NeurAxis (NYSE-Amer: NRXS) is doing something other companies can’t or won’t do: provide a drug-free way to treat debilitating pediatric conditions, including Irritable Bowel Syndrome (IBS) and Functional Abdominal Pain (FAP). And this is not a wait-and-see proposition. NRXS is already treating patients with its FDA-cleared PENFS IB-Stim technology that, for the lucky patients treated so far, facilitates no longer using potent prescription pharmaceuticals off-label. That difference is hugely significant, especially with the side effects of using drugs off-label, sometimes worse than the condition being treated.
It’s also led to a decidedly bullish analyst report from Goldman Smallcap Research. He supports a case for NRXS shares to reach $14 in the next six to twelve months post-IPO, an over 179% increase from its current $5.01 price. Specifically, the analyst values NRXS as well-positioned to revolutionize treatment strategies for children and adults suffering from chronic and debilitating conditions. As noted, that mission is in progress. NeurAxis is already providing treatment alternatives to providers for pediatric Functional Abdominal Pain (FAP) and Irritable Bowel Syndrome (IBS) in patients 11-18 years old with the first FDA-cleared therapy utilizing its innovative Percutaneous Electrical Nerve Field Stimulation (PENFS) technology. The technology is just one value driver. Its cumulative effect is what’s attracting investor and care provider attention. (*Share price of $5.01, 08/21/23, Yahoo! Finance, 12:15 PM EST)
And it should. Success shown to date puts NRXS technology a significant step closer to earning a front-line treatment designation, a spot that can be more than transformative; it could enable NRXS to secure the lion’s share of the estimated $9 billion total addressable pediatric care market. Scoring a portion of that market share can be lucrative. For example, treating only 25% of the expected yearly cases – about 200,000 children – presents a roughly one billion dollar revenue-generating opportunity at current reimbursement rates. While that’s more than plenty to send shares of this low-float biotech significantly higher, there’s more supporting the value proposition.
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Front-Line, First-Mover Advantage Can Be Lucrative
There’s enormous value inherent to its robust IP portfolio, the over 700 patient reports, and an increasing number of publications supporting NRXS technology as a best-in-class treatment option. Further value accrues from having at least four major carriers providing payer coverage, with more expected this year. The sum of just those parts will make competing against NRXS challenging or even futile, especially for companies with no options but to stay committed to using dangerous off-label pharmaceutical use to treat the same indications.
Considering all of that, the best way to phrase NRXS is to say they are timely to its opportunity. More importantly, they can provide safer, more effective, and scalable means to treat pediatric indications with limited or no existing treatment options. GSCR sees that as opening the door to a massive revenue-generating opportunity. He estimates NRXS revenues to reach $22 million by 2025. That’s not all. In addition to the top-line growth expected, revenues are expected to be met with 88% gross margins, similar to those over the past two years. Thus, whether modeling PPS growth through top-line, bottom-line, or a combination of both, a bullish case for NRXS shares is well-supported.
Keep this in mind, too. The company is monetizing its assets by addressing critical clinical needs that have gone unmet or under-served. By filling those gaps, NRXS is positioned to exploit a clear and broader commercial pathway, especially from leveraging the value inherent to its FDA De Novo clearance. The FDA De Novo clearance is an important value driver in the NRXS equation because it’s an application that, if granted, establishes a new “device type” along with classification, regulation, necessary controls, and product code. That, in turn, creates a pathway toward earning future expedited approvals by making the device eligible to serve as a predicate for new medical devices through an expedited 510(k) process.
NRXS Differences Are Advantages Treating Unmet Pediatric Care Needs
From a valuation perspective, the De Novo clearance can’t be under-appreciated. Beyond potentially expediting new approvals, the designation supports NRXS being an innovator whose work can result in bringing an entirely new treatment method to the market. Its position to lead is no coincidence. It results from extensive work developing its PENFS technology, with the IP inherent to that strengthening NRXS’s competitive advantage. Remember, NRXS doesn’t want to treat with chemicals; instead, they are pioneering unique neuromodulation work that provides access to the central nervous system. Once its target is reached, it stimulates and ultimately induces a change in brain pathways and connectivity.
