NeuroPace Announces Pricing of Public Offering of $65 Million of Common Stock

Rhea-AI Summary

NeuroPace (NPCE) has announced the pricing of a public offering of 6.5 million shares of common stock at $10.00 per share, expecting to raise $65 million in gross proceeds. The offering, set to close on February 18, 2025, includes a 30-day option for underwriters to purchase up to 975,000 additional shares.

The company plans to use $49.5 million of the net proceeds to repurchase approximately 5.27 million shares from KCK at $9.40 per share. The remaining proceeds will fund general corporate purposes, including clinical trials, R&D expenses, administrative costs, debt reduction, and working capital.

The offering is managed by J.P. Morgan, Cantor, Wells Fargo Securities, and Leerink Partners as joint book-running managers, with Lake Street Capital Markets as lead manager.

Positive

• Raising $65 million in gross proceeds through public offering
• Strategic share repurchase from major stockholder at $9.40 per share, below offering price
• Potential for additional capital through underwriters' option for 975,000 shares

Negative

• Significant shareholder dilution with 6.5 million new shares being issued
• 76% of proceeds ($49.5M) allocated to share repurchase rather than operational growth
• Offering price indicates potential market pressure on stock value

Insights

Financial Analyst

This $65 million public offering represents a strategic financial restructuring for NeuroPace, with several noteworthy implications for investors. The offering price of $10.00 per share represents a 17.3% discount to the current market price, which is relatively standard for secondary offerings but indicates some pricing pressure to ensure successful placement.

The most intriguing aspect is the immediate repurchase of 5.27 million shares from KCK at $9.40 per share. This transaction suggests a carefully orchestrated exit strategy for a major stockholder while simultaneously allowing NeuroPace to maintain better control over the share distribution. The $0.60 per share spread between the offering price and repurchase price helps offset transaction costs.

The involvement of premier investment banks as joint book-running managers adds credibility to the offering and suggests strong institutional interest. The 30-day option for an additional 975,000 shares provides flexibility to meet excess demand and potentially raise additional capital for operational needs.

The remaining proceeds after the share repurchase will provide approximately $15.5 million for general corporate purposes, including R&D and working capital. This capital injection strengthens NeuroPace's financial position for executing its growth strategy in the neuromodulation market, though investors should note the dilutive effect of the new shares on existing stockholders.

MOUNTAIN VIEW, Calif., Feb. 14, 2025 (GLOBE NEWSWIRE) -- NeuroPace, Inc. (Nasdaq: NPCE) today announced the pricing of an underwritten public offering of 6,500,000 shares of its common stock at a public offering price of $10.00 per share. All of the shares are being sold by NeuroPace. The aggregate gross proceeds from the offering are expected to be $65 million, before deducting the underwriting discounts and commissions and offering expenses. The offering is expected to close on February 18, 2025, subject to customary closing conditions. In addition, NeuroPace has granted the underwriters a 30-day option to purchase up to an additional 975,000 shares of its common stock at the public offering price.

NeuroPace expects to use approximately $49.5 million of the net proceeds from the offering to repurchase 5,270,845 shares held by NeuroPace’s significant stockholder, KCK Ltd., at $9.40 per share, which is the price per share at which the underwriters will purchase shares of NeuroPace’s common stock from the company in the public offering. NeuroPace intends to use the remaining net proceeds from the offering, together with any net proceeds received from the underwriters’ option, for general corporate purposes, which may include clinical trial and other research and development expenses, selling, general and administrative expenses, debt reduction and working capital.

J.P. Morgan, Cantor, Wells Fargo Securities and Leerink Partners are acting as joint book-running managers for the offering and Lake Street Capital Markets is acting as lead manager for the offering.

