NeuroOne Medical Technologies Corporation — FY2021 Form 10-K
Reporting period: Fiscal year ended September 30, 2021. This is an annual filing; it does not provide a separate fourth-quarter results summary. The company develops thin-film brain electrodes and related diagnostic and therapeutic technologies, and had only limited commercial sales.
Financial performance and position
| Metric | FY2021 | FY2020 |
|---|---|---|
| Product revenue | $178,146 | $0 |
| Collaboration revenue | $64,812 | $1,926,566 |
| Product gross loss | $(97,749) | $0 |
| Operating expenses | $10.19 million | $6.83 million |
| Loss from operations | $(10.22) million | $(4.90) million |
| Net loss | $(9.95) million | $(13.64) million |
| Net cash used in operating activities | $(8.60) million | $(3.43) million |
At September 30, 2021, cash was $6.90 million, current assets were $7.29 million, current liabilities were $1.18 million, total assets were $7.94 million, and total liabilities were $1.38 million. The company had no convertible notes outstanding at year-end; operating lease liabilities totaled $316,000. Accumulated deficit was $40.8 million. The company reported no income tax benefit in either year.
Changes versus the prior year
- Product sales began in December 2020, generating $178,146 in FY2021, but product costs exceeded product revenue by $97,749.
- Collaboration revenue fell to $64,812 from $1.93 million, reflecting the timing of revenue recognition from Zimmer’s upfront fee.
- SG&A increased 32% to $6.26 million, primarily from sales and marketing, payroll, public-company and insurance costs. R&D increased 89% to $3.93 million, largely due to sEEG development.
- Operating cash use rose to $8.60 million. Net loss narrowed mainly because FY2020 included substantial noncash interest and note-extinguishment costs; operating loss increased.
- Financing provided $11.53 million in FY2021, primarily from a January 2021 private placement. After year-end, an underwritten offering raised approximately $13.4 million gross; the base offering closed in October and the overallotment shares in November 2021.
Outlook, risks and notable items
- Going concern and funding: Management and the auditors identified substantial doubt about the company’s ability to continue as a going concern. The filing says year-end cash may not fund operations for at least 12 months from filing; additional capital may be required, and failure to obtain it could force spending reductions or cessation of operations.
- Regulatory and product development: FDA-cleared products include cortical electrodes for temporary use up to 30 days and sEEG electrodes for use under 24 hours. An application to extend sEEG use to under 30 days was pending FDA review. Other therapeutic products remain in development. Management targeted an RF-ablation 510(k) submission in Q4 2022, subject to development, testing and regulatory progress.
- Zimmer relationship: Zimmer has exclusive distribution rights and made a $2.0 million upfront payment. Additional sEEG fees depend on milestones and negotiations; the Product Availability Date had not occurred. Zimmer could terminate its sEEG distribution license if that date had not occurred by June 30, 2022.
- Execution and operating risks: COVID-related supply-chain and staffing disruptions, including polyimide-film shortages, delayed development and product availability. The company relies on third-party manufacturers, licensed intellectual property from WARF and Mayo, and Zimmer for commercialization. Reimbursement, adoption, competition, further regulatory requirements and future financing remain material uncertainties.
- Litigation: PMT litigation remained unresolved; trial was postponed to August 2022. The company said the outcome of claims against it was not estimable. It had received $185,000 in sanctions proceeds recognized in FY2021 other income; separate sanctions awarded to a former employee were not company proceeds.
- Dilution: At year-end, 7.50 million warrants and 1.12 million options were outstanding. The October–November 2021 public offering increased shares outstanding; gross proceeds do not equal net proceeds.
- Unusual accounting and controls: The FY2021 audit identified warrant classification as a critical audit matter; warrants were classified as equity. Management reported effective disclosure controls and internal control over financial reporting at year-end.
Key facts for investors to verify
- Current cash runway and whether further financing is needed after the post-year-end offering, including the offering’s net proceeds.
- Subsequent FDA decisions on the under-30-day sEEG submission and progress toward RF-ablation testing and clearance.
- Zimmer’s milestone payments, product availability conditions, distribution activity and any changes to the agreement.
- Commercial sales, unit economics and whether product revenue can grow enough to offset operating costs.
- Developments and potential financial exposure in the PMT litigation, as well as supply-chain and reimbursement conditions.