Hello, everyone, and thank you all for joining us during the Lytham Partners Spring 2025 Investor Conference. Our next presentation is from Neuraxis. My name is Ben Shamsian, Vice President at Lytham Partners, and today we welcome Brian Carrico, CEO, who'll be taking us through a slide presentation followed by a Q&A discussion afterwards. NeurAxis trades under the ticker NRXS. Now, let's get started. Brian, welcome, and I'll turn the floor over to you for your presentation.
Thanks, Ben. Welcome. Good to see everyone again, and look forward to this presentation today and meetings later on in the day. Again, as Ben said, Brian Carrico, President and CEO of Neuraxis. We're going to jump right into the presentation here. Who are we? For those of you who don't know NeurAxis and those who do know NeurAxis, we've continued to make changes in the company, and we are a neuromodulation company, growth stage med tech neuromodulation company developing therapies for chronic and debilitating GI conditions in pediatrics. We are moving into the adult space, we expect, later this year in our neuromodulation space. We have a proprietary PENFS technology, neuromodulation technology. Again, we're focused on therapies in the population suffering specifically from disorders of the gut-brain interaction in the GI space.
We've had an exciting last 12, 18 months, and it's gotten more exciting this year. We have recently secured a Category 1 CPT code, which comes with RVUs. We'll talk more about that today. We have recently upped our PENFS policy coverage nationally to 51 million covered lives. As we say here, we expect these covered lives to reach $100 million or more by the end of December. We have recently announced that last year we did about $2.7 million in revenue, which is only one-tenth of 1% of the debilitated market. Our gross margins were at 88% last year, and we expect that to increase as we get more and more insurance coverage.
Anyone who's in the healthcare space and specifically the med tech space understands that having a Category 1 CPT code with RVUs brings credibility to the technology, but ultimately it allows us and allows the physicians who are treating with this technology to receive RVUs. RVUs are how these physicians are measured, paid, and bonused. This is a very important aspect of the company. For any technology that does really well in med tech, you have a Category 1 CPT code and very strong data, which allows you to receive insurance policy coverage. As we approach January 1, 2026, the entire picture is coming together to scale the technology. At the top of this slide, you'll see that I have a statement: strong data, which we have overwhelming data at this point, equals strong policy coverage and reimbursement, and that equals strong revenue growth.
Over the last three or four years, we've done a significant amount of research that has allowed us to gain the insurance policy coverage we have. Farther down the slide, you see the last three quarters. We were up 40% in Q3, 43% in Q4, 39% in Q1. We didn't do anything different nine months ago or six months ago than we have been doing for two or three or four years. This is simply a response to the guidelines, which we'll talk more about today. It's also a response to a little bit of the insurance coverage that we've been able to access in the last year, but it's still prior to having the major insurance that we need and that we're expecting in 2025. It's also before the category 1 CPT code that we talked about earlier.
This is nice growth, but it's not what we expect in the coming quarters and years. Let's focus on the first and the third line of this slide: functional abdominal pain in children. We had that indication previously, and we just announced recently that we received functional dyspepsia and nausea symptoms associated with functional abdominal pain. This brings our total addressable market to nearly double, but most importantly, the synergies with this new indication are identical across the board. It's the same children's hospital call point, the same pediatric gastroenterologist physician call point, the same W-2 salesforce, the same insurance policy coverage. Everything is in synergy with this new indication, which is excellent from a capital outlay for the company, which we won't require any additional capital for this. It allows us to scale in parallel with the first indication.
A few highlights about the company: very large total addressable market and therefore a serviceable available market, which is real revenue available for us. I'll talk more about that on another slide. We are first to market. We have a category 1 CPT code coming, which we just spoke about with major insurance policy coverage in place and more happening as we speak. We are expecting the academic society to release guidelines in the coming weeks in a published form. We've already seen the abstract form listing us as the highest level of evidence, and we're expecting that to be published in the coming weeks. As you have maybe seen before, our management team and board of directors are very experienced. This is a team that's gotten us where we are today.
We continue to add to this team with areas of expertise as we scale operations, and we have a very clear path to profitability. As you've maybe seen in our financials, our burn rate continues to come down. I mentioned on our earnings call a couple of weeks ago that Q2 was going very well, and we expect our burn to continue to decrease. From a serviceable available market, the two indications we're talking about today are functional abdominal pain, IBS on the bottom left of the screen, and then functional dyspepsia at about three o'clock on the left wheel there. I want to walk through the functional abdominal pain so you can understand how we came to these numbers. There are 6 million children in the United States with functional abdominal pain, and 10% of those are debilitated, or 600,000 children.
Those 600,000 children times $5,000, which is about what we get per patient, is $3 billion. Functional dyspepsia, which we just received as an indication, brings about 400,000 children. Collectively, we've got about 1 million children that are debilitated, and debilitated means they're missing at least three days of school a month that need this technology. As we move closer to the category 1 CPT code, that allows physicians to be paid for their time, and it allows us, and the guidelines will allow us to gain more insurance policy coverage so the patients are covered when they see the physician. We're treating disorders of the gut-brain interaction, as I mentioned earlier. We're affecting a part of the brain called the amygdala. We're utilizing the vagus nerve, and we have the functional dyspepsia indication.
