Hello, and welcome to NeurAxis Company Webcast. My name is Ben Shamsian, Vice President of Lytham Partners, and today, Brian Carrico, CEO of NeurAxis, will be taking us through a brief slide presentation, followed by a fireside chat moderated by me. As a reminder, NeurAxis trades under the ticker NRXS. With that, let's get started. Brian, welcome.
Thank you, Ben. Good to see you again. Welcome, everyone, to the Lytham Conference. This deck is effective January 2026. With that, I'm going to jump in. For those of you who aren't familiar with NeurAxis, we're a growth stage med tech company. We've been around for 10 plus years, and we've hit significant milestones in the last months and last year heading into 2026. I'm excited to share those updates with everyone. If you've not been following along on the quarterly calls and the updates press releases. With that, we're going to jump into the presentation here. Who is NeurAxis? NeurAxis is a first-to-market growth stage med tech company focused on neuromodulation therapies for chronic and debilitating conditions in GI, specifically disorders of gut-brain interaction in pediatrics and adults.
We were previously a pediatric company and recently became an adult company as well, which we'll talk more about. With multiple FDA indications in the market and additional clinical trials of PENFS in multiple pediatric and adult conditions underway, we're focused on unmet GI healthcare needs in the pediatric and adult space. So a few corporate overview points just in the last year that have become extremely important to our growth. And if you're familiar with med tech, it's very different than biotech within the life science space, and it's extremely important to scale a technology to have a Category I CPT code and insurance policy coverage. So we've recently secured a Category I CPT code for PENFS technology, obtained significant expanded commercial payer coverage, and we have the only FDA-approved or FDA-cleared treatment recommended in the guidelines for pediatrics.
Our Category I CPT code that I just referenced became effective January 1st, so just a couple of weeks ago. PENFS policy coverage, we're recently, with new policy coverage, we're now right at a little over 100 million covered lives. Our 2025 revenue, we haven't released Q4 results yet, but it was, I think, very clear after Q3 that we would go well over $3 million in revenue. Our gross margin in 2025 is going to come out around 84%, which is about what we were reporting after Q3. And in 2025, we sold about 5,000 units. Our pipeline, I want to talk a little bit about our pipeline because although we have multiple indications and multiple indications in research stage, we want to make it very clear that we're staying very focused on the brain-gut axis and disorders of the gut-brain interaction.
When you look at the first indication, we have functional abdominal pain in IBS in children, and then you'll see the next one, second one down, we have functional dyspepsia in children. These were both done. The first one was done with an RCT at Children's Wisconsin. The second one was done with the RCT and a large registry. We also now have both of those indications in adults, functional dyspepsia and functional abdominal pain and IBS in adults. Then we have several additional indications that are in the research stage, which you see below that. I want to stay focused today on functional abdominal pain and functional dyspepsia in pediatrics and adults. That's really our focus this year. That's the focus of the insurance policy coverage.
And even more so, we're focused in the pediatric space because although the Category I CPT code is effective for the technology as a whole, the insurance policy coverage that we've referenced of 100 million covered lives is primarily specific to the pediatric space, age eight to 21 years of age. A few points about the company and the opportunity. We've got a very large global market with a significant unmet need. And I've talked for a couple of years now about how important strong data is because strong data equals strong policy coverage and reimbursement, and that's how we get strong revenues. We have a very clear commercial pathway. We went through the FDA de novo clearance, which means we were first to market. We now have, as I mentioned, the Category I CPT code and major insurance coverage momentum. So these things are in place.
We've laid the groundwork. We've laid the foundation for us to be able to scale this technology in the pediatric space and then ultimately into the adult space. We are now in the pediatric guidelines, as I mentioned earlier, as the only FDA-cleared or FDA-approved treatment that's recommended in those guidelines. Our board and our path to profitability, both very important. Our board and our management team, both very experienced in the life science space. Our management team that's here, 90% of that team is a team that has gotten us to where we are. We will continue to add to our commercial team as we grow. And if you look at our numbers recently, we have a very clear path to profitability in the coming months and year. So how big? What's our addressable market?
