Summary
NSIG is a life sciences company focused on developing bioelectronic products with the potential to transform the lives of patients suffering from major neurological and neuropsychiatric disorders such as epilepsy and depression.
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Based in Los Angeles, CA,NeuroSigma (NSIG) scheduled a $50 million IPO on Nasdaq with a market capitalization of $17 million at a price range midpoint of $14 for Thursday, Nov. 9, 2014. SEC Documents
Manager, Co-managers: Jefferies & Co.
Joint-managers: BTIG, Craig-Hallum Capital Group
Valuation
Glossary
Valuation Ratios | Mrkt Cap ($mm) | Price /Sls | Price /Erngs | Price /BkVlue | Price /TanBV | % offered in IPO |
| NeuroSigma (NSIG) | $176 | n/a | -11.8 | 4.6 | 4.6 | 28% |
Conclusion
Neutral
4.6 times book
No revenue
To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.
Business
NSIG is a life sciences company focused on developing bioelectronic products with the potential to transform the lives of patients suffering from major neurological and neuropsychiatric disorders such as epilepsy and depression.
NSIG currently has approval to market its lead product in the European Union for the adjunctive treatment of epilepsy, in Canada for the treatment of drug-resistant epilepsy, and in Australia for the adjunctive treatment of drug-resistant epilepsy.
The approvals in the European Union, Canada and Australia are for adults and children nine years and older. Approximately 4.6 million people in these regions suffer from epilepsy.
Additionally, NSIG has approval to market its lead product in the European Union for the adjunctive treatment of major depressive disorder and in Canada for the treatment of major depressive disorder, in each case for adults and children nine years and older. In the European Union and Canada, approximately 31.6 million people suffer from major depressive disorder in a given year.
NSIG intends to seek, though has not obtained, approval to market its lead product in the United States for the adjunctive treatment of drug-resistant epilepsy and for the treatment of major depressive disorder, where approximately 2.9 million people suffer from epilepsy and approximately 17.0 million people suffer from major depressive disorder in a given year.
A portion of the proceeds from this offering will be used to initiate a pivotal trial of its lead product as adjunctive treatment for drug-resistant epilepsy in the United States.
NSIG also intends to seek, but has not obtained, approval to market its lead product in Australia for major depressive disorder, where approximately 963,000 adults suffer from this disease in a given year.
Despite the availability of numerous pharmaceutical and device treatments, approximately one-third of the patients with epilepsy and one-third of the patients with major depression continue to endure debilitating symptoms following first-line treatment.
NSIG believes an innovative, safe, non-invasive and affordable treatment alternative with minimal side effects is urgently needed for these subsets of patients.
NSIG has developed a neuromodulation technology that non-invasively stimulates the trigeminal nerve to treat epilepsy and depression and have begun efforts toward commercialization of this technology in the European Union, Canada and Australia.
Although its primary commercialization efforts target the treatment of epilepsy, NSIG is also leveraging its technology to advance initiatives for the treatment of other neurological and neuropsychiatric disorders.
Clinical trials in depression, attention deficit hyperactivity disorder and post-traumatic stress disorder have already produced promising data, and an upcoming trial in traumatic brain injury will provide initial data on the use of NSIG’s technology for the treatment of that condition.
Based on these findings, NSIG plans to conduct clinical trials to demonstrate the safety and efficacy of its technology for each of these indications.
As with other products marketed for these medical conditions, the U.S. Food and Drug Administration, or the FDA, regulates the marketing of NSIG’s product in the United States, and NSIG intends to seek approval to market its product in accordance with its regulatory pathways.
Intellectual property
NSIG’s patent portfolio includes rights to patents and patent applications that NSIG owns, whether wholly-owned or co-owned, or NSIG licenses from others.
NSIG has the exclusive rights to a large portfolio of pending TNS-related U.S. patent applications and their foreign counterparts.
NSIG aggressively seeks patent protection in the United States and internationally for its products and technologies where and when NSIG believes it is appropriate. Issued U.S. patents have a term that extends from issuance to approximately 20 years from the earliest effective priority date.
Competition
NSIG believes that in the DRE and MDD indications, existing and future branded drug therapies are currently the primary competition for its eTNS system.
NSIG also expects to face competition in the treatment of DRE and MDD, and other indications NSIG may investigate for treatment with TNS, from other companies that are developing non-invasive neurostimulation technologies.
Cyberonics Inc. (NASDAQ:CYBX), a publicly traded company based in the United States, has developed and is marketing an implantable VNS neuromodulation therapy for the treatment of epilepsy and depression.
This system is composed of a stimulating electrode that is placed around the vagus nerve in the neck, and a pulse generator that is implanted subcutaneously in the chest, similar to a pacemaker.
Cyberonics received approval from the FDA for use of its device as adjunctive therapy in epilepsy patients over 12 years of age in reducing the frequency of partial -onset seizures that are refractory or resistant to antiepileptic drugs.
5% shareholders pre-IPO
Leon Ekchian, Ph.D. 30.42%
David Hayes 5.88%
Ian Cook, M.D. 5.88%
Lodwrick Cook 30.10%
Dividend Policy
No dividends are planned.
Use of proceeds
NSIG intends to use the $43 million in proceeds from its IPO as follows:
under $10.0 million to fund the pivotal trial of its eTNS system as adjunctive treatment for DRE in support of FDA approval, which NSIG expects to cover the entire cost of such trial;
$7.0 million to build out its sales, marketing and medical affairs functions;
$3.0 million to develop its wire-free second generation eTNS system;
$6.0 million to advance clinical studies of its eTNS system for neuropsychiatric indications;
$2.0 million to fund observational trials outside the United States and accumulate health economics and quality-of-life data to facilitate reimbursement;
$6.1 million (including $4.8 million owed to related parties Mr. Cook and Dr. Chambi) to repay the aggregate principal amount and related interest on certain promissory notes, of which $2.4 million will be used to repay promissory notes that automatically become due upon the closing of this offering; and
the remainder for working capital and other general corporate purposes.
Disclaimer: This NSIG IPO report is based on a reading and analysis of NSIG’s S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.