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NeuroPace Inc reports Netloss of $8.8 Million in Q1-2020

By Divya on Jun 03, 2021 | 05:33 AM IST


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NeuroPace, Inc. (Nasdaq: NPCE), a commercial-stage medical device company focused on transforming the lives of people suffering from epilepsy, today reported financial results for the quarter ended March 31, 2021.

Recent Highlights

•Total revenue of $11.2 million for the first quarter of 2021, representing a 12% increase over the comparable prior year period in 2020

•Initial implant revenue of $8.1 million for the first quarter of 2021, representing a 23% increase over the prior year period

•Completed an initial public offering of 6.9 million shares, raising approximately $105 million in net proceeds

•Issues 2021 total revenue guidance of approximately $47 million, representing 14% growth compared to 2020

“We are pleased with our quarterly results and continue to take a measured approach in the early stages of the COVID-19 recovery,” said Mike Favet, Chief Executive Office of NeuroPace. “In addition, we are excited about the successful completion of our IPO and are grateful for the support of the participating investors. The proceeds from the offering will enable us to take the next steps in our journey to make RNS Therapy the standard of care for drug-resistant epilepsy patients.”


First Quarter 2021 Financial Results

Total revenue was $11.2 million in the first quarter of 2021, a 12% increase from $10.0 million in the prior year period. Initial implant revenue was $8.1 million, a 23% increase from $6.6 million in the prior year period. Replacement implant revenue was $3.1 million, a decrease of 8% compared to the prior year period. Due to the longer replacement cycle of NeuroPace’s newer device with an eight-year battery life (double the battery life of the previous generation device), the decline in replacement implant revenue was expected.

Gross margin for the first quarter of 2021 was 75.7% compared to 70.7% in the first quarter of 2020. The increase in gross margin was primarily due to lower fixed costs per unit associated with increased volume and ongoing efforts to reduce product costs. Gross margin for the first quarter of 2020 was negatively impacted by a reduction in production volume due to the COVID-19 pandemic.

Total operating expenses in the first quarter of 2021 were $12.4 million, compared with $12.5 million in the same period of the prior year. R&D expense in the first quarter was $4.1 million compared with $4.8 million in the same period of 2020. The decrease in R&D expense was primarily driven by a reduction in payroll and personnel-related expenses. SG&A expense in the first quarter of 2021 was $8.3 million compared with $7.7 million in the prior year period. The increase in SG&A expense was primarily driven by increased costs associated with the initial public offering, and increased payroll and personnel-related expenses. This was partially offset by reduced expenses resulting from COVID-19 restrictions, including reduced sales representative travel costs.

Net loss was $8.8 million for the first quarter 2021, compared to a net loss of $6.7 million in the prior year period. The Company recorded a non-cash charge of $3.1 million in Other expenses due to an increase in fair value of convertible preferred warrant liability resulting from the initial public offering. The convertible preferred warrants were exercised in April upon closing of the IPO.

Cash and marketable securities were $30.5 million and long-term borrowings were $49.6 million as of March 31, 2021. The Company received approximately $105 million of net proceeds from the initial public offering, which closed on April 26, 2021.


2021 Financial Guidance

Despite ongoing challenges and uncertainties due to the COVID-19 pandemic and its impact on physician and patient behavior, NeuroPace is providing financial guidance as follows:

Full year 2021

•Total revenue of approximately $47 million, representing growth of 14% compared to prior year period.

•Initial implant revenue of approximately $36 million, representing growth of 29% compared to prior year period. Given the uncertain timing of enrollment in the Company’s clinical studies, initial implant revenue guidance of $36 million includes a small clinical study revenue contribution.

•Replacement implant revenue of approximately $11 million, representing a decline of 16% compared to prior year period.



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