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Neurological disorders are among the most startling and debilitating conditions that you can suffer, with epilepsy being a particularly challenging one. Characterized by recurrent seizures, epilepsy patients may also experience social stigma. To address this, biotechnology firm NeuroPace developed the RNS System, a personalized device that mitigates symptoms in focal drug-resistant epilepsy, focuses on seizure reduction and decreasing the overall frequency of seizures.
According to NeuroPace’s website, the RNS System is the only such device which the Food and Drug Administration approves. Not surprisingly, investors anxiously awaited its initial public offering (IPO), which yielded significant profitability. Below are the key details to consider regarding its debut.
When Did NeuroPace IPO?
NeuroPace IPO’d on April 22, 2021, selling 6.9 million shares and the underwriter’s option to purchase an additional 900,000 shares at at opening price of $17 per share. Gros proceeds totaled $117.3 million.
NeuroPace Financial History
It’s not unusual for many innovative biotech firms to accrue financial support exclusively on their aspirations. In other words, they may have little to no operational history. Instead, backers put their faith in the underlying technology, which creates a high-risk, high-reward investment profile.
Fortunately, that’s not the case with NeuroPace. According to its S-1 filing with the Securities and Exchange Commission, NeuroPace delivered revenue of $41.1 million in the full year 2020. This is up more than 11% from 2019 revenue of $36.97 million. Notably, the company kept its cost of goods consistent ($10.5 million in 2019 versus $10.9 million in 2020).
Further, NeuroPace saw reductions in research and development expenses, as well as selling, general and administrative expenses. All told, the company pared down its net loss in 2020 to $24.3 million, a conspicuous improvement compared to the nearly $30 million net loss in 2019.
Where the biotech firm really generated traction was in its private funding campaign. Since Jan. 1, 2005, NeuroPace raised a total of $238 million. Major backers include Johnson & Johnson Development Corporation, KCK and Accelmed.
Its most recent private venture round was on Aug. 31, 2020, which saw the company raise $33 million from 5 investors.
NeuroPace Potential
Admittedly, new technology has a Wild West nature because you never really know what public retail investors will do with their money. Also, it’s worth pointing out that historically, the market sector wasn’t always thrilled with biotech. Recently, though, this attitude is changing for the better. This means that quality of life can change and companies such as this can better pinpoint the seizure source for most patients.
Certainly, NeuroPace has the potential to continue moving the biotech needle in the positive direction. According to the Centers for Disease Control and Prevention, 1.2% of the U.S. population had active epilepsy in 2015. This breaks down to 3 million adults and 470,000 children.
Further, data from the World Health Organization estimates that 50 million people worldwide suffer from epilepsy, with approximately 5 million people receiving a diagnosis for the disease every year. Therefore, NeuroPace offers a critical solution for a major unaddressed need. Drug-resistant focal epilepsy is an issue that has solutions, but the electrical stimulation you get from NeuroPace products is far different from other pursuits in this area.
As mentioned earlier, NeuroPace’s RNS System is the only FDA-approved device of its kind. It works through responding to abnormal brain activity and provides electroencephalogram (EEG) data for medical professionals, which can facilitate improved patient care. Remember, a commercial-stage medical device is often just one step in a much larger growth process for a company such as this.
As a result, reducing electrical activity int he brain without coming in contact with brain tissue is not only a revelation, it could lead more private companies to focus on brain disorders and even go public with that knowledge.
How to Buy NeuroPace (NPCE) Stock
Moreover, this method is straightforward. If you know how to buy stocks, you’ll find NPCE to be a cinch. Below are the key steps to follow.
- Pick a brokerage.
Logically, before you can participate in any equity sector opportunity, you must first choose a brokerage with which to do business. Several years ago, this choice had significant financial implications as different brokers will charge vastly different fees for their services.
Today, the paradigm shifted, with the advent of mobile investment and trading platforms bringing quicker, more convenient and cheaper access to everyday investors. In response, the brokerage industry largely standardized incentives, such as commission-free trading. Therefore, your decision boils down to personal preference and ambition.
If you work a constant on-the-go schedule, you may find that a mobile trading app is more than adequate for what you need. On the other hand, if you want to develop your craft, you should elect a robust, comprehensive platform. - Decide how many shares you want.
Once you have your brokerage squared away, you’ll need to decide how many shares of the NPCE stock you want to buy. Primarily, the share count represents your risk tolerance for a particular trade.
Naturally, if you want greater profitability, you need to purchase more shares. But the opposite is also true -- the more equity units you have, the more exposed you are to downside volatility. Therefore, you should save your largest acquisitions for your most high-conviction investments.
Irrespective of whatever magic number works for you, you should write this figure down and stick to your strategy. This way, you won’t let market noise and distractions deter you from your well-reasoned game plan. No matter what happens, never make decisions based on your emotions. - Choose your order type.
Due to constantly fluctuating valuations in the market, you must consider which order type to deploy before executing your transaction. Below are the basic concepts to understand.
• Bid: The bid is the highest price a buyer will offer for a stock. It is always lower than the ask.
• Ask: In contrast, the ask is the lowest price that a seller will accept. It is always higher than the bid.
• Spread: The bid-ask spread is the different between the bid and ask price. Primarily, the spread represents liquidity and risk. For instance, narrower spreads indicate high liquidity and low risk, as you can depend on a buyer being available to buy your shares. A wider spread indicates low liquidity and high risk due to a lack of participants.
• Limit order: To acquire shares at a specified price, use a limit order. Please note that the market does not guarantee that your target stock will reach your price so your limit order can hang unfulfilled.
• Market order: To buy shares at the going rate, you can use a market order, which fulfills at the next available price. The transaction terms are least favorable to you, with buy orders executing on the ask and sell orders on the bid.
• Stop-loss order: A protective function for your stock holding, a stop-loss order will exit your position at either a predetermined price or the next available price. Stop-loss orders are risky for volatile stocks because they can open a new session at a much lower price than the prior session’s close (i.e. gap-down session).
• Stop-limit order: Stop-limit orders exit your position only at a predetermined price. The main risk here is that if your target stock keeps falling following a gap-down session, you would have been better off placing a stop-loss order. - Execute your trade.
To execute your trade, follow these steps for a market order:
• Select action type (buy or sell).
• Enter the shares you want to acquire (or sell).
• Hit the buy (or sell) button.
For limit orders, follow the same steps above, with the exception that you must also enter your desired execution price.
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A Stock With a Worthy Mission
As an FDA-approved medical device manufacturer, NeuroPace garnered tremendous investor interest over the years and it’s finally making good on its promise. More importantly, the company addresses critical needs for epilepsy sufferers where traditional therapies failed. Thus, NPCE stock is one which you can feel good about while potentially earning huge profits.
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.