All right. Good morning. My name is Ross Osborn. I am on the med tech team at Wells Fargo. This morning we have NeuroPace, and from the company, we have the CFO, Patrick Williams, and the Head of Investor Relations, Scott Schaper. Thanks for being here. Thank you. Good morning. Jumping right in. NeuroPace has consistently highlighted the significant under-penetration of the drug-resistant epilepsy market. Where do you believe the largest barriers remain today? Diagnosis, referral patterns, physician awareness? I think it is a little bit of all of it. At the end of the day, the product has been on the market for a little over 10 years. Neuromodulation is clearly an area, we describe it as the next frontier in terms of medical device and medicine. If you think about the number of patients that are out there is about 3.6 million people in the U.S. that suffer from epilepsy. About 1.2 million of them are drug resistant. Only about 75,000 or so will actually make it to what we call a Level 4 comprehensive epilepsy center. Of that 75,000 amount, 15,000 will actually get some sort of medical intervention. It is an extremely under-penetrated market. Where we see the biggest opportunity is the ability to continue to drive within those Level 4 CECs, and get more adoption within each account. But at the same time, trying to increase not only the number of patients that go to a Level 4, but also the number of patients that eventually go and get some sort of neuromodulation. I think a big part of it is awareness. I think, when we hear stories about patients that have suffered from epilepsy for years, decades, one of the first things you ever hear them say is, "I wish I knew about these options sooner." I am sure we will talk about IGE and some other things and some of the adoption dynamics, but I would say overall awareness within the patient community needs to be higher, as well as within the physician community. We are beginning to start that. Great. Maybe while we are here, walk through Project CARE, how that is going, what else remains for you guys to do. Yeah. We started, probably, maybe over almost two years ago. The thought behind that was to focus on how do we get more awareness in the channel, especially out in the community setting. I mentioned this concept of a Level 4 comprehensive epilepsy center, a Level 4 CEC. For patients to get to there is only about 250 of those across the U.S., so if you are not in a major metropolitan area or further away, then how do we get you, right? How does a doctor be able to advise you on what your options are? At the same time, we started Project CARE, and the concept behind that was more in the community setting. We haven't broken it out as much in terms of the number of patients we see. I think that gets down to what we are seeing is really the adoption dynamics related to the indication we have today. Right now, we are indicated for adult focal epilepsy. Most of those patients, just because of the nature of that disease state, they do require to go to a Level 4 because they require a full workup, including what we call a stereo EEG at the end of phase II, is what we call it. Fairly invasive, time-consuming step in order to identify where exactly the epilepsy is happening within the brain. As we think about other expanding indications, which I know we will talk about, we think the adoption dynamics there will be much more favorable, and that is where Project CARE could really take off, because we will be able to potentially bypass that phase II, sEEG, and that will be a big driver, we believe, of adoption and awareness as we go forward. Great. Before we get to IGE, maybe walk through RNS, your system, and how that differentiates from other offerings on market. Yeah. You want to take that one, Scott? Sure. It is a neurostimulator cranial implant that is continuously monitoring, recording, and analyzing each patient's individual physiology. And in doing so, allows the patient to have tailored therapy and lead placement exactly where the seizure onset or the seizure network is focused, which allows personalized therapy over time, which you see in our clinical data, which we believe is best in class, as well as the data that's generated from the device. So like I said, it's continuously monitoring, recording each patient's EEG patterns. And over time, that allows the physician to better understand lead placement as well as their individual disease state, which you see also in our clinical data that allows our results to get better as the therapy gets tailored. Great. And then I guess over time, is there a role for different neuromodulation devices within epilepsy, whether that's focal or generalized? Or do you see RNS taking most of the share? Yeah. So, maybe just to tell everyone what the other options are within the competitive space. The largest shareholder is a vagus nerve stimulation known as VNS, which LivaNova has that. And then a similar type of brain stimulation is Medtronic's DBS, deep brain stimulation. That is a pectoral implant as well. We're a cranial implant. And then, what I would call we're the other medical device with a neuromodulation, RNS. And then the fourth option would be a medical intervention, which is usually some sort of resection. Look, we probably, people can look at our numbers. We're probably less than, depending on