Aclarion, Inc. (NASDAQ:ACON) is a healthcare technology company that is transforming the way chronic low back pain is diagnosed and treated. By leveraging the power of magnetic resonance spectroscopy (MRS) and proprietary augmented intelligence (AI) algorithms, Aclarion has developed a groundbreaking solution called Nociscan that helps physicians precisely identify the source of a patient’s chronic pain.
Business Overview and History
Aclarion, Inc. was formed in February 2015 and is incorporated in Delaware. The company started as Nocimed, Inc. and later changed its name to Aclarion, Inc. in 2022. From its inception, Aclarion has been focused on addressing the significant unmet need in chronic low back pain management. The company’s founders recognized the limitations of existing diagnostic tools and sought to develop a more accurate and objective approach to pinpointing the origin of a patient’s pain.
In the early years, Aclarion faced challenges in securing funding and navigating the complex regulatory landscape for medical devices. However, the company persevered and achieved several important milestones. In 2017, Aclarion entered into a license agreement with the Regents of the University of California to utilize certain patents related to its technology. This provided the company with the necessary intellectual property rights to continue developing its solutions.
The year 2020 marked a significant turning point for Aclarion when it received additional funding through a SAFE agreement with NuVasive, a leading medical device company in the spine sector. This investment allowed the company to accelerate its research and development efforts. Despite the challenges posed by the COVID-19 pandemic, Aclarion continued to make progress, expanding its patent portfolio and strengthening its partnerships with key opinion leaders in the medical community.
After years of research and development, Aclarion unveiled Nociscan, its flagship product that utilizes MRS to measure biomarkers within the intervertebral discs of the spine. Nociscan’s AI-driven algorithms analyze the MRS data to identify the specific disc or discs responsible for a patient’s chronic low back pain. This information empowers physicians to make more informed treatment decisions, potentially leading to better outcomes for patients.
The company’s efforts culminated in its initial public offering (IPO) in April 2022, where it raised additional capital to support the commercialization of its Nociscan product. This milestone provided Aclarion with the resources needed to expand its commercial reach and continue building a strong evidence base to support Nociscan’s clinical utility.
Financial Highlights
As a growth-stage company, Aclarion has been focused on expanding the commercial reach of Nociscan and building a strong evidence base to support its clinical utility. For the year ended December 31, 2023, the company reported total revenue of $75,400, a slight increase from the previous year’s $60,440. While Aclarion’s top-line growth has been modest, the company has made significant strides in securing payer coverage and establishing strategic partnerships that are expected to drive future revenue growth.
The company’s net loss for the year ended December 31, 2023, was $4,911,374, compared to a net loss of $7,068,593 in the prior year. Aclarion’s operating cash flow for the year ended December 31, 2023, was -$3,646,947, and its free cash flow was -$3,766,469. These figures reflect the company’s ongoing investment in research and development, as well as its efforts to commercialize Nociscan and build out its sales and marketing infrastructure.
For the three months ended September 30, 2024, Aclarion reported total revenues of $14,410, a decrease of 24% compared to $19,070 in the prior year period. For the nine months ended September 30, 2024, total revenues were $35,490, a 42% decrease from $61,610 in the same period of 2023. The decrease in revenues was primarily driven by the conclusion of certain clinical activities at customer sites utilizing the company’s Nociscan reports, partially offset by an increase in patient-pay reports.
Gross profit for the three months ended September 30, 2024 was a loss of $6,920, compared to a profit of $493 in the prior year period. For the nine months ended September 30, 2024, gross profit was a loss of $28,610, versus a profit of $5,290 in the same period of 2023. The decline in gross profit was due to the decrease in revenues combined with an increase in cost of revenue, primarily from higher hosting, software, and partner fees.
Operating expenses for the three months ended September 30, 2024 were $1.29 million, up 11% from $1.16 million in the prior year period. For the nine months ended September 30, 2024, operating expenses were $3.68 million, a 2% decrease from $3.75 million in the same period of 2023. The increase in the third quarter was driven by higher sales and marketing, as well as general and administrative costs, while the year-to-date decrease was due to lower research and development and G&A expenses.
Overall, Aclarion reported a net loss of $1.37 million for the three months ended September 30, 2024, compared to a loss of $998,010 in the prior year period. For the nine months ended September 30, 2024, the net loss was $5.00 million, an increase from $3.65 million in the same period of 2023. The higher net losses were primarily attributable to the decline in revenues, increased operating expenses, and non-operating charges related to debt restructuring.
Liquidity
As of September 30, 2024, Aclarion reported cash and cash equivalents of $1.32 million, including $10,000 in restricted cash. The company has been actively managing its liquidity, raising capital through public and private offerings, as well as an equity line agreement, to fund its operations and growth initiatives.
Aclarion’s debt-to-equity ratio as of September 30, 2024, was 0, indicating that the company has no long-term debt on its balance sheet. The current ratio and quick ratio both stood at 2.80, suggesting that the company has sufficient short-term liquidity to meet its immediate obligations.
