TLDR
- - Neuronetics Inc’s (STIM) stock price has fallen from more than $4 to $0.80 a share since April.
- - We flagged 2 unique insiders making multiple purchases following this decline in price.
- - Losing money for 5 years.
- - Recently merged with Greenbook TMS Inc.
BACKGROUND
Neuronetics is a biotech company focused on Major Depressive Disorder. They were founded in 2003 and received FDA clearance for their technology in 2008. The main innovation of Neuronetics is the NeuroStar treatment, which they claim is the leading transcranial magnetic stimulation (TMS) treatment for major depressive disorder. In the past 3 years NeuroStar has treated 88,533 patients, and Neuronetics aims to double this number in the next 2 years, as part of their current 5 year plan. Neuronetics has a tiny market cap of $23.48M and has been in the red for the past 5 years.
FINANCIALS
The company’s financials are not great, with 5 years of unprofitability in a row. From their most recent quarterly financials, they have a net income of -$9.83M which is a Y/Y change of -100%. Revenue is 16.45M for the quarter.
They also recently got a new credit agreement for financing with Perceptive Credit Holdings, changing from SLR Investment Corp. They are allowed to borrow up to $90M in 3 tranches of $50M, $15M, and $25M. They have already borrowed the first 50M which helped pay off the previous debt, and they are allowed to borrow the other two based on approvals. The cost of this capital is quite high at an annual interest rate of 7% plus the greater of 4.5% and the one month SOFR rate.
LAWSUITS
Neuronetics filed a lawsuit, which was settled at the start of 2023, against BrainsWay. Neuronetics argued that BrainsWay was misrepresenting the data of Neuronetics treatments for their own gain. They were not using a full course of treatment which made Neuronetics look much less effective than it is. In the settlement, BrainsWay agreed to stop using the data, in addition to other confidential terms.
RECENT EVENTS
They recently entered into an agreement to acquire Greenbrook TMS Inc, another transcranial magnetic stimulation company out of Ontario Canada. The deal resulted in a combined company where the stockholders of Greenbrook and Neuronetics own 43% and 57% of the new company respectively. The agreement also results in a board with 7 directors, 5 appointed by Neuronetics and 2 appointed by Madryn Asset Management, which is a key stakeholder in Greenbrook.