because all of the clinical data that we can get out there helps us in our discussions with the payers to get payer coverage decisions and reimbursement for this technology. We'll go through that process in detail a little later in the presentation. One thing I do wanna highlight is the uniqueness of our technology. If you look at our revenue and our quarterly filings, you see that most of our revenue is coming from research studies. These are research studies where we are not paying to be a part of these research study.
These are big organizations coming to us, and they're recognizing the unique capability of our technology to identify painful discs, and they're contracting with us, they're paying us, to be part of the study so that they can have our data available to identify discs that are painful. A big one was the NIH, this big NIH study, where they were given a $150 million grant to address opioid addiction. Opioid addiction, you know, low back pain is the number one diagnosis leading to opioid addiction, so that's why the government was interested in doing this. As part of that study, they decided that they were gonna look at all these different diagnostics that were out there to try to see if they could identify groups of populations that would do better with one particular treatment or another.
So we were part of that initial study, which was the comeBACK study. And then they followed that up with the BEST study, which is a 200-patient study, where they're really looking at four different treatment groups and trying to understand what might be the best treatment path for various patients based on identifiable data before they go into the study. And we were the only imaging modality that was picked to be a part of that BEST Study. The enrollment there is the enrollment for these studies began in 2021, completed in 2024, and now they're starting the analysis. So we haven't seen the results of what this is happening, but there was an abstract published in 2024.
Following along that same theme, there's corporations out there that are looking to kind of regenerate the discs and come up with other treatments besides fusion, and we've been included in these studies as well, and there's more of these to come, but just highlighting really on this slide that as these companies or these research organizations look to develop new treatment modalities with stem cells and other sorts of things to regrow the discs, they need a way to measure that progress, and the biomarkers that we're able to identify is being established as a critical component of that, so again, this is another study that was recently completed. We're still awaiting the data, but we were paid for NOCISCAN throughout this study and expect, you know, additional clinical studies to come in and drive this revenue for us.
So now I just wanna dive in a little bit deeper about the product and how it actually works. So what happens is, I talked a little bit about patients go to an MRI, you get structural information. Well, you can run a specific sequence in the same MRI scanner called the spectroscopy sequence. And what spectroscopy will do, it will look at the chemical nature of the tissue as opposed to the structural nature. And it's just raw data that's generated on the machine, and that raw data is then sent to our cloud, to the Aclarion cloud, where we analyze it, we process it with our proprietary software, and we break it down into biomarkers, and that's what you're seeing on this slide.
Those peaks are biomarkers, so we quantify those peaks with the area under the curve, and then we use those biomarkers into, in an algorithm, a proprietary algorithm that we have. We put those numbers in there, and the algorithm has six ratios for each disc, with three pain markers in the numerator and two structural integrity markers in the denominator. And the output of that is whether a disc is painful or not. And you can see the separation here is pretty good. There's a little bit of overlap, but very good separation here for clinical purposes. So there really is no competition in the marketplace that can identify the biomarkers through spectroscopy like we do with a non-invasive diagnostic.
The only competition that's in the market to evaluate whether discs are painful or not is the discogram, and this has been the gold standard for many years, but it's fallen out of favor over the last ten years, primarily because it's invasive, it's expensive, it's subjective, but the biggest issue is the animal model for disc degeneration is to take a needle and poke it into the annulus, the outside layer of the disc, and that's what you do in this procedure. You take an awake patient, because they have to stay awake, you put the needle into the disc, you pressurize the disc, and then you have a conversation with them about whether that's painful or not.
This has fallen out of favor at a time where we're coming in with what we believe is better data in a non-invasive manner, because it's objective, it's measurable, there's no subjective discussion about it, there's no radiation, no pain involved, and it's cheaper. We have broad intellectual property. I'm not gonna go into all of the patent portfolio, but we licensed the IP out of UCSF, where this technology was invented, and it covers all of the biomarkers and the process of how we go about generating the reports that we generate. The current product status is that of a surgical decisioning tool, so that's what we sell to the surgeons that use this product. We explain the value of these biomarkers, and they utilize the product to help decide how they're going to treat their patients.
The next generation of this product is, delves a little bit more into AI, and this comes down the road as we get more data, where we can start to correlate the initial MRIs, the initial MR spectroscopy sequences, the biomarkers, and then the outcomes, so that hopefully we can get into the area of predictive analytics, where everybody coming in with low back pain gets a scan done, and that scan is helping determine what the best intervention is for that particular patient, whether that's surgery or regeneration or conservative therapy. We have all approvals in place in the U.S. and overseas. A little bit about the market opportunity, because it's pretty big. In the U.S., the highest cost diagnosis is low back pain and neck pain. That's $135 billion a year. That's what we aspire to.
