Leerink maintains Outperform on NeuroPace stock despite trial data

On Tuesday, NeuroPace Inc (NASDAQ:NPCE), which has seen an impressive 134.79% return over the past year, maintained its Outperform rating from Leerink Partners after releasing preliminary one-year data from the NAUTILUS study. According to InvestingPro data, the company currently trades above its Fair Value, with four analysts recently revising their earnings expectations upward for the upcoming period. The trial evaluated the safety and effectiveness of NeuroPace’s RNS system in patients with idiopathic generalized epilepsy (IGE). While the device met its primary safety endpoint, it did not achieve statistical significance in its primary efficacy endpoint after one year.

The report followed by stating, "This morning, NPCE (OP) released 1-year preliminary NAUTILUS data assessing the safety and efficacy of NPCE’s RNS system in idiopathic generalized epilepsy (IGE) patients, meeting its primary safety endpoint but not showing statistical significance on its primary efficacy endpoint at 1-year follow-up. This is a surprising and disappointing outcome."

Despite the mixed results, Leerink Partners expressed a cautiously optimistic view following a conference call with the management. The firm acknowledged the less than ideal results but noted management’s reasons to remain positive about NeuroPace’s future prospects in addressing drug-resistant IGE. The company’s financial fundamentals show some strength, with revenue growing at 22.05% and a healthy current ratio of 6.63, indicating strong liquidity. InvestingPro analysis reveals 12 additional key insights about NeuroPace’s financial health and market position.

The RNS system’s safety profile was reinforced by meeting the study’s primary safety endpoint, which is a critical factor in the treatment of medical conditions. The lack of statistical significance in the primary efficacy endpoint at the one-year mark, however, raised concerns about the system’s effectiveness over time.

NeuroPace’s management provided explanations during the follow-up call that offered some reassurance to investors and analysts. The statement from Leerink Partners concluded with, "Overall, we would have preferred cleaner, more definitively positive topline results, but management has offered some reasons to remain positive on NPCE’s path forward in drug-resistant IGE."

Investors and stakeholders in NeuroPace Inc will be watching closely as the company continues to navigate the challenges of developing effective treatments for IGE and seeks to provide value for both patients and shareholders. For a comprehensive analysis of NeuroPace’s market position and future potential, investors can access the detailed Pro Research Report available exclusively on InvestingPro, which provides expert insights and actionable intelligence for informed investment decisions.

In other recent news, NeuroPace Inc. reported its first-quarter 2025 earnings, surpassing expectations with a revenue of $22.5 million, which exceeded both Cantor Fitzgerald’s projection and the FactSet consensus. This marks a 24% year-over-year increase, attributed to strong sales of its RNS System. The company also raised its full-year revenue guidance for 2025, now expecting revenues between $93-97 million, representing a growth of 16-21% from the previous year. Despite these positive financial results, NeuroPace faced mixed outcomes from its NAUTILUS study, which did not achieve statistical significance in its primary effectiveness endpoint for the overall study population. However, a subgroup with lower baseline seizure frequency showed a statistically significant response, offering potential for targeted treatments. Cantor Fitzgerald maintained an Overweight rating on NeuroPace, reflecting confidence in the company’s growth trajectory. NeuroPace plans to submit the full dataset from the NAUTILUS study to the FDA and engage in discussions about regulatory pathways. The company continues to focus on expanding the use of its RNS System and enhancing its market presence.

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