During the nine months ended September 30, 2024, Aclarion raised approximately $4.9 million in net proceeds from various financing activities, including a public offering, an equity line of credit, a Reg A offering, and the issuance of Series B and Series C preferred stock. Management plans to secure additional funding to support the company’s continued operations and product development initiatives.
The company believes its current cash balance will be sufficient to fund its operating plans into December 2024. However, Aclarion will need to raise additional funds to continue financing its technology development, as it has experienced recurring losses from operations and requires more capital to execute on its business objectives.
Operational Highlights and Key Milestones
Aclarion has achieved several critical milestones that position the company for long-term success. In 2024, the company secured its first commercial agreement with Sheridan Community Hospital in Michigan, expanding access to Nociscan in the Midwest. Additionally, Aclarion made significant progress in the UK market, securing payer coverage from three of the four largest private health insurers, including AXA, Aviva, and Vitality.
The company has also made strides in building a robust clinical evidence base for Nociscan. In 2024, Aclarion launched the CLUE (Clinical Utility and Economic) Trial, a multi-center study designed to quantify how often Nociscan’s AI-generated biomarker data changes a surgeon’s initial treatment plan for patients with chronic low back pain. This real-world data will further validate Nociscan’s clinical utility and support its adoption among healthcare providers.
Furthermore, Aclarion has expanded its partnerships with key opinion leaders (KOLs) in the spine care community. The company has signed agreements with ten prominent KOL surgeons to assist in gaining traction and reimbursement for Nociscan throughout the United States. These collaborations will be instrumental in driving market awareness and demonstrating the value of Aclarion’s technology to the broader medical community.
Competitive Landscape and Growth Opportunities
The chronic low back pain market represents a significant opportunity for Aclarion, as it is the largest expenditure in the U.S. healthcare system, costing Americans an estimated $134 billion annually. Aclarion’s Nociscan solution addresses a critical unmet need, as traditional diagnostic tools often fail to accurately pinpoint the source of a patient’s pain, leading to suboptimal treatment decisions.
Aclarion faces competition from other diagnostic technologies, such as traditional MRI, but the company believes Nociscan’s unique ability to measure specific biomarkers within the intervertebral discs sets it apart. Additionally, Aclarion’s growing intellectual property portfolio and strategic partnerships with KOLs provide a strong competitive advantage as the company continues to expand its commercial footprint.
Looking ahead, Aclarion is exploring opportunities to leverage its MRS technology and AI capabilities beyond chronic low back pain, potentially expanding into other areas of medical imaging, such as breast, prostate, and brain imaging. As the company continues to execute on its growth strategy and build a compelling body of clinical evidence, Aclarion is poised to disrupt the chronic pain management landscape and improve patient outcomes.
Risks and Challenges
Despite Aclarion’s promising progress, the company faces several risks and challenges that investors should consider. As a growth-stage company, Aclarion is dependent on securing additional funding to support its ongoing operations and expansion efforts. The company’s ability to raise capital on favorable terms and maintain sufficient liquidity is essential to its long-term success.
Additionally, Aclarion’s technology relies on the adoption and integration of Nociscan into the standard of care for chronic low back pain management. The company’s success is contingent on its ability to convince healthcare providers and payers of the clinical and economic value of its solution, a process that can be time-consuming and resource-intensive.
Furthermore, the chronic pain management market is highly competitive, and Aclarion faces the risk of emerging technologies or alternative treatments that could challenge the company’s market position. Regulatory changes or adverse coverage and reimbursement decisions could also impact Aclarion’s commercial trajectory.
The company’s recent financial performance, particularly the decline in revenues and increasing net losses, underscores the challenges Aclarion faces in commercializing its Nociscan technology. The conclusion of certain clinical activities at customer sites has impacted revenue generation, and the company will need to successfully transition to broader commercial adoption to achieve sustainable growth.
Conclusion
Aclarion is at the forefront of a revolutionary approach to chronic low back pain management, leveraging cutting-edge biomarker technology and AI to empower physicians to make more informed treatment decisions. With a growing intellectual property portfolio, strategic partnerships, and a robust clinical evidence base, the company is well-positioned to disrupt the chronic pain landscape and improve patient outcomes.
As Aclarion continues to execute on its growth strategy, expand its commercial footprint, and explore new applications for its technology, the company presents an intriguing investment opportunity for those seeking exposure to the dynamic and rapidly evolving healthcare technology sector. However, investors should carefully consider the company’s current financial position, ongoing capital requirements, and the challenges associated with commercializing a novel medical technology in a competitive market.
The company’s focus on building clinical evidence, securing payer coverage, and expanding its network of KOL partnerships demonstrates a strategic approach to market penetration. If Aclarion can successfully navigate the challenges of commercialization and achieve broader adoption of its Nociscan technology, it has the potential to capture a significant share of the substantial chronic low back pain management market.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.