For patients and NRXS, the technology can be a treatment game-changer and a financial windfall, respectively. In other words, while patients can ultimately benefit from an improved standard of care, NRXS, and its investors also stand to gain. Remember that NRXS’s IB-Stim™ and PENFS technology is already generating revenues, expected to increase significantly through accelerating care-provider adoption to treat pediatric cases of FAP and IBS. Attractive to providers and patients, IB-Stim provides a non-drug and non-surgical approach to treatment that can be used in outpatient settings, reducing pain through neuromodulation to branches of cranial nerves. Better still, the NRXS approach to treatment can generate favorable treatment results in roughly three weeks. There are more excellent intrinsics to consider.
In addition to facilitating quick results, care providers appreciate PENFS mitigating the often enduring side effects of drugs being prescribed off-label. Those can be severe, including suicidal ideation, depression, and weight gain. In stark contrast, NeurAxis notes PENFS treatment side effects as irritation at the treatment site. Another critical distinction is that PENFS treatment is targeted via the brain-gut axis, a significant departure from conventional localized and peripheral care, which, as noted, often comes with severe unintended consequences.
Scores Of Research Validate NRXS Technology
NRXS is mitigating that dilemma. And plenty of research and data support PENFS and IB-Stim’s value to patient needs, including four current publications, data from over 700 published patients, six different study types, thirteen children’s hospital studies, and an expected fourteen publications documenting the positive contributions from NRXS innovation and technology by the end of 2023. Additionally, research and data highlight compelling advantages of IB-Stim compared to other treatments. While there’s a long list of benefits, it’s what IB-Stim doesn’t do that is causing its rapid adoption.
Unlike commonly prescribed off-label treatments, IB-Stim doesn’t foster suicidal ideation, dementia, abdominal pain, or allergic reactions. Neither does it induce vomiting or diarrhea, documented symptoms associated with current drugs treating FAP and/or IBS, including some from Mallinckrodt (NYSE-Amer: MNK), Johnson & Johnson (NYSE: JNJ), AbbVie (NYSE: ABBV), and Pfizer (NYSE: PFE). Incidentally, NRXS doesn’t intend to rest on targeting just its current billion-dollar opportunity. In addition to treating pediatric FAP and IBS, they are advancing a pipeline to treat chronic nausea, post-concussion, cyclic vomiting syndrome, and chemotherapy-induced nausea in children. Those are clearing human clinical design and moving toward human clinical trials. That mission is also in progress.
NRXS is advancing its prospective, randomized, double-blind study for post-concussion syndrome at Children’s Hospital of Orange County. The company noted that additional site(s) could be added to strengthen the research data and expedite NRXS targeting a $1.9 billion market opportunity from the estimated 400,000 patients diagnosed annually. Like its other products, this actively-enrolling study targets an unmet medical need, positioning NRXS to capture the value inherent to an approved and potentially front-line therapy.
NeurAxis Has The Infrastructure to Monetize Approvals
The most valued contributor supporting the NRXS value proposition is that, in addition to compelling assets, they have the infrastructure to meet demand. Its in-house capabilities utilize 69,000 square feet of space for its offices, factory, warehouse, and environmentally-controlled needs. That’s ample space for controlled and monitored manufacturing capacity, is sufficient in size for additional NRXS needs, and, most importantly, is FDA-registered, ISO-certified, and ITAR-registered to meet industry and management standards and practices.
Most of all, it shows that NRXS has assembled the pieces to deliver better treatments to the markets without diluting asset ownership. Eight issued and eighteen pending patents covering devices and methods are strengthening its ability to stand alone. These protections are valid through 2039 without adding to existing claims that enhance patent longevity. Even more value accrues from NRXS expecting these patents to be protected internationally, allowing them to operate freely and negotiate from a position of strength regarding potential partnerships and licensing.
Summarize NeurAxis this way: No drugs, no surgery – just a better, safer, and more efficient treatment using neuromodulation to provide intended results. Then, combine that with NRXS’s industry-leading Medical Advisory Board, a tiny trading float, and operations and infrastructure to support growth and scale; the $14 price target earned from GSCR is more than appropriate; it’s justified. Hence, at $5.01 on Monday, NRXS shares present more than an attractive proposition; they expose a compelling one.
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