the quarter, 15%-20% of that. Overall 15,000 that are happening in a year in terms of patients. And we believe that there's clearly a market share opportunity for us to continue to take market share. Most of the revenue that you see from the largest shareholder in LivaNova with VNS is related to the replacement cycle. Their battery, depending on maybe every three, four years, our battery lasts closer to 10 years. Because of that, most of the implants you see from us are all initial. And we probably have less than 10% of our overall revenue generated by replacement revenue. That will become a tailwind for us as we move forward each and every year. The more RNS we place today becomes a replacement down the road. Great. Let's discuss NAUTILUS trial. You've disclosed receiving a letter from the FDA that your application was not approvable in the current state. Maybe before we discuss the data, would you walk through your aspirations in IGE, why that market opportunity is interesting for NeuroPace? Yeah. I talked a little bit, taking a step back on the opportunity of the market. Of the 1.2 million patients that are drug-resistant, or just overall epilepsy, we view that about 60% of that is what we call focal epilepsy. Of that 60%, again, we're only indicated for adults, so 18+ years of age. Probably 20% of that market is below the age of 18. If you do the quick math there, our addressable market is about 48% of the overall market. The indicated expansion through the NAUTILUS clinical trial we did is for idiopathic generalized epilepsy. We did submit for both adult and pediatric. We can talk about sort of where the steps are and move around with that. We see that market as about 20% of the overall epilepsy market, and the remaining 20% to get you that 60/20/20, that remaining 20% is a little bit more niche. You've got some things like LGS, Lennox-Gastaut, and some other more niche-y type disease states within epilepsy. The nice thing about IGE and the idiopathic generalized epilepsy is it's predominantly adult. You tend to present symptoms of that in your teens. By the time you go through your journey of pharmacological, et cetera, you're usually over 18 years of age by the time you get to deciding to do a medical intervention. The other thing is about that disease state and those patients are very cognitively functioning, and someone in here could have IGE and we don't even know it. As I mentioned, because it onssets later on in your teens, your brain is essentially developed and everything else, and you're a functioning person. You just have epilepsy every now and then. You're not exactly sure why. We believe the adoption dynamics related to IGE are going to be very, very favorable, not only from patient advocacy, because they'll be able to speak for themselves, but we believe also the fact of the matter is you can bypass, as I mentioned before, potentially going to a Level 4 CEC, getting a phase II workup is what we call it. The rationale behind that is we have two leads in our system. You will be sticking those two leads or placing them in the neural network of the brain or the thalamus area. As opposed to now with the adult focal, by design, the focal epilepsy requires a little bit of a combination of both. One lead will go on the surface of the brain, fossae, and then the other one will go into the neural network. Again, a little bit more straightforward. I think the physicians will appreciate that. They don't really have to guess about where they put that lead on the surface of the brain. We think those adoption dynamics will be very, very favorable, and we will be the only FDA-approved device for IGE. Maybe let's walk through the data we've seen to date. You missed your primary efficacy endpoint. You hit the safety endpoint, but you did meet your secondary efficacy endpoint. How significant is the secondary efficacy endpoint? Does the clinical community appreciate you guys hitting that while missing the primary? I'll let Scott take it. Well, just to hit the last part first, the clinical community reaction has been very positive. We've discussed and talked with a number of the investigators, as well as discussed out in the field. Everybody's very excited about the data. Just for everybody else, our 18-month data showed a 77% median seizure reduction, and we announced a couple of weeks ago that that had improved to 100% at 24 months. So median seizure reduction data is very robust, as well as the safety data, very robust as well, highly statistically significant. Good. Can we walk through the move from 77% to 100%? I don't know if it's clear to everyone. Yeah. Sure. In terms of the patient population Sure and who actually made it to 100. Yeah. We did a clinical trial, as we talked about, and we've been giving readouts as we go through. The short answer is we put the two-year data out, the 24-month data. Not every patient received 24 months of stimulation, but the number is between 23 months and 24 months, and the reason for that is many of the patients crossed over from the sham into the active very quickly, as that was the design trial. It's also one of the reasons why, unfortunately, we missed the primary efficacy endpoint, which was time to second generalized tonic-clonic seizure. That is the major seizure that we track. The great news is that much like our focal indication, when