I don't necessarily like to talk about the total addressable market, but I'm more interested in the serviceable available market. And right now, between pediatrics and adults, we have a $22 billion serviceable available market in the United States, and I'll talk about one of these indications, and then that'll explain how we can extrapolate the other indications and what those sizes look like. So for functional abdominal pain and IBS, on the bottom left, you'll see a $3 billion market opportunity. To get to that number, we looked at the total number of patients in the United States with functional abdominal pain and IBS associated with IBS, and that's right at 6 million patients. 10% of those are debilitated. The definition of debilitation in this market, it means they're missing at least three days of school per month. In addition, these patients are not participating in social activities.
They're not participating in sports. And as a general rule, they're on some type of medication, some off-label medication. So when you look at those 600,000 patients and you multiply that by $4,800, almost $5,000 per patient, which is how much NeurAxis receives from the Children's Hospital when an insurance approval is completed, that's about a $3 billion market opportunity. So when you extrapolate that out over these additional indications, you can look at how we get to these numbers. So from a science standpoint, I won't dive too much into the science today, but as I mentioned earlier, these are disorders of the gut-brain interaction, and it affects the vagus nerve. And these are signals that are speaking to each other from the gut to the brain and the brain to the gut.
And they do affect all indications that we've talked about today: functional dyspepsia, irritable bowel syndrome, and then cyclic vomiting syndrome, which is in the research phase of the technology. So the DGBIs, this is a large problem, as I've said multiple times, with an unmet need. Until IB-Stim, there were no FDA-approved therapies for children with these conditions. These disorders are negatively impacting the quality of life and ability to function, school, sports, social activities. There is insufficient data, to say the least, to support the use of most prescribed drugs, some with serious side effects. And there are a growing number of families and providers who are seeking non-pharmacologic alternatives for their children. So this is now, after the years that we've done this research, a very established technology with demonstrated safety and efficacy for patients eight to 21 years of age.
Although now we have the adult indication, we're focused on pediatrics right now. Patients eight to 21 years of age, this is a non-drug, non-surgical device therapy that can be placed in an outpatient clinic. So this is placed on a Monday, for example. It's worn for five days. The device is discarded. The patient comes back one or two days later and has a second device placed. This goes on for four weeks. So each patient will receive four devices over four weeks. And at that point, we've got significant data, statistically significant, at six to 12 months, multiple studies that show the success of 12 months. This slide shows the foundation of who NeurAxis is and why we're gaining so much insurance policy coverage, why we were awarded a Category I CPT code, and why we have such strong support from the academic societies.
We now have 16 current publications, and not only have we done 16 publications, none of these studies were sponsored by us. These were all investigator-initiated research, investigator-initiated research, IIR, and we've done 10 different types of studies. People say, "Well, have you done this type of study or this?" We've done 10 different types of studies from double-blind, placebo-controlled, long-term data, registry, fMRI data, quality of life, head-to-head versus medications and the standard of care, health economic. We've done 10 different types of studies at 13 children's hospital sites around the country and all investigator-initiated research, as I mentioned. I'll be high level about how this device works, but this is a neuromodulation frequency that's traveling through the cranial nerve to the amygdala, and ultimately, in a positive way, this is inducing changes in brain pathways and connectivity.
As I mentioned earlier, the data just doesn't support standard pharmacotherapy in children with IBS. There are significant risks of TCA side effects in children. There's no data to support use of antidepressants in children. You see some of these side effects: long-term risk of dementia, increased weight gain, increased risk of suicidal ideation. These are not drugs and pharmaceuticals that you want your children taking and not pharmaceuticals that physicians want to be prescribing to their patients. As I mentioned earlier, we did a double-blind, placebo-controlled trial that was published in The Lancet. This is the number needed to treat. The number needed to treat is the number of patients that need to be treated for one patient to get the targeted improvement with a greater than or equal to 30% improvement.
As you will see, IB-Stim has an NNT of 3, whereas IBS drugs in adults have an NNT that ranges from 6-14, again emphasizing the strength of the PENFS or IB-Stim data. We moved patients in the RCT from moderate to minimal disability, which is not easy to do. We moved these patients at full two points, and moving them one half a point is statistically significant. So this was quite the move to go from moderate to minimal disability. We did the largest pediatric registry in children with DGBIs. This was about a 300-patient registry. 61% of these patients had failed at least four medications, which is interesting to say the least. We did a study at Cincinnati Children's Hospital, or I should say Cincinnati Children's Hospital did a study that IB-Stim was equivalent or better than the standard medications used for functional abdominal pain.
