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01:33 Thank you, [Towanda] [ph] and those of you attending today's quarterly review. Dr.

Shai Gozani, President and CEO of NeuroMetrix is participating in this call. For those unfamiliar, we are a Boston-based medical device company focused on reducing the impact of neurological disorders and pain syndromes both on individuals and on populations.

01:55 Our technologies are non-invasive, we hold extensive proprietary intellectual property, our business model is based on recuring revenue from a customer installed base and our principal products are DPNCheck, a diagnostic device providing rapid point-of-care detection of peripheral neuropathy; and Quell, a wearable neurostimulation device indicated for symptomatic relief of lower extremity chronic pain. 02:22 Revenues in the fourth quarter of the year were 1.8 million, this is flat with Q4 of last year.

Full-year revenues of 8.3 million were up 11.9% from the prior year. DPNCheck sales to U.S.

Medicare Advantage accounts constitute the majority of revenue. Medicare Advantage revenue was up 26% year-on-year, primarily reflecting pricing increases.

02:50 International DPNCheck sales, which are primarily to Japan and China were up 7% year-on-year. However, within that growth rate, revenue from consumables grew 46% and this was a combination of volume growth and higher pricing.

03:08 Quell revenue in Q4 was up slightly quarter-on-quarter and down on a full-year basis, as spending continues be carefully managed to ensure a positive product line contribution to operating results. 03:22 Our aftermarket sales, primarily our consumable electrodes and biosensors across all product lines constituted 89.9% of total 2021 revenue versus 76.6% in 2020.

This was a meaningful year-on-year expansion of recurring revenue from the installed user base. 03:46 Gross profit on revenue was 1.2 million in the quarter, down from 1.3 million in Q4 of 2020.

Spending to secure critical parts caused the unfavorable variance. For the full-year, gross profit increased to 5.9 million from 5.2 million in 2020.

04:05 Our gross margin rates were 71.7% in 2021 versus 71.2% in 2020, an improvement of 50 basis points. Looking back to 2020, we saw delays in parts deliveries and longer lead times on orders starting late in the second quarter early in the third quarter.

This evolved in the second half of the year into part shortages at traditional sources. 04:33 So far, we've been able to meet our production requirements by turning to alternate distributors, albeit at higher prices and with the margin effects we experienced in the fourth quarter.

As we all know this is a global problem and is not possible to predict when we'll see a return to a more orderly supplied environment. 04:52 In the next several quarters, we will likely experience further margin contraction as we deal with the situation and take all essential steps to maintain production.

Operating expenses totaled 2.2 million versus 1.7 million in Q4 last year. For the full-year OpEx increased to 8.2 million from 7.3 million.

05:14 Fourth quarter of 2021, we transferred R&D’s certain unique custom parts to support the development and the eventual commercialization of Quell technology for specific disease indications with fibromyalgia being the initial prescription program. These parts carried a value of $400,000.

05:35 Also in the fourth quarter, we incurred sales and marketing costs related to an independent consulting study and evaluation of commercialization options for the emerging prescription portfolio. Increased personnel costs, including incentive compensation were recorded within all categories in OpEx in the fourth quarter and during the full-year of 2021.

06:00 Net loss for the fourth quarter was 1 million versus 326,000 in 2020. On a full-year basis, the loss was 2.3 million in 2021 versus 2.1 million in 2020.

[Referring] [ph] to per share, net loss for the year was $0.45 in 2021 versus $0.69 in 2020, with the increase in shares outstanding in the last year diluting the EPS number. 06:30 With regard to the balance sheet and capitalization, we ended the quarter with 22.6 million in cash, 6.7 million shares outstanding that's $3.38 cash per share.

And stockholders’ equity of 23.2 million, which is $3.48 a share. We have adequate funding to invest in the growth strategies during 2022 and beyond.

06:55 Dr. Gozani will now address our overall strategy.

06:59 Thank you, Tom. So, I will be covering updates on our product lines, I'll discuss our growth catalyst, and provide directional guidance for 2022.

Starting with DPNCheck, we are preparing for a focused launch of our second generation DPNCheck device in the U.S. market.

07:16 Now, unfortunately, the breadth of the launch is constrained by the supply chain challenges that limit our ability to build inventory. Due to these production issues, we expect to phase in the second generation device over the course of 2022.

07:29 The key innovations in the second generation device are around enhanced usability. We leveraged our experience with the first generation device accumulated over about eight years and nearly 2 million patient test to substantially revamp the technicians experience to make it easier and faster to complete a DPNCheck tests, both of which are critical for scalability of the point of care tests.

07:52 Importantly, however, the underlying diagnostic measurements are unchanged so the large body of published peer-reviewed clinical literature that has validated diagnostic accuracy and utility of the DPNCheck test continues to apply. 08:06 On the commercial front, we are building our DPNCheck commercial team under the direction of Su Bell, our SVP Population Health & Value Based Care.

Brandi Damkier, recently joined as VP Clinical Partnerships and we are expecting to hire several more individuals with deep Medicare Advantage experience in the near term. This is the first time we have had a dedicated commercial effort targeting the Medicare Advantage market, a more broadly value based care.

08:31 We expect to see a positive revenue impact from this organization starting later this year, given the long sales cycle characteristic of an insurance oriented business. We believe that investing now in enhancing our DPNCheck commercial capabilities will provide a substantial and sustained return in the coming years.