we did the original clinical trial and got approved back in 2014, then we did a post-approval study on that, you saw increases in median seizure reduction over time. If you look at year one of the original trial for focal, I think it was around 44%. By the time we got to year 10, we were up in the high 60s, 70s. Then in the post-approval study, you can see year one, year two, and year three were phenomenal, with year three being closer to 82% median seizure reduction. As we talked about IGE, Scott just went through it, but at year 18 months, year one and a half, we were at 77, now we're at 100% median seizure reduction. Clearly the product does very well. Clearly the product right now under the IGE indication is even showing better efficacy, clinical efficacy than with a focal patient. I think there's a combination of a few things there. One is we're smarter, the clinicians are smarter. We fine-tune the product a little bit and the teachings around that. The other thing is what I mentioned before, there's just less variability in terms of where you place the leads. Because of that, it's pretty straightforward. You place the leads in the neural network, clearly with epilepsy, placing the leads in the neural network helps detect and stimulate at the same time, and prevent that major catastrophe, which is a generalized tonic-clonic seizure. There was also some other data that we collected, 30% reduction in seizure-related injury events, over 40% reduction in rescue med use. From a quality of life perspective, the device has a very meaningful impact. The FDA came back, requested additional information on the disease state broadly, but also from your clinical trial. Where do you guys stand in gathering that for the FDA? Yeah. I will spend a little bit of time on this because I think this is probably the hottest topic that we get the question on. What is today? Beginning of September. In mid-July, I guess I will call it late July, we did have a conference call. We received a letter from the FDA related to our submission, and the letter said we are not approvable. We talked about that quite a bit on the earnings call recently, and I will give you the high points. I encourage everyone to listen to the words that we chose to communicate to everyone. We did meet the primary safety endpoint, as I said before. There were some questions in the letter related to underrepresented populations. I talked a little bit about the adult versus the pediatric or under 18. We had people that did enroll that were under the age of 18, but we did not have a lot of them, and so the FDA commented and said, "We think this is an underrepresented patient population." I will talk about potential pathways for that. The other concern they had or question they had was around what we will call subpopulations. I talked about this concept of a generalized tonic-clonic seizure or a GTC. It is the frequency. They split out, and they looked at people that were having more than X amount, let us say, two seizures a month, versus those who are having less than two. The FDA had questions statistically around, well, what is driving the overall population? Is one subpopulation driving the results that we saw? They did ask for the 24-month data as well, which we have since provided. Through all of that, we did get a not approvable letter, and the encouragement of the FDA. In fact, again, we chose our words carefully. They strongly recommended that we go through a process called an SIR or a Submission Issue Request. What that does is it allows for a collaborative back and forth with the FDA. We do have what is called a Breakthrough Device Designation, and so that allows a little bit more connection and collaboration with the FDA. We have submitted the SIR, and so we did that not too long ago. The FDA then has about 21 days, or exactly 21 days, to respond to us, to assign a meeting. What we are saying right now is that we expect that meeting to occur by early to mid Q4. Probably the next data point for everyone will be our Q3 earnings call, which will be in early November. That will probably be where we can give an update in terms of where we are at. Again, we have active communication with the FDA. We have spoken to them since this. I think the key takeaways for everyone is that we were not denied. We believe that there is a pathway to get an IGE approval. We are not giving up on any single subpopulation at this point, although we will admit that the pediatric, for instance, might be an area that we would need to work out with the FDA, whether that is a post-approval type study, maybe it is another trial that we have to go through, maybe it is doing real-world evidence. But at this point, we want to submit and continue to drive for all patients, no matter what their frequency is. We will continue to have those conversations, and that will be part of this SIR meeting, again, that we anticipate will happen in early to mid Q4. Okay. What are the potential outcomes of the SIR meeting? Yeah. I think we will go through the full spectrum. Everything goes not so well, and they say, "Well, based on what you are saying, that we will not approve and deny at that point." That could require a whole new clinical trial and everything else. We do not expect that to be an area of where we will go down. Clearly, we have a good meeting and