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This isn’t a stock for conventional value investors. But if you enjoy investigating or learning about existing and emerging technology, particularly in medicine, this may be something you find quite interesting.

To keep things within a reasonable length, I’m not going to define many terms beyond the acronyms, so this may take some time to read for those who’re partially or fully unfamiliar with material discussed. It is possible that I’ve made mistakes, please point them out if you know what they are. I’ll do my best to source various parts of this write-up, especially claims or demonstrations of products and procedures which I find to be important or listed herein. Some claims may be incorrect although it was my full intention to make accurate representations of publicly available information. I’m not a physician, nurse, administrator, or have anything to do with medicine. I’ve never worked in healthcare. I am an independent researcher that has been given a lot of help.

Please do your own diligence.

ClearPoint Neuro $CLPT is a medical device manufacturer, service provider for translational

medical research involving several domains of medicine, and a social network of hospitals, practitioners, & commercial enterprises. The company is simultaneously involved with mature & cutting-edge science across a few different branches of medicine involving neurosurgery.

Since ClearPoint Neuro was founded it has never made a net profit. Historic net income losses since 1998 are in the range of 140mm+/-10mm USD depending on error of memory and the burn that happened in Q2 of 2022. They do and have had relatively high gross margins throughout their operating history, but to date cash outflows should be relatively in line with historical net income. I’m not going to write much about the valuation side of things, margins or really any relevant financial metrics that a conventional value investor would find useful. I’m not sure if that’s something I’m even capable of doing, but I would like to see forward projections made, if possible, from the years 2025 and onwards. As an investor and an observer, I think the primary way to gain meaningful insight at this stage is through a detailed qualitative analysis of what the technology is involved with, an abbreviated company history that leads to the present day, some current and ongoing practices, clinical results across various investigational /experimental therapies and a word on the tenure of Joe Burnett as CEO.

ClearPoint Neuro is a company who provides a variety of disposable products and (pre)clinical services for neurosurgeons at select public institutions & commercial entities. They are primarily located throughout America and select locations in Europe. You will likely be familiar with many places that are involved. I’ll list a few just to give an example:

UCSF, Stanford University, Stanford children’s hospital, UCSF Benioff Children’s, Mayo Clinic Pheonix, Mayo Clinic Florida, Duke University, Yale University, Charles River Labs in Mattawan, Cleveland Clinic, Memorial Sloan-Kettering, Mt. Sinai West, UPMC, Barnes Jewish Hospital, Children’s National, Ohio State University, and a few dozen more I don’t want to type (see investor presentation).

There are likely a huge number of physicians to thank for the start of this. In part it began from Krystof Bankiewicz and Paul Larson cleverly making their way to a functional work flow to treat an ultra rare genetic disease called AADC deficiency. Or perhaps it began when convection enhanced delivery was first being described in animal models. But irrespective of the origins or causes for ClearPoint as an incorporated entity, Krystof and Paul were early users of the products that lead towards todays company. As an aside, both Krystof and Paul are still practicing using similar equipment and treatments for various neurological disorders and disease and as ambassadors of the technology. You can see Krystof speaking here at the opening of Ask Bio’s opening ceremony for a newly constructed manufacturing facility in the Summer of 2021. VIRALGEN NEW FACILITIES ONLINE 1 SUB ENG SIN BANDAS 1 - YouTube

As the years went along slow progress was made and ClearPoint became a company

that could routinely support small volumes of lead implantation and as well as supporting various drug programs, such as intratumoral injections of oncolytic virus therapy. E.g., Neuro Intervention System Used for MRI-Guided Delivery of Toca 511 in a Study of Patients With Brain Cancer | Imaging Technology News (itnonline.com) took place and slowly the application space expanded.

What they’re doing now is described as follows:

Examples DBS (Deep Brain Stimulation) & RNS (Responsive neurostimulation).

Note: There is another line item under the term ‘therapy products’ that you will find in the SEC filings. Its scope is outside the brain and spine, but for now it remains nothing more than a distribution agreement for laser thermal therapy products to initially be used in FLA of prostate cancer.

Note: Unfortunately, even if I wanted to, a comprehensive breakdown is impossible due to the scope and depth of existing and ongoing research, as well as roughly 2/3 to 3/4 of programs & partners being undisclosed (especially within the biologics and drug delivery segment). But I think most who take the time to read this will find my explanation and

examples adequate.

The first and most important thing to note about these therapeutic modalities is that there’s a good deal of overlap between the equipment and the process. The stereotactic head frame used for a biopsy procedure can also be used for LITT, and they often are performed in conjunction. To provide an example as to why and how this fits into a hospital setting, imagine this scenario.