We have a significant amount of data that we could go through on a separate call, but that's high level. So what's our go-to-market strategy? What's the situation look like? You can see here, we do have 17 insurance plans now in place, and this number needs to be updated. My apologies. We do have about 100 million covered lives now. And the Cat 1 code, as I mentioned, is effective 1/1/2026. The primary call point right now, and has been for years, the 260 children's hospitals. The 260 children's hospitals throughout the United States, that is where these 600,000 children with functional abdominal pain and IBS that are debilitated and the 400,000 pediatric patients with functional dyspepsia are being seen. The challenge for the last five years has been straightforward.
Number one, there was no Category I CPT code, which means the physicians were not receiving credit or RVUs for treating the patients, and there was very little insurance policy coverage, which means the patients weren't being covered for the treatment. It makes it very difficult when there's no financial opportunity for the patients to be covered and the physicians to be paid for their time. It makes it very difficult to scale a technology. So the data was extremely important, and we're currently pulling multiple levers from a W-2 sales standpoint, marketing standpoint, working with the academic society on academic society talks around the data.
We're pulling many more levers in addition to that to be top of mind and make sure all physicians are aware of the technology and aware of the data as we move this technology to more of a frontline treatment so we can treat these patients earlier and have more success long-term. IP portfolio. We have a very strong IP portfolio. I would just say that right now the IP runs through 2039, and we're continuing to lengthen that. We are working currently to lengthen that. Manufacturing. Our manufacturer is in the Midwest. We do receive one component from overseas, but as a general rule, these components are brought to us through the United States, and then they're assembled and manufactured here in Central Indiana. Our medical advisory board, there's six of the leading pediatric gastroenterologists from around the country. This medical advisory board has not changed in recent years.
They've been very helpful to us on multiple levels. Management team has not changed. Tim Henrichs, our CFO, is the most recent addition, but he's been here, I believe, two years this month, and he was on the board previous to that, so he's been around for a while, and our board of directors continue to be the same board of directors we've had. We did add Dr. Gil Aharon from The Rosalind Fund in Toronto about a year ago, so we're glad to have Gil on board. He's been extremely helpful. The board's been tremendous. Their experience has been very helpful, so again, just to highlight where we are, very large total addressable market, very clear commercial pathway with the children's hospitals and our W-2 sales team.
We have a category I CPT code, major insurance payer coverage momentum in place, the highest grade evidence via the guidelines, and we have a clear path to profitability. So I want to touch base on the capital structure. Currently, the price at the end of the day on Friday, January 9th, I believe it was $4.86, 10.6 million shares outstanding. And if you add the warrants, the options and RSUs, the preferred round, it comes out to about 18 million shares fully diluted. And as of December 31st, we had $5 million in cash on the balance sheet with no debt. So with that, if anyone has any questions, please contact Ben Shamsian, and he'll be happy to set up a call with myself and/or Tim Henrichs, our CFO. So with that, Ben, I'll turn this back over to you.
All right. Well, thank you, Brian.
That was helpful. Let's dive into the Category I CPT code. What does this enable you to do? First of all, congrats on achieving that. It was a long time in the making. But what does this enable the company to do that you weren't able to do before?
Yeah, great question, Ben. As I've talked about multiple times publicly, first of all, it's extremely difficult to get a Category I CPT code, and there's a reason it's very difficult. Number one, it requires a significant number of trained providers that are utilizing the technology. And that's difficult because you can't get providers to use the technology if they're not getting paid or any credit for using the technology. They are physicians that have requirements as well, and you need a Category I CPT code.
To get the Category 1 code, you have to have a significant number of trained providers. And number two, you need overwhelming evidence so that you can get insurance policy coverage. And the combination of those allows you to scale the technology. But the category one code does multiple things. Number one, it brings RVUs to the physicians so they get credit for the technology. Number two, it brings credibility to the technology because the research that's required to get a category one CPT code helps significantly gain more insurance policy coverage. And then the code itself gets locked into Medicaid fee schedules, and it gets locked into insurance companies so that the billing is much more streamlined. Previously, we had a Category III CPT code, and you have to build a charge bundle. It's very confusing. The prior authorizations are virtually impossible.