everything gets approved. We also think that there will likely not be a high probability on everything getting approved. I mentioned, again, such as the underrepresented population with pediatrics. So it is probably somewhere in between, and I think that is why we got the encouragement from the FDA to have this collaborative exercise with them and process with the Submission Issue Request. Some people have speculated, well, could you get a narrowed indication? Yeah, they may say, "Hey, you know what? Pediatrics is off the table. Focus on adult." Again, our position is we want to make sure that we get a broader indication no matter how many seizures you have. But a potential would be that they come back and say, "Well, we are going to approve you for only X amount of patients that have two or more seizures a month." That is not dissimilar to the original approval we got way back when in 2014. In our minds, would it hurt adoption? Probably around the edges a little bit, but not a ton, because the reality of the matter is any sort of approval will be beneficial for us. Again, this is a neuromodulation device that is not approved for any IGE. We will be the first one out there. Perhaps there is a way to work out expanded approval as we go through a post-approval study. But again, we think that this is a viable path. The communication with the FDA has been strong, very collaborative, and we believe that we will get an approval. The timing of such, I think some people said, "Well, when could we expect to see an IGE approval?" Again, they could put us back and call it a major amendment when we submit, and that could restart what we call the 180-day clock. You start doing the math on that, and based on, I said, a meeting in early to mid, you do 180 days on that, you are looking at a Q1 to Q2 2027 approval then. Okay. And just to put a finer point on it, our current expectation is that we have data to support the overall clinical population and what was represented in the trial, both from a seizure frequency perspective. So I do not want anybody to get the sense that we are going in with any kind of, "Let us narrow the indication." Our expectation is that it will be for the full patient population. Yeah. It was clear to us as we looked at the letter that there has been turnover in the FDA, for sure. And we had some new statisticians that were involved. There was a new director involved, and we have talked about that. So I think for us, as we read through the letter and had the ensuing conversations, this is about getting together and making sure that all areas of the FDA are on board. And we do not, at this point, have to run any more clinical trials or anything like that. So this is simply just explaining how we see the data and comparing it to them. The last thing I would leave you with is that one of the things that we talked a lot about, and what the FDA encouraged us to talk about, was clinical meaningfulness. And that really takes into account the totality of what does it mean to live with IGE as a patient, and if you can reduce a seizure frequency. Clearly, if you look at absolute values and someone is having 10 seizures a month and you take them from 10 to two, that is a great outcome. Right? The absolute value, of course, is eight. But if you are having two seizures a month and you take them from two to one or two to 0.5, the absolute value obviously is not as compelling. The percentage may be a little bit less than the other one I gave. But what we wanted to do, and what the FDA encouraged us to do, was talk about that clinical meaningfulness. There is an opportunity for us during the SIR meeting to present the patient's point of view, to present the physician's point of view on this. I think that's where you start talking about the benefit to the patient, because we clearly do have very compelling secondary endpoints that we talked about. We sometimes, I'll take this from our CEO, we equate it as an analogy to car accidents. If I could tell you that you could have one less car accident a month and you were having two, which is not great, would you take it? Most people are like, "Of course, I would." That's what we talk about when we say clinical meaningfulness. We did talk a lot about that during the FDA call we did in late July, then during our earnings call subsequently. I think that's an important factor that people need to take into account. We're excited to get in front of the FDA and talk through this. Great. Okay, so assuming 4Q approval, what does the commercialization pathway look like next year? Should we expect meaningful revenue? Yeah, it's not a binary. It's going to be a ramp-up, and the reason for that is our profile of our insurance profile for payers is about 50% of them are private pay. About 20% is split between Medicare, traditional Medicare, and Medicaid. The other 30% is Advantage Plans with Medicare and Medicaid, which kind of work like private pay. For the private payers specifically, they are on coverage cycles that are not based on. They're yearly, annual, but they're not all at the same time. Some are in May, some are in November, some are in March, or whatever. We have put into place. The good news is the delay. We're all ready to go, so we have to submit what's called payer dossiers. We already have approval for adult focal and the new approval