08:49 Now, moving to the Quell Neuromodulation Platform. Quell is currently FDA cleared for symptomatic treatment of lower extremity chronic pain and is available over the counter.

As we have discussed over the past couple of the years, we are transitioning from over the counter to prescription applications. 09:06 In particular, we are building a portfolio of prescription wearable neurotherapeutics for specific disease indications.

Our lead program is for fibromyalgia, a complex chronic pain condition that affects about 10 million U.S. adults.

09:20 In July of last year, we received the FDA breakthrough device designation for the use of Quell to fibromyalgia symptoms in adults. And in October of last year, we filed our de novo request for this clinical indication, which is currently under review at the FDA.

09:37 Depending on the FDA review timelines, we hope to be positioned for a focused launch of the prescription Quell offering for a treatment of fibromyalgia later this year. 09:47 Now, at this time we are primarily focused on the ongoing regulatory process, but we also starting to ramp up our commercial efforts.

We have engaged a leading healthcare consultancy to conduct a go to market strategy analysis. And we hope to provide more information about the market and our strategies will get closer to launch.

However, we can offer some general direction at this time. 10:08 The primary sales target for the fibromyalgia indication at launch will be about 10,000 rheumatologists and [pay made to] [ph] physicians who are the key specialists that manage fibromyalgia.

10:19 We are planning to utilize regional and national professional conferences, digital outreach, and other novel strategies to educate these physicians about Quell as a treatment option for fibromyalgia. At this time, we are not planning to establish a dedicated field sales organization.

10:35 We intend to work towards broad third party reimbursement for the fibromyalgia indication and there may some patients for which reimbursement under the existing triple medical benefit [indiscernible] benefit for [ten devices] [ph] is applicable. However, generic [indiscernible] reimbursement is sporadic administrative [indiscernible] some to physicians and the co-pays and co-insurance could be quite expensive for patients, particularly those with high deductible plans.

10:58 As a result, we do not expect a significant number of covered lives at large because obtaining effective reimbursement, a reimbursement will be a multi-year process As an alternative, we are developing a streamline in cost effective self-pay approach. We are leveraging our extensive direct-to-consumer experience to create a subscription model that should be financially acceptable to most patients with fibromyalgia, it will generate attractive sales and margins for the company.

11:24 From an operations perspective, we are not expecting to engage distributors or other third parties. We already managed prescription medical devices with our existing customer support and fulfillment infrastructure and believe that we can support the Quell fibromyalgia prescription business with modest growth in headcount and systems.

11:43 My last update is in our chemotherapy induced peripheral neuropathy or CIPN program. This condition is a disabling complication that occurs in many patients treated with common chemotherapeutic drugs.

There are few treatment options for CIPN and those are used to have limited effectiveness and cause side effects. 12:02 We recently announced that we received a second FDA breakthrough device designation for treatment of chronic CIPN by Quell.

There's also an ongoing National Cancer Institute funded multi-center randomized sham-controlled trial of Quell in patients with CIPN. The trial is expected as complete this year and if the results are positive, we anticipated a regulatory filing for this indication in 2023.

And if those timelines hold, we may be in position to launch this indication by the end of 2023. 12:33 Now, though we are not positioned to provide specific financial guidance for this year, we can provide some directional guidance relative to last year.

In terms of overall revenue, we expect it to increase driven primarily by growth in the domestic DPNCheck business. 12:55 Now, this will be partially offset by a temporary decrease in Quell revenue as the business transitions from over the counter to prescription neurotherapeutics, as well as a continued downward trend in advanced revenue, which is a legacy business that lacks attention to our focus on other priorities.

13:07 We expect a modest increase in operating expenses reflecting investment in our DPNCheck and Quell growth initiatives. We also anticipate a modest increase in net loss, due to relative timing of investments and the resulting revenue growth.

13:20 Finally, cash will decrease due to negative income. However, we expect to finish the year with about $20 million on the balance sheet, $20 million of cash on the balance sheet.

And at this time, we are not planning to execute financings outside of opportunistic use of our ATM facility. 13:38 So in summary, NeuroMetrix is a committed and operationally efficient organization with novel products that are targeting large markets with unmet needs.

And that represents our prepared comments and we'd be happy to take any questions at this point.

14:27 Yeah, this is [Jared Cohen] [ph]. Hello.

14:31 Hi, Jared. How are you?

14:34 Yes. So, I guess, yes, as you said this is a transition year in the sense that, you both have over the counter and ultimately go to a prescription based model ultimately, in terms of – at least for the –I'm talking about the Quell, and I keep getting emails about that.

So, ultimately, you'll go to a total prescription based model for the Quell, just a little confused by that?

15:07 Yes. So, thank you for the question, Jared.

The plan is to ultimately winddown the over the counter business and transition completely to a focus on prescription products. So, you are correct in that.

That process will proceed through the course of the year, but ultimately, we see the real opportunity for us and the strongest growth in these disease specific prescription indications that we've been talking about. That being said, we have FDA clearance for over the counter, so we will continue to support and provide product to all our existing over the counter customers.

15:53 Okay. So, it's to the existing customers, they can keep getting reusables and then to new indications will be a prescription model.

Okay.

16:04 Exactly, exactly.

16:06 Okay. All right.

Thank you very much.

16:09 Absolutely.

16:33 Well, thank you very much for joining us this morning. And we look forward to keeping you updated over the balance of the year.

Thank you very much.