SVB Leerink starts NeuroPace at OP; PT $25

SVB Leerink initiated coverage of Neuropace (NASDAQ:NPCE) with an “outperform” rating and $25 price target. The stock closed at $20.91 on May 14.

“To us, NeuroPace represents a top-tier growth profile SMID-cap MedTech company targeting a chronic and highly underserved patient population, with the opportunity to dramatically shift the treatment paradigm to more interventions in treating epilepsy with its platform Responsive Neurostimulation (RNS) system,” analyst Danielle Antalffy writes. 

Even with an initially much more focused commercialization effort in the adult focal drug resistant epilepsy patient population – currently a $1-billion market opportunity annually – Ms. Antalffy said NeuroPace can deliver a 2020-2025 compound annual growth rate in sales of over 20%. 

“To us, NeuroPace has a significant opportunity to drive intervention rates meaningfully higher in these drug resistant patients, with total addressable market (TAM) expansion over both the medium- and long-term via first a pediatric focal indication and then a drug resistant generalized indication, both of which together would essentially double the annual market opportunity,” she added. 

In the near term, Ms. Antalffy said NeuroPace is very much a commercial execution story, and “we believe that with the underserved nature of this patient population, the company is well-positioned to ramp adoption and meaningfully accelerate utilization from current and even pre-COVID levels.” 

Longer term, “we view NeuroPace as a potential TAM expansion story, with indication expansion into other epilepsy markets and other neurocognitive diseases that could increase the TAM ten-fold,” she added.