We're starting in the $10 billion market, which is the market for surgery, and this is the lumbar fusion surgery and the disc replacement surgery. That's the space that we're focused on right now. And then once we develop that space, then it would be all surgeries, which is a $40 billion market, and then eventually, really, population management, which takes us into the $135 billion market area. I think it's important to understand the landscape here because these augmented intelligence and artificial intelligence algorithms are all new. And the companies, the first company to come up with any of this was HeartFlow, and they were founded in 2007. You can see the rest coming in 2009, 2016. Most of these companies are in the heart disease space.
Understand that heart disease is smaller than low back pain. We sit in a big market, the only group coming in here, and what's interesting about all of these groups that came before us is they helped establish this relatively early path. They established the CPT codes that you need to bill this. They established the clinical data that you need to show to get the insurance companies to pay, and we're following down this path. As you follow down the path, I think one of the things that's super important to see here is the value that these companies are able to generate as they go from their early stages to getting their codes, to then getting payment and becoming the standard of care in their space.
It all starts with the reimbursement, and you need to get Category III CPT codes. We got those in January of 2021 off of the strength of the Gornet study that I talked about previously. The goal now is once you get these Category III codes, which don't have a payment assigned to them, you need to try to transition them to Category I CPT codes. To do that, you have to increase the billing volume for your Category III codes and then partner with surgeons to get that done because this is gonna be KOL leaders. These are key opinion leaders. These are top surgeons in the space that are trying to move the field forward.
They adopt these new technologies, and they start to use them, and they put them in front of the payers, and then they have discussions with the payers as to why their patients are doing better and why the insurance company needs to pay for these. This is the process that all the companies, anybody developing a medical device of any sort or bringing new technology into play, has to go through, and we're following down that same path. This essentially is just another visual on the process. The standard of care really talks about increasing those codes, generating scan volume, and then once you get a coverage decision in one market, you then put standard sales and marketing support behind that to expand the number of cases that you drive towards. So that's—
When I talk to investors, and I point them towards the key catalysts that they should be looking for, I really point to the idea that you wanna look at activations of MRIs for our key opinion leaders that we've put in place. Then you wanna look at increased scan volumes coming in from these surgeons, and then ultimately getting these coverage decisions from local payers, which is really the single most important thing in the commercialization process to really scale it up, and we've been fortunate enough to have a really successful case example of this. We put out some recent press releases to highlight this, but we had a tremendous success out in the U.K. following this pathway.
We had some The London Clinic, which is a large spine center out there in the U.K. They love this technology. They were previous big believers in discography. They went out, and they did a study comparing about 20 patients, the results of discogram to our technology, were very impressed with our technology. Went to the payers in the market to argue for payment so that they didn't have to proceed with the discograms anymore. Very successful in doing that. They went. They got three of the top four payers in the private market to give us payment coverage. We're still working on the first one, and our next steps here are to put resources behind this, sales resources, to now expand it out to The London Clinic, and increase the scan volume.
That's really the model. That's the model that HeartFlow followed. It's the model that we're following, and this is the model we're taking to the United States with the idea of working with these KOLs to drive these payer coverage decisions. This slide then goes into a little bit about who our KOLs are, and I'm not going to go into the details of all of this, but these guys are leaders of the big spine societies, the people that talk to the payer community, the people that talk to the coding folks and make recommendations. You can see some of the centers here. You have UCSF, you have Barrow, which is a big neurosurgical center in Phoenix. You have Advocate Aurora, which is one of the biggest healthcare systems in the country, Weill Cornell Medicine, Northwestern.
Big leaders with big names pushing this forward for us. This next slide is really just the management team. You guys have all. I gave you my background already. I wanna highlight Brent Ness, who's the CEO. Brent and I worked together on a previous company I had that I sold to a private equity group, and Brent was actually out working with HeartFlow, and Cleerly, he had been a commercial development officer with those guys early on, so he understood this model. When I had the opportunity to come into Aclarion at the board level and bring in a new commercialization team, my first call was to Brent to tell him that, "Hey, look at this opportunity here. We're going after low back pain in very much the way that HeartFlow and Cleerly went after the cardiac space." So he jumped on.