for the expanded disease state of IGE. It will be the same reimbursement coding, though. The same DRG, the same CPT code. All we need to do is to convert the private payers' coverage policy to include IGE patients or not to exclude them, depending on how they have the wording. We have a whole plan in place on there. What we have talked about, it is going to be a bit of a ramp-up. We would say that after one year, we will be through all of the private payers, and we should be able to have them all on board. Clearly, reimbursement is important as part of the adoption dynamics. The way that I have been describing it is, that first six months, depending on when we get the approval and when the coverage policies come in, will be highly dependent on getting that insurance coverage. Then months seven, eight, and nine, it will start ramping up. It is going to be a bit of a hockey stick, right? Because you are going to bring them all on board. Then certainly months 10, 11, and 12, we would expect to have most of the insurance covered at that point, or the coverage policies changed. At that point, we would have cycled through, and that we should be in a good spot from that standpoint. In terms of all the infrastructure, anything else we need to do? Nothing else we need to do. We have enough sales people out in the field. We have got enough support. It is the same call point as I mentioned before. We will get a lot of leverage from what we have in place today. Again, we were expecting approval earlier this year, and so all of those things are in place and ready to go for us. One thing on the reimbursement that I would add is that the published peer-reviewed evidence is obviously very important to go to the payers with. That's a good point. We had our 18-month NAUTILUS data published in Epilepsia not too long ago, quite a bit ahead of expectations, so we're ready to go from that perspective. Yep. Great. Then maybe post broader payer coverage, how should we think about the ramp relative to focal? Can it go twice as fast given it's the easier diagnosis process? You have Project CARE in addition to established base. One and a half times? Any rough math there? Yeah. So I've talked about it a few times, and I use this phrase, right, adoption dynamics. The adoption dynamics for IGE are clearly more favorable across a number of areas. I talked about the patients being able to advocate for themselves. They tend to be a little bit more self-sufficient and they still depend on a network of support, but many of them live on their own and may not be driving as much, for obvious reasons. But they're pretty functioning. They can go to work and things of that nature. So, I think that's one adoption dynamic. The physician side of it as we mentioned before, you have the ability to potentially bypass the Level 4 CEC. So we clearly need to work with the healthcare provider community on that. Our position is that you do not need to go through a phase II to do that. That should open it up to the community setting, and everything else. Then, finally, the adoption dynamics with our product. The beautiful thing about our product is it provides a ton of data, right? That's something that we believe is a clear differentiator. The ability to have the closed loop system that detects and monitors, and we have over 27 million EEGs now, is important because what that is going to allow us to do over time is to be able to eventually get to a point where we can use artificial intelligence, machine learning, et cetera, to help the patients and the physicians get to their endpoint quicker. Again, with the placement of the leads being in the thalamus or the neural network, that's much more straightforward. The doctors, I believe, will have more confidence in when they're treating an IGE patient. When you enable that with some of the things that we're doing now, might as well hit it now, is that we just recently launched what we call our ECoG Assistant. ECoG Assistant allows a doctor to look at thousands and thousands of screens and lines of ECoG data. Then what it does is it filters it down and says, "Here are the 50 or 60 that potentially matter," right, for that patient. That's all based on, again, machine learning that we have in the background in the 27 million ECoGs. We're also looking to launch Remote Care, and so we'll be filing that with the FDA by the end of this year. We mentioned that. What Remote Care will do is, again, thinking about a patient in the community setting or not next to a Level 4 CEC, or it doesn't really. They could be in a major metropolitan also. It's going to give them the ability for the doctor to be able to read their ECoGs in a remote capacity. They don't have to come into the office to be able to read that data point. Programming. Programming, exactly. That's the important part of it, is the programming of it. To be able to program that, as we talked about, over time, we see very strong improvement as a patient and their doctor work on finding that exact setting for them. Then over time, with the AI and everything else, we'll be eventually going to auto-enablement, auto-detection, and that'll be a really big part of it. We will get to the point where it's a little bit of a set it and forget it. I think right now, all of those things will help us increase the adoption dynamics, and that's what