A patient has a triggering event that leads them to some initial scan that informs physicians of a small lesion. It measures less than 2 millimeters radially across its largest dimension. Further, it is located near the brain stem. This may prevent many surgeons from taking the chance at surgery and this starts a chain of events that dramatically changes patient outcome. Because if the surgeon’s needle can’t consistently, safely and accurately biopsy the lesion, then pathology cannot be informed. This means pathology cannot inform neuro-oncology about what the lesion is and how to move forward with treatment. This isn’t something you are likely to encounter, but it is possible and real people are faced with these issues. But with ClearPoint Neuro this biopsy is made possible due to the degree of accuracy (sub millimetric tolerances) and live guidance allowing for trajectory realignments (Reference 1: https://youtu.be/GFtUMus8_Co). And by using LITT with live MRI guidance (commonly referred to as MRgLITT), tumors may be ablated using various commercial installations of laser thermal therapy devices installed throughout America and Europe that are using ClearPoint’s disposables.

This includes the NeuroBlate system by Monteris or Medtronic’s Visualase. And as I write this, it has been 6 months and 13 days since Clinical LaserThermia Systems Americas submitted their 510(k) to the FDA for their temperature relay software for use in the TRANBERG thermal therapy system. If this software is approved for use, the entire workflow will be cleared and commercial use of CLS’s product portfolio can be used in America for approved therapies using MRgLITT. My understanding is CLS currently has approval in Europe to perform clinical trials using this system already.

At present day for the currently approved laser ablation systems, ClearPoint sells their disposables for a number of ablative procedures. CLS has a more extensive collaboration with ClearPoint, so the take is roughly 2-3x greater than surgeries being performed today. What makes LITT & potentially imILT (immunestimulating intersitial laser therapy) very important for ClearPoint, is these are some of the shortest procedures by time that a surgeon has access to using ClearPoint products and services. They are also here in a commercial setting today with payors routinely adding coverage. E.g., see Cigna’s announcement supporting coverage from last November (Reference 4: Monteris Medical Announces Positive Coverage Policy Decision for MR-guided Laser Interstitial Thermal Therapy (prnewswire.com). For other areas of the business, many programs are inherently less mature than areas of LITT inside neuro-oncology and DRE focal laser ablation.

Note: You can see a display of the Monteris system at MSK in this video posted a few

months ago on their YouTube channel. The piece of equipment referred to as ‘the

tower’, is described in the video and is manufactured by Clearpoint Neuro as

well as all other stereotactic head frame observed in the presentation.

As described before, ClearPoint helps companies and various academic groups during drug development. They do this by supplying the equipment that enables local drug delivery, as well as translational services such as working with the design and submission of

clinical trials with small biotech companies as they go from benchtop to clinic. Most of their smaller clients have far less experience in performing drug trials than ClearPoint due to ClearPoint acting as a partner platform company and already having been in 25+ human clinical trials involving drug delivery with their Smartflow Cannula (Ref 5: ClearPoint Neuro Services and Solutions for Delivery of CNS Therapies in Clinical Trials - YouTube). They also offer a small dedicated internal neurosurgical channel with device expertise using ClearPoint where a partner can opt for use by paying a channel access fee. The conglomeration of various aspects such as software, disposables, number of injections, and neurosurgical channel use, leaves a wide mix of revenue between the various drug delivery programs. There is concentration amongst both the hospitals with installations and commercial partners in terms of revenue. You can read more about this in the current SEC filings.

I think it’s critical to understand the why of local delivery to know what’s motivating behavior in this segment. Drug development in neuro-oncology, as well as for various neurodegenerative conditions, has a marked history of poor efficacy and safety (Reference 3: Convection Enhanced Delivery for Diffuse Intrinsic Pontine Glioma: Review of a Single

Both due to dose limiting toxicity issues which stem from select, common features of neuroanatomy and physiology. If you administer a drug systemically, i.e., through an oral tablet or through an IV, your therapy must make its way through the body and past the BBB (Blood Brain Barrier) and then to the target structure in sufficient concentration to achieve a

therapeutic effect. There are select paths which may offer greater transferability through the blood brain barrier, for instance, near the midline of the third and fourth ventricles, there are anatomical structures called circumventricular organs where the tissue if far more permeable. There are also diseases in which degeneration occurs where the blood brain barrier is interrupted and local, convection enhanced injections are unnecessary such as advanced Tay Sachs disease where thalamic degeneration has already occured (REF 9 Microsoft

Word - 120520 Flotte Et al REVISED_ NatureMedicine_linenumbers.docx (researchsquare.com)).