So a Category I CPT code ultimately cements a technology into the healthcare field and allows the technology to be utilized on what I would consider a recognized basis.
Okay. Let's talk about payer coverage. You're now over 100 million covered lives, including one of the largest payers in the country that was announced a few weeks ago. What does this mean for the acceptance of PENFS and your ability to ramp up sales over the next couple of years?
Yeah. Look, we've gained a few smaller policy coverages just in the last couple of weeks. We won't announce every small policy going forward. We will announce the notable policies. Look, the Category I CPT code is wonderful because it allows physicians to be recognized for doing the treatment. But if the patients aren't covered by their insurance, you still have a major roadblock.
We've got about 40%, if you take Medicare off the table, because we're not talking about Medicare here. They're around 250 million covered lives. We're between 40%-50% of the country being covered at this point. This allows the patients to come in and be treated. If you don't have policy coverage, it makes it very difficult because although we have a patient assistance program, patients would like to be able to utilize their insurance coverage. They pay the premiums, and they want to be able to recognize that. We see more and more of patients wanting their insurance to cover this because of their premiums versus paying cash out of pocket in addition to their insurance. It's extremely important.
We're working hard to get the remaining insurance policy coverage in place because although some hospitals have great insurance policy coverage right now, the heavy majority of children's hospitals are still in a situation where they have, if there are five large payers, they have 20% of each payer. So the fact that we have one or two in place helps them, but it still makes their job fairly challenging. So it's up to us to continue to present the data to the other large payers along with the Category I CPT code from a credibility standpoint and get written policy coverage so these kids can have access to this technology.
Okay. So just to piggyback on the patient assistance program, how does getting more covered lives not only help your sales, but also your gross margins?
Well, that's a great question, Ben.
When we have very little policy coverage, the patient assistance program was a much bigger presence, and therefore your ASP goes down significantly. We're cautiously optimistic here, more than cautiously optimistic, that with the more insurance policy coverage, we'll have more full-price devices going out because patients are covered and therefore raising our ASP significantly. That's the expectation. And I've been very clear that in the last 90 days, that the first 90 days of 2026 are very much an information gathering session. And everything from a strategy standpoint that's been in place for six to 12 months is not changing. But we've laid the groundwork. We've pulled every lever we can pull. And now we need to see what the response is, both from the children's hospitals and from the payers.
And then 30 days, 60 days, 90 days in, we're going to have a very clear picture of what's working, if there's something that's not working, and why. And we'll be able to adjust. And on the Q1 earnings call, we'll be able to break this down as to what's working, what we still need to fix. And most importantly, when we know what's working, we know where we can put dollars to grow revenue versus just putting someone in place before we know if that's really where they're best utilized.
Okay. We're almost out of time. So final question. Companies obviously have had many transformational milestones. 2026 looks to be a great setup year for high growth. You have had great healthcare funds as investors and supporters. What does the balance sheet look like now, and how do you expect to fund this growth going forward?
Yeah.
Again, number one, we had $5 million in cash at the end of the quarter, I believe. Traditionally, over the last year, we've been burning around $450,000-$500,000 a month. I think that we have money into Q3 right now, and that's with a modest revenue ramp. Again, things could go as we expect. They could go better. They could go worse. And we need these next 90 days to see how the payers are responding. So we will make a decision in Q2 about if and when we raise a little additional capital. But look, our goal has number one goal is revenue. But simultaneously, we would like to get to cash flow break-even as soon as possible, not at the expense of revenue, but with our margins.
We expect our margins to approach 90% this year, and then we'll be able to do a lot with those margins and towards cash flow break-even and profitability.
All right. Well, thank you, Brian, and thank you, everyone, for watching. If you have any questions or would like to schedule a meeting with NeurAxis, please send me an email at shamsian@lythampartners.com. We have additional presentations and fireside chats coming up next, so please stick around for more. Thank you, everyone, and have a great rest of the day.