One of the harshest realities that all human beings must endure is watching their larger-than-life heroes — whether that be a star athlete, a movie star or more poignantly, a single parent working multiple jobs — succumb to the ravages of time. Aging and its associated inconveniences are an inevitability, yet some families endure the added toll of neurodegenerative diseases.
Older millennials indulging in the bittersweet throes of nostalgia — which is quite a few of them, according to Georgetown University's McDonough School of Business professor Marlene Morris Towns — will fondly remember the Back to the Future franchise. As children, they would act out various scenes Marty McFly, played by Michael J. Fox, starred in.
Today, the actor that dominated the box office in the 1980s and 1990s features in his most important role yet, as a powerful advocate for finding a cure to Parkinson’s disease. Although he suffers from this terrible condition, Fox is quick to point out that he has “access to things others don’t.” Further, he refuses to compare himself to the nearly 1 million Americans living with the condition, most of whom are less fortunate.
That’s the main backdrop of the initial public offering (IPO) of NeuroSense Therapeutics, a clinical-stage biotechnology firm dedicated to treatments for neurodegenerative diseases. While it ranks at the top in heartening narratives, investors should consider the points below in their due diligence.
When Is the NeuroSense Therapeutics IPO Date?
Because of a surge of new public market offerings, the inclusion of NeuroSense Therapeutics in the IPO calendar suddenly became extremely competitive. On Dec. 8, the biotech firm announced the pricing of its deal involving the distribution of 2 million units at $6 per share. Each unit consists of 1 ordinary share and a warrant to purchase 1 common stock at the same price.
Gross proceeds under the specified terms will be $12 million before expenses related to the IPO. Further, NeuroSense granted the underwriter of the offering a 45-day option to purchase up to 300,000 ordinary shares and/or 300,000 additional warrants at the IPO price.
Maxim Group LLC represented the sole bookrunner for the deal. Shares started trading on the morning of Dec. 9 on the Nasdaq exchange under the ticker symbol NRSN. Warrants feature the symbol NRSNW.
Depending on how the offering develops, NeuroSense expects to receive net proceeds of either $9.9 million or roughly $11.5 million if Maxim Group fully exercises its option to purchase additional shares and warrants. In either case, management intends to take the proceeds to support the clinical development of PrimeC, NeuroSense’s lead candidate for the treatment of amyotrophic lateral sclerosis (ALS).
According to the National Institute of Neurological Disorders and Stroke, ALS is “a rare neurological disease that primarily affects the nerve cells (neurons) responsible for controlling voluntary muscle movement (those muscles we choose to move). Voluntary muscles produce movements like chewing, walking and talking. The disease is progressive, meaning the symptoms get worse over time.”
Currently, no cure exists for the disease nor an effective treatment to halt or reverse the disease’s progression. Where PrimeC is so promising is that it aims to “synergistically inhibit the progression of ALS” through the regulation of “microRNA synthesis, reducing neuroinflammation and influencing iron accumulation.”
According to NeuroSense’s website, PrimeC demonstrated encouraging preclinical study results, improving motor performance and the recovery of the morphology of motor neurons, neuromuscular junction structures and microglial cells.
Also, the Food and Drug Administration granted PrimeC orphan drug status, enabling NeuroSense with financial incentives such as tax credits and exemptions from user fees. Currently, the biotech is preparing its lead candidate for a Phase 2b/3 clinical trial.
NeuroSense Therapeutics Financial History
As an aspirational biotech firm granted orphan drug status, it’s incredibly difficult to assess NeuroSense Therapeutics’ financials under traditional performance benchmarks. When you hear the term clinical stage, it’s really a bourgeois phrase to indicate that the underlying company does not have any therapies in the commercial market.
However, it’s also unfair to downplay the clinical label. Rather than whimsical daydreamers, these biotechs have at least 1 candidate — a tangible treatment or device — available for regulatory and scientific scrutiny. Adding to the tailwind for NRSN stock is that the issuing firm is already deep into Phase 2 and on the cusp of Phase 3 trials.