we're excited about. What about on the pricing side of things? Does it make sense to. I think you guys have been growing 150 to 200 basis points on price. Yeah. But adding on all the AI capabilities, is it to serve for attractiveness, or do you think you can start charging higher prices? I think you can expect us to continue to have the moderate, call it a couple 150, 200 basis points of pricing every year. We will clearly watch what reimbursement does with CMS and sort of stay in line with that. In terms of either charging a different price for IGE, do not see that happening. We are still very under-penetrated. If anything, we will look to try to increase reimbursement for the accounts in the physician community. At the same time, when we think about pricing and some of the other things we are doing, like AI, ECoG Assistant, or remote monitoring, we see that as being able to not so much monetize that portion of it, but monetize the overall market share ability of taking market share. We are still at a very small market share, as I said before. If we get access to the 20% of IGE patients in the 1.2 million that are drug-resistant, we see that the opportunity to make this easier, increase adoption dynamics, is much better than just trying to get a little bit on ASP in the near term. The economic value of an implant, if making it easier to use or identifies patients easier, makes the procedure easier, makes it easier to manage more efficiently. If a center does one or two additional implants, the revenue from that would far exceed probably any SaaS revenue that we could do. Our focus is on maximizing the economic value of the core implant. Our gross margins are low 80% right now, so we guided 82%-83% on a non-GAAP basis. Still very strong ASPs and very strong gross margin. We are happy with those. For us, it is really all about driving additional market share and hopefully one day expanding the market as well. Great. Any questions from the audience? All right. If not, I think the focus is primarily on IGE and your ability to get that indication, but focal continues to perform well. Entering the year, we thought about RNS growth about 20%. We're looking at 21%-23% exiting the year. Consensus is at 22% for total revenue growth. How should we think about 2027 as RNS moving from 20% to low 20% growth? Yeah. A lot of upside from there. This year we did not include in our guidance anything related to IGE. I think that's important for everyone to remember. The other thing is we've talked about with our current indication that we would expect to grow around 20% for the distant future. The last time we talked about was going through 2027 because that was really part of our long-range plan. We now have the delay, what we'll call it on IGE. Though not in our numbers, I know some of the street models have probably put IGE in 2027. A little early for us. We got to see what the timing is. I would encourage people to not include IGE in their 2027 right now until we give a number. The big part of that is what we talked about earlier, is we need to know when the approval's going to happen, and then when that cycle happens with the private payers and bringing them on board. Clearly, if it happens earlier in 2027, then we'll be able to get through the private payer cycle. If it's a little bit later, then it's just going to take a little bit longer. We will clearly give color and guidance around what those numbers look like once we get approval and we have a better understanding of that. But still a little early right now for us to do. It's the same guidance philosophy as when we enter 2026. Yeah. If we have it, we'll include it. If we don't yet, we'll wait. Yeah. What about on the cash flow side of things? You alluded to your strong gross margin, but we started thinking about 2027 as the kind of inflection point of achieving cash flow breakeven exiting the year. Sure. How much of that was driven by IGE when you established the LRP? Is it still achievable? Yeah, and so it is. I think really we have demonstrated the ability to generate cash. We have done that in a couple quarters, including free cash flow. Ultimately for us, we believe that we are valued on growth and taking market share. I think everyone would agree with that, and certainly our investor base that we have today. But at the same time, we want to be prudent and smart about it. When we figure out where we can grow more market, we will obviously invest in those areas, and we have done quite a bit of that on the sales and marketing side already. I will not back away from what we said before, which was exiting 2027 at a cash flow breakeven. That was not contingent on getting an IGE approval, and as I said, we have demonstrated it. For us, again, it is a super under-penetrated market. We are going to be the only neuromodulation device that can do IGE. We have got a lot of great stuff happening with what we will call AI, with our ECoG. I like to call it AI assistant. And then also with remote monitoring, and then more to come on that. And then of course, we have a strong foundation, which is the focal side of it. I think those are the three takeaways for everyone is good foundation, expanding TAM, and new products coming on that should help with adoption. Great. Patrick, Scott, thanks for being here. Appreciate it. Thank you. Thanks, Ross.