We have the IBS indication, and we're in the research stage of their cyclic vomiting syndrome indication. What have people been doing for 20, 30, 40, 50 years with this condition? It is a problem with an unmet need. There are no FDA-approved therapies prior to IB-Stim for these children with DGBIs. These conditions significantly affect the quality of life and ability to function for these children. They're not going to school. They're not playing sports. They're not socializing with friends. There is insufficient data to support the use of most of these prescribed drugs. Many of these drugs have FDA black box warnings and have serious side effects. As you can imagine, a growing number of families and providers are seeking non-pharmacologic alternatives for children. This is a picture of the device currently.
This device is placed on a Monday, for example, and taken off on a Saturday, and the patient comes back two days later for a second device. This goes on for four consecutive weeks, and therefore each device, the cost is about $1,200. The children's hospital buys from us. The children's hospital bills the patient insurance, and the insurance company reimburses the hospital. Four devices over four weeks, $1,200 each brings it to about $4,800, almost $5,000 per patient. This slide shows the foundation of who we are and why we've been so successful in recent years and months, and why we're expecting to be much more successful in the coming quarters and years. We now have 16 current publications utilizing our technology, two randomized controlled trials. We have all investigator-initiated research, which means we didn't sponsor. There's no bias in this research.
We have done 10 types of studies, including long-term data, real-world data, registry data, head-to-head against standard of care. We have got excellent data at this point, and that is why we are expecting the published guidelines from the academic society in the coming weeks. What are we doing to the brain? I will stay high level on the science here. We are ultimately accessing the vagus nerve and the cranial nerves with a neuromodulation frequency affecting a part of the brain called the amygdala. That technology is inducing changes in the brain pathway and connectivity, and therefore causing long-term benefit, long-term relief for these patients. The current standard pharmacotherapy we spoke about earlier, these side effects are significant. These patients are taking TCAs, SSRIs, antidepressants. We are starting children on antidepressants with no evidence, heavy side effects such as increased risk of suicidal ideation, weight gain, long-term risk of dementia.
We have an alternative with significant data with virtually no side effects available. You can understand why the demand for the technology is what it is and why the Category 1 CPT code is so important. Number needed to treat, this is the number of patients that need to be treated for one patient to get the targeted improvement. The number needed to treat for IB-Stim is three. When you compare that to IBS drugs in adults like levetiracetam, linaclotide, and rifaximin, this number needed to treat ranges from 6-14. You can understand quickly in this graph why this technology is so strong. We've done the largest pediatric registry in children with disorders of gut-brain interaction, over 300 patients at seven centers, including Cincinnati and Boston Children's.
61% of patients enrolled in the study had failed greater than or equal to four medications prior to treatment. This study also has sustained efficacy in abdominal pain at 6-12 months after treatment. This is the study showing that we were equivalent or better than standard medications in a head-to-head trial at Cincinnati Children's Hospital. This is a go-to-market slide. You can see we have 17 insurance plans at this point with 51 million covered lives, category 1 code effective January 1, 2026. The 260 children's hospitals are our primary call point right now. IP, we've got significant IP in place in the United States, both method and device patents, international IP in process, and our US IP runs through 2039 as of today. Management team, board of directors. Board of directors is strong.
I'd be happy to talk individually with investors about the board of directors if you wish. Again, back to the highlights of the company. We've completed the data. We've convinced the academic society and the scientific community, and we have a few points of execution left. Number one is the guidelines. We're expecting those to be published so we can gain the rest of the insurance policy coverage nationally. We have a Category 1 CPT code, which has been awarded to us, which will become effective January 1, 2026. At that point, this becomes about execution in the commercialization phase. To recap, first to market, large serviceable available market, current treatments are off-label with adverse side effects. We're Category 1 CPT code in place, major insurance policy coverage, highest grade of evidence in the guidelines. We've now published around 1,000 patients in those 16 studies I referenced.
Very experienced management team and board of directors and operations and infrastructure built to scale as we have a clear path to profitability. Talk briefly about RED. We just launched RED, rectal expulsion device. This is technology that was licensed from Michigan and developed at Michigan. And we licensed this for a few reasons. Number one, there's a Category 1 CPT code already in place, so there are RVUs in place. Number two, it's reimbursed by almost all insurance companies, including Medicare. Number three, it fits from a synergy standpoint with our W-2 sales team. We are in the GI space. We're in the pediatric GI space today. We expect to be in the adult GI space later in 2025 with expanded indications. This was a nice fit, and we've just launched this.