According to BIO, the world’s largest trade association representing biotech firms and related institutions, the “overall likelihood of approval (LOA) from Phase I for all developmental candidates was 9.6% and 11.9% for all indications outside of oncology.”
That said, the association also stated that “Phase II clinical programs continue to experience the lowest success rate of the 4 development phases, with only 30.7% of developmental candidates advancing to Phase III.” Therefore, prospective investors of NRSN stock must realize that progress in clinical trials does not guarantee future success. Indeed, the middle of the clinical spectrum is where many hopeful candidates’ wheels fall off.
What will likely attract market speculators to NRSN stock is the economic proposition. According to data from Fortune Business Insights, the global neurodegenerative disease treatment market size reached a valuation of nearly $35.5 billion in 2018. Industry experts project that this segment will hit almost $62.8 billion by the end of 2026.
Further, government agencies may invest more heavily on neurodegenerative diseases, especially once the COVID-19 pandemic fades away. As Fortune Business indicates, these conditions “pose a substantial burden on global healthcare costs as well as on mental and physical health of the populations.”
While you may have reasons for optimism, you should also note that NeuroSense is a pre-revenue company. Pre-revenue status indicates that the biotech only generates operating losses, to the tune of $1.2 million in 2019 and $2.9 million in 2020.
Based on its cashflow statement, the company is able to keep the lights on mainly through the issuance of shares and warrants. Still, keep in mind that such tactics are dilutive. At some point, NeuroSense must generate revenues to keep forward momentum in NRSN stock.
NeuroSense Therapeutics Potential
One of the greatest fears among people is the loss of cognitive and emotional control. Perhaps even worse is watching a loved one slowly degrade, often adopting another personality. According to the medical journal Annual Reviews, neurodegenerative diseases may cause symptoms like “anxiety, dysphoric mood, apathy, disinhibition and euphoric mood.” Simply the potential for NeuroSense to mitigate these symptoms boosts the feel-good profile of NRSN stock.
More critically, though, Harvard NeuroDiscovery Center notes that “Because neurodegenerative diseases strike primarily in mid- to late-life, the incidence is expected to soar as the population ages. By 2030, as many as 1 in 5 Americans will be over the age of 65. If left unchecked 30 years from now, more than 12 million Americans will suffer from neurodegenerative diseases. Finding treatments and cures for neurodegenerative diseases is a goal of increasing urgency.”
Still, take an extremely cautious approach with NRSN stock. The bottom line is that many other biotech firms offered potential to address neurodegenerative diseases, only to be undone in late clinical stages. Thus, only risk what you can comfortably afford to lose.
How to Buy NeuroSense Therapeutics IPO (NRSN) Stock
With NRSN hitting the market, interested investors who know how to buy stocks must acquire shares at the open. For a refresher, follow the steps below.
Step 1: Pick a brokerage.
With modern brokerages competing on similar financial incentives, this dynamic gives you the chance to narrow your best brokers to platforms that ideally match your needs.
Step 2: Decide how many shares you want.
All IPOs are risky, and biotech firms may take the cake. Therefore, a balanced share count is an absolute must.
Step 3: Choose your order type.
Before trading, learn these market concepts.
- Bid: The buyer’s best offer for a stock.
- Ask: The seller’s lowest acceptable price.
- Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
- Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the current rate.
- Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.
Step 4: Execute your trade.
Follow these steps to execute a market order:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
NRSN Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.
Pre-IPO shares — or new issues at their initial offering price — are no longer available for NRSN since it’s already trading now. However, those interested in select upcoming public market debuts should consider opening an account with SoFi Invest.
A Hopeful Breakthrough for Breakdowns
With neurodegenerative diseases leading to some of the most heartbreaking scenes across the globe, virtually everyone wants NeuroSense Therapeutics to succeed. Nevertheless, investors must set aside their emotions and focus on realities when considering NRSN stock.
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.