ClearPoint also performs procedures for clients using things like intrathecal delivery where local delivery isn’t required, however, the method ClearPoint is most renowned for is what I’ll primarily be discussing.

While the pharmacokinetics of a drugcirculating inside the cerebral spinal fluid are remarkably complex, there’s a metric that’s easy to understand. It’s called ‘hydraulic conductivity’ (abbreviated as K). What it typically measures is water flux through a porous material – that is, how fast water diffuses through a porous medium. The K value of the endothelium lining the vessels inside the brain is remarkably low. Its K value is similar to un-fissured clay and some types of slate (Reference 2: A novel method for measuring hydraulic conductivity at the human blood-nerv barrier in vitro - PMC (nih.gov).

And while drug distribution in the brain/spine isn’t driven solely by diffusive flow (small naturally occurring differential pressures are thought to exist that cause bulk flow inside the brain), the dense packing of endothelium creates highly asymmetric drug distribution throughout much of the brain, and often the result is DLT’s (dose limiting toxicities) in dose escalation trials as concentrations build in layers of tissue proximal to where the drug makes

contact with the organ (Reference 3: Convection Enhanced Delivery for Diffuse Intrinsic Pontine Glioma: Review of a Single Institution Experience - PMC (nih.gov))

Brain clearance systems also exist which can remove foreign materials and thereapeutics that were administered directly or indirectly into the brain. Think of it sort of like dirty effluent that exists the brain. Companies like Plus Thereapeutics use nano liposomes to assist in both retention and distribution of their brachytherapy using Rhenium-186 for intratumoral injections. From the perspective of nuclear medicine, what excites me here is that the amount of Gray that can be absorbed by the tumor body of Glioblastoma is substantially higher than what can be achieved by typical external beam radiation therapy (ERBT), and the full dose can be administered in a fraction of the time. And if you were to investigate ionizing radiation and its impact on cell life, what you would see is that a critical variable of what happens to the cell has to do with the time in which it was absorbed. 10Gy absorbed over 5 weeks is not the same thing as 10 Gy absorbed over 5 hours. But that is a significant difference here.

A routine standard of care treatment plan for glioblastoma may have 30 separate treatments

of EBRT where the total dose administered is 60 Gy in 2 Gy increments. But because intratumoral convection enhanced delivery can administer Re-186 packaged inside a nanoliposome in a replicable & controlled fashion, the absorbed dose can safely be 10x-20x greater than what’s possible with EBRT. Further, the side effects from radiation are prevented, as the absorbed dose from beta decay is largely contained within the tumor body, and the half-life of Re-186 is so short that any that is cleared results in a safe whole brain & body dose. In a small number of patients treated with ERBT you can get malformations (potentially lethal) as well as radiation necrosis of brain tissue (REF 6: Radiation Necrosis - an overview | ScienceDirect Topics, REF 7: Radiation-induced changes of brain tissue after radiosurgery in patients with arteriovenous malformations: dose/volume-response relations - PubMed (nih.gov)) You can find more information about this here https://youtu.be/d5xp7jhgKSE

Similar programs are happening across dozens of rare and not so rare diseases, e.g., a stem cell therapy that recently began for MTLE or Ask Bio’s (A Bayer Subsidiary) gene therapy for Parkinsons, which is set to have a readout sometime in the near future as the trial ended early this year.

The last nail in the coffin for what is effectively a defacto monopoly on drug delivery for any programs their disposables touch, is that the construction of the catheter that’s infusing the drug influences its coverage of a structure. Issues like reflux (which is where infusate flows back into the tip of the catheter) decrease coverage and can leave a target partially untreated. Seeing the infusate happening live contrasted on MRI has the added benefit of knowing if perivascular spread is occurring (which also decreases target coverage) and needs to be corrected by the surgeon performing infusion. Getting over these barriers is a tall order that requires the effort of entire highly specialized and trained teams. And it is almost certainly the greatest cause of failure in drug development for neuro indications in both the brain and spine. And to give credit to Logos Capital for a very important part of this, these challenges have to be met while your drug is on a patent clock.