We're in the soft launch phase and learning more about this as we continue to expand nationally. The capital structure, this is exciting. This capital structure has recently changed based on a few things. Some warrants being exercised and a small raise that was done. This was as of May 22nd. The share price finished at $3.03. The shares outstanding are 9.5 million warrants. We had some warrants exercised during this time, 1.7 million warrants, and shares fully diluted were at 17.3 million. Cash position as of May 22nd was $6.8 million. We had of that $6.8 million, when you look at our burn rate in the first quarter, we averaged about $500,000. In theory, this is about 13 months of cash if we didn't grow at all, which is not happening. We're excited about the recent developments.
From there, I will be happy to take questions. Thank you.
Thanks, Brian. Let's jump into some topics here. Let's talk about the new indication for functional dyspepsia. What makes this so exciting for NeurAxis and what are the synergies here with regards to what you already have?
We're excited for multiple reasons, but primarily because it's the same call point, same insurance policy coverage, same Category 1 CPT code as our first indication, same Salesforce. I would say there's more desperation for this indication than the first one because the first one, although there are some drugs that are off-label with real side effects, there are some drugs that help some children with functional abdominal pain specifically. With functional dyspepsia and nausea symptoms, there's virtually nothing that works except IB-Stim.
There is a real urgency and desperation to get this to the market, and we'll begin commercializing this immediately. I would highlight that.
Okay. Last three quarters, you've had strong revenue growth up in the 30s and 40% year on year. What's leading to those strong growth numbers, and are you satisfied with what you're seeing so far?
We're certainly not satisfied and expect significantly higher growth numbers in 2026. What's leading to this is organic growth. Children's hospitals that are already using the technology that are becoming more and more comfortable using the technology, and they've maybe gotten a little bit of insurance policy coverage.
As I've mentioned on many earnings calls, call it bad luck, call it what you want, but the insurance policy coverage that we've gotten to date is primarily in areas where children's hospitals are not bringing the technology in until there's a Category 1 CPT code. The current Category 3 CPT code can be very challenging from a prior authorization billing and coding standpoint. The hospitals where we have good revenue now and are okay with the Category 3 CPT code are, we have not gotten insurance policy coverage in those areas. This growth is really organic. We've accessed maybe a little bit of the insurance policy coverage, but the majority of it has not been utilized. No, we're not happy. We're not satisfied, but we are happy with the growth and the fact that the current accounts are beginning to treat more and more.
Okay.
That leads me to an important catalyst coming up in January. First, the guidelines, and then as we begin into January. Can you talk about what that will mean for Neuraxis, a national coverage? Can you talk about more specifically, are the hospitals waiting for these guidelines to come out?
The hospitals aren't necessarily, the guidelines are going to be very impactful to physicians. Some, if they're treating two patients a week, maybe they start treating six or eight or ten patients a week because the guidelines are highly respected. They're independent by the academic society. I wouldn't say they're waiting on the guidelines. We are waiting on the guidelines, and the hospitals are waiting on the guidelines for insurance policy coverage.
There are multiple payers, many of size, that are telling us they need the academic society guidelines published in order to write policy coverage as an internal mandate. We are cautiously optimistic that once those are published, that within three to six months, we will see policy coverage from those larger payers. Regarding the Category 1 CPT code, yes, the children's hospitals and the physicians have been waiting on this for years. The reason is right now with the Category 3 code, the physicians who are measured and paid and bonused on RVUs are essentially donating their time to treat with IB-Stim. They are not gaining any payment or recognition. Once there is a Category 1 CPT code, these physicians will be reimbursed. The guidelines are instrumental for insurance policy coverage to treat, to allow more patients to be covered.
The Category 1 CPT code is instrumental so that the physicians get compensated for their time versus working for free as they are now.
Okay. I want to talk about the recent capital raise, about $5 million. This was done by some existing investors, but more importantly, by new fundamental and well-thought-of funds. Can you talk about what the cash runway does for you in terms of your ability to go out to market and sort of do what you need to do?
First of all, as you can see in our financials, the burn rate year over year has come down significantly. I think that based on Q2, and I have talked about this publicly in our earnings call, is going very well. We expect this burn rate, cash burn, to continue to come down.
It gives us, even at the current burn rate of Q1, it gives us over one year of money. With waiting on the guidelines, the insurance covering and cat one, which will all hit in that timeframe. The cash flow allows us to just focus solely on the business execution, operations, and scale the technology and the revenue and gain more insurance policy coverage. We do not have to spend any time on capital raising, which is, as everyone knows, it can be very time-consuming. More new investors, many new investors, mostly new investors came into this round, and strong investors, healthcare-minded, institutional funds. We added about $1 million in warrants that were exercised. That is where the cash balance of $6.8 million, as of, I believe it was May 22, comes into play. Look, we are in an excellent position.
not need cash anytime in the foreseeable future. We are excited about the coming quarters.
All right. Brian, thank you for that. Thank you for your time. Thanks everyone for watching. If you have questions, want to schedule a meeting with NeurAxis, please send me an email at shamsian@lythampartners.com. That is S-H-A-M-S-I-A-N at lythampartners.com. If you would like to learn more about Lytham Partners, you can visit our website at lythampartners.com or follow us on LinkedIn to stay connected about our future events. Hope you all enjoy the rest of the conference and have a great day. Thank you.