He brought John Lorbiecki with him, and he's just he was our CFO. They worked together at Medtronic. John was a divisional CFO at Kyphon and Surgical Navigation Technologies, so very, very well experienced in the public markets with running the financial side of the business. And Ryan Bond has been with the company the longest. He preceded me in this company, and he's been leading some of the strategy, was instrumental in getting Category III CPT codes, working with the KOLs and coordinating all the clinical trials. So that's the leadership team driving this forward. We do have an independent board, all with big experience. Bill Westman leads the compensation committee, and he's the lead independent director. He's on the board of multiple public companies and has been for many years.
Steve Deitsch is actually the CFO of a public company. He serves as the head of the audit chair, and Amanda is also in a public company with experience on the regulatory and governance side. Then Scott is an MD with a long history of relationships with the payers, and these guys have been instrumental in helping us advance the cause. We also have an advisory board, the scientific and medical. On the scientific side, it's really Jeff Lotz. He's the founder of the technology. It's his lab at UCSF. He's a guru in the low back pain space and has been incredible with the clinical development of this technology and getting it to the level where it is today.
On the medical side, we have both a surgical section and a radiology section. Bob Yslas heads up the spine section at Scripps and has been instrumental in helping formulate the clinical strategy, and Lawrence Tanenbaum is with RadNet, which is the largest freestanding imaging center in the country, and he's been very helpful in getting us access to these MRI centers to perform the NOCISCAN. These are some financial highlights. You can, as of June 30th, you can see the cash of about $1.1 million, quarterly burn of $1.6 million, and you can see recent market data from the other day. So really, the key takeaways, we're addressing a huge market, $135 billion a year in the US, the largest cost diagnosis in the country.
We're coming at it with a first non-invasive diagnostic. We're putting strong clinical evidence of value behind that with our clinical strategy. Large patent portfolio, CPT codes already issued, and regulatory clearance in both in the U.S., E.U., and the U.K. A strong value proposition for everybody across the board in the ecosystem, and an established path to success for these AI algorithms in heart disease and stroke, which we are now applying to low back pain for the first time. And then a management team that has tremendous experience in the space. With that, I will move to the Q&A and see what questions I have here. So, question number one: How is current business going? Are you on target to reaching your quarterly goals?
So our business, our business is going well from the standpoint of development and moving forward with driving with getting our KOLs that we needed to get in place. Now, the effort is pushing through MRI activations for those KOLs. We have about four out of the 10 of those done, and then we're looking to push other capabilities as well. You saw what we The London Clinic, which now sets us up to drive additional volume there. We're also coming into the community and working directly with doctors to push around imaging centers that we have.
There's a patient pay model that works for us right now, but the main goal is to continue to push these KOLs to drive the codes to the payers, and then have the discussions with the payers to get the coverage decisions. We think we're gonna be very successful with that. It worked like a charm in the U.K., and we expect that to be replicated here in the U.S. And then we back that up with the big studies that I was talking about, like CLARITY and some other that provide incremental data that give us opportunities to come to the payers, in conjunction with these KOLs, to continue to argue for it.
But the biggest thing is, when you take it up to a 40,000-ft level, there's nothing like this available to the surgeons, and it clearly gives them data that helps them make a much better decision. And in the end, that's gonna result in better outcomes, and better outcomes are gonna result in payment. And that's what you're seeing on the cardiology side, and we think we're gonna see that here. So next questions: What should investors be expecting from London in the future? That's a great question, and, you know, we're figuring that out as well, right? This is fairly new. We just got the payments there. It's a private market that can pay. It's a big section of the U.K. population that is looking at this. So our approach is going to be to follow the lead of the doctors.
So the doctors who originally made the decision to push for the payer coverage decisions, they are going to be publishing their paper as to why they pushed this. That's gonna help us and them present other doctors in the community. The marketing department of The London Clinic is pushing this now out to the community surgeons to get more referrals and we're gonna be pushing to get more imaging centers on board and growing that, so we'll be reporting on the progress there, but the big things to look for are going to be more MRI activations, more surgeons coming to the table, and really scan volume. At this time, it's really gonna translate into revenue because now those scans will be paid by the payers. We'll also expand into additional insurance carriers.
We have others that we wanna hit over in that market. So that's the last question. I'll turn it back over to at this point.
Thank you very much, ladies and gentlemen. That does conclude Aclarion's presentation. You may now disconnect. The next session will begin shortly. Please consult the conference agenda for the next presenting company.