One of its original purposes as a company was for the guidance of electrodes to be implanted that’s under the umbrella of a branch of neuroscience called neuromodulation. The primary value-add of ClearPoint being that an MRI affords you visual biomarkers that enable patients to be under general anesthesia during surgery. There’s an added benefit that a higher degree of precision results in fewer passes of a ventricle on average, which has a positive correlation in studies to both hemorrhage and infection. It also makes certain conditions that may benefit from visual biomarkers not readily seen in the cases of psychiatric conditions, such as severe treatment refractory OCD and Major Depressive disorder. Speaking of MDD, Abbott, who uses ClearPoint disposables & their software for select DBS procedures received breakthrough designation for their neurostimulator for the treatment of MDD. While it will take many, many years to translate into a commercial procedure with insurance coverage (Refractory OCD has had humanitarian device exemption by the FDA for over a decade & payors still consider it an experimental procedure).

I personally spoke to a woman who had received MRI guided DBS for refractory OCD a number of years ago. Her name was Meg and the procedure radically transformed her life and likely saved her personal relationships. You can listen to a podcast detailing her story on NPR here: Deep Brain Stimulation: Remote Control Brain : NPR

Other psychiatric conditions using this technology such as the case below are also under investigation. This one is a bit of a tear jerker as the procedure stopped a small girl with autism spectrum disorder from constantly inflicting self-harm (e.g., at one point she bit down hard onto a solid surface and shattered her teeth).

Autism study in Ont.: Deep brain stimulation and self-harm | CTV News There’s also an entirely separate initiative with a company called Blackrock Neurotech (formerly BlackRock microsystems) who are seeking to begin commercial implantations of their brain computer interfaces in late 2022/2023. They’re the most mature Brain computer interface company in the world with over 10 years of in human data involving their Utah Array. IF their device is successfully commercialized, they likely have the only marketable brain computer interface for a very long time. Famous investors like Peter Thiel and Christian Angermayer are bankrolling them, meaning they have significant resources to call upon should they need funding to forward the implantation solution they are co-developing with ClearPoint Neuro.

This company would not be where it is without him. In his 5-year tenure, Joe has transformed every facet of this company. Adoption by hospitals has grown significantly. Active clinical trials and commercial pharma partners have exploded from 5 to 45+, he’s overseen the improvement equipment saving time during every surgery involving skull mounted stereotaxis (which is a lot of them). He’s still working with a team that followed him from his past companies, and no matter where you go (A tegus report profiles his character along with other key employees of ClearPoint), everyone has something good to say about the man. So far I am thoroughly impressed with his capital allocation and his ability to scrap together as much as he has with the resources he’s been given in a complicated and dynamic environment. It’s easy to spend money in tech.

There is not a doubt in my mind there are people alive today that wouldn’t be if it was not for his leadership in proliferating this technology stack. So a heartfelt thank you (from everyone)

to Joe Burnett and the entire team at ClearPoint Neuro.

REF 1: https://youtu.be/GFtUMus8_Co

REF 2: A novel method for measuring hydraulic conductivity at the human blood-nerve barrier in vitro - PMC (nih.gov)

REF 3: Convection

Enhanced Delivery for Diffuse Intrinsic Pontine Glioma: Review of a Single Institution Experience - PMC (nih.gov)

REF 4: Monteris Medical Announces Positive Coverage Policy Decision for MR-guided Laser

Interstitial Thermal Therapy (prnewswire.com)

REF 5: ClearPoint Neuro Services and Solutions for Delivery of CNS Therapies in Clinical Trials-YouTube

REF 6: Radiation Necrosis - an overview | ScienceDirect Topics

REF 7: Radiation-induced changes of brain tissue after radiosurgery in patients with arteriovenous malformations: dose/volume-response relations - PubMed (nih.gov)

REF 8: Microsoft Word - 120520 Flotte Et al REVISED_ NatureMedicine_linenumbers.docx

(researchsquare.com)

AADC Deficiency Gene Therapy - https://youtu.be/NAhKdMlipcc

AADC Deficient Gene Therapy - https://twitter.com/edu4rare/status/1544676941910900741?s=20&t=ZU0mD8us4Tq7eUlpCLz6wA

MPS3A Gene Therapy - Lysogene Provides Additional Update on AAVance Phase 2/3 Gene Therapy Clinical Trial with LYS-SAF302 in children with MPS IIIA (apnews.com)

LITT - ASSFN_Position_Statement_on_LITT_for_the_Treatment_of_Drug_Resistant_Epilepsy_091321.ashx (aans.org)

Monteris Medical Announces Publication of Largest Cohort to Date of LITT for Treating Most Aggressive Brain Tumor | Morningstar

See various presentations of physicians describing their experience with ClearPoint on their Youtube Channel.

Disclosure: I hold common stock in ClearPoint Neuro NASDAQ: $CLPT