The shares of common stock described above are being offered by NeuroPace pursuant to a shelf registration statement filed by NeuroPace with the Securities and Exchange Commission (SEC) that was declared effective by the SEC on November 22, 2022. The offering is being made only by means of a prospectus and prospectus supplement that form a part of the registration statement. A preliminary prospectus supplement and accompanying prospectus relating to the offering were filed with the SEC and are available on the SEC’s website located at http://www.sec.gov. A final prospectus supplement and accompanying prospectus relating to the offering will be filed with the SEC and will be available on the SEC’s website located at http://www.sec.gov. Copies of the final prospectus supplement and the accompanying prospectus related to this offering, when available, may be obtained from J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, or email: prospectus-eq_fi@jpmchase.com and postsalemanualrequests@broadridge.com; Cantor Fitzgerald & Co., Attn: Capital Markets, 110 East 59th Street, 6th Floor, New York, New York, 10022, or email: prospectus@cantor.com; Wells Fargo Securities, LLC, 90 South 7th Street, 5th Floor, Minneapolis, Minnesota 55402, at 800-645-3751 (option #5) or email a request to WFScustomerservice@wellsfargo.com; Leerink Partners LLC, Syndicate Department, 53 State Street, 40th Floor, Boston, Massachusetts 02109, by telephone at (800) 808-7525 ext. 6105, or by email at syndicate@leerink.com; or Lake Street Capital Markets, LLC, 920 Second Avenue South, Suite 700, Minneapolis, Minnesota 55402, telephone: (612) 326-1305, or email: prospectus@lakestreetcm.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About NeuroPace

Based in Mountain View, Calif., NeuroPace is a medical device company focused on transforming the lives of people living with epilepsy by reducing or eliminating the occurrence of debilitating seizures. Its novel and differentiated RNS System is the first and only commercially available, brain-responsive platform that delivers personalized, real-time treatment at the seizure source. This platform can drive a better standard of care for patients living with drug-resistant epilepsy and has the potential to offer a more personalized solution and improved outcomes to the large population of patients suffering from other brain disorders.

Forward Looking Statements

Certain statements in this press release are forward-looking statements that involve a number of risks and uncertainties. These statements may be identified by introductory words such as “anticipate,” “believe,” “expects,” “intends,” “may,” “plan,” “should,” “subject to,” “will,” “would” or words of similar meaning, or by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements include statements regarding the timing and completion of the offering and the satisfaction of customary closing conditions related to the offering, the anticipated total gross proceeds from the offering and the planned use of the net proceeds of the offering, including those received from the exercise of the underwriters’ option. For such statements, NeuroPace claims the protection of the Private Securities Litigation Reform Act of 1995. Actual events or results may differ materially from NeuroPace’s expectations. Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, risks and uncertainties associated with market conditions and the satisfaction of customary closing conditions related to the proposed offering, and those factors disclosed in NeuroPace’s filings with the SEC, including its Quarterly Report on Form 10-Q for the quarter ended September 30, 2024. These forward-looking statements represent NeuroPace’s judgment as of the time of this release. NeuroPace disclaims any intent or obligation to update these forward-looking statements, other than as may be required under applicable law.

Contact:
Jeremy Feffer
Managing Director
LifeSci Advisors
jfeffer@lifesciadvisors.com

FAQ

How much is NeuroPace (NPCE) raising in their February 2025 public offering?

NeuroPace is raising $65 million in gross proceeds through a public offering of 6.5 million shares priced at $10.00 per share.

What is the purpose of NPCE's $65 million stock offering?

The primary purpose is to repurchase shares from KCK ($49.5M), with remaining funds used for clinical trials, R&D, administrative expenses, debt reduction, and working capital.

How many shares is NeuroPace repurchasing from KCK ?

NeuroPace is repurchasing 5,270,845 shares from KCK at $9.40 per share, totaling approximately $49.5 million.

What is the price difference between NPCE's offering and repurchase price?

The public offering price is $10.00 per share, while the repurchase price from KCK is $9.40 per share, a $0.60 per share difference.

When will NPCE's public offering close?

The offering is expected to close on February 18, 2025, subject to customary closing conditions.