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

Rhea-AI Summary

NeuroPace (NPCE) has announced plans for a $65 million public offering of common stock, with an additional 30-day option for underwriters to purchase up to 15% more shares. A substantial portion of the proceeds will be used to repurchase all shares held by KCK , a significant stockholder, at the same price per share as the public offering.

The remaining proceeds will fund general corporate purposes, including clinical trials, R&D expenses, selling, general and administrative expenses, debt reduction, and working capital. The offering's joint book-running managers are J.P. Morgan, Cantor, Wells Fargo Securities, and Leerink Partners, with Lake Street Capital Markets as lead manager.

The offering will be made through a shelf registration statement previously declared effective by the SEC on November 22, 2022.

Positive

• Potential debt reduction through offering proceeds
• Additional funding for clinical trials and R&D activities
• Working capital enhancement for operations

Negative

• Potential dilution of existing shareholders through new stock issuance
• Market uncertainty regarding offering completion and terms
• Large shareholder (KCK ) exiting position through share repurchase

Insights

Financial Analyst

This $65 million public offering marks a strategic pivot for NeuroPace's capital structure and ownership composition. The transaction's structure reveals several critical implications for investors:

The complete buyout of KCK 's position represents a significant ownership transition that will reshape the company's shareholder base. This exit by a major stockholder through a structured repurchase, rather than a market sale, suggests a coordinated approach to minimize market impact while providing liquidity.

The offering's structure, featuring a 15% overallotment option, provides flexibility to accommodate additional demand while potentially reducing price pressure. The participation of five prominent investment banks, led by J.P. Morgan, indicates strong institutional backing and suggests robust demand expectations.

The use of proceeds signals a comprehensive strategy beyond the share repurchase. The allocation towards clinical trials, R&D, and debt reduction indicates a balanced approach between strengthening the balance sheet and funding growth initiatives. The mention of debt reduction is particularly noteworthy, as it suggests a strategic move to optimize the capital structure.

The shelf registration statement's recent effectiveness (November 2022) indicates this offering was part of a planned capital markets strategy rather than an opportunistic raise. This methodical approach to capital raising, combined with the coordinated exit of a major shareholder, demonstrates sophisticated financial management aimed at minimizing market disruption while maximizing strategic flexibility.

MOUNTAIN VIEW, Calif., Feb. 13, 2025 (GLOBE NEWSWIRE) -- NeuroPace, Inc. (Nasdaq: NPCE) today announced that it intends to offer and sell, in an underwritten public offering, $65 million of shares of its common stock. All of the shares are being offered by NeuroPace. In addition, NeuroPace intends to grant the underwriters a 30-day option to purchase up to an additional 15% of the shares of its common stock offered in the public offering. The proposed offering is subject to market and other conditions, and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering.

NeuroPace expects to use a substantial portion of the proceeds from the public offering to repurchase all of the shares held by NeuroPace’s significant stockholder, KCK Ltd., at a price per share equal to the price per share at which the underwriters will purchase shares of common stock from NeuroPace 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 may be made only by means of a prospectus and a prospectus supplement that form a part of the registration statement. A preliminary 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 preliminary 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 those relating to 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 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 the consummation of the offering, the completion of the offering on the anticipated terms or at all, uncertainties related to market conditions, the satisfaction of customary closing conditions related to the offering, general economic conditions, 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

What is the size of NeuroPace's (NPCE) proposed public offering?

NeuroPace (NPCE) has announced a proposed public offering of $65 million of common stock, with an additional 30-day option for underwriters to purchase up to 15% more shares.

How will NeuroPace (NPCE) use the proceeds from its 2024 public offering?

NeuroPace will use a substantial portion to repurchase all shares held by KCK , with remaining proceeds funding general corporate purposes, including clinical trials, R&D, administrative expenses, debt reduction, and working capital.

Who are the underwriters for NeuroPace's (NPCE) 2024 stock offering?

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

What is the impact of NPCE's share repurchase from KCK on shareholders?

The repurchase will result in KCK fully exiting their position, with shares being bought at the same price per share as the public offering, potentially affecting stock price and ownership structure.