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| NeuroMetrix's Quell device--Courtesy of NeuroMetrix |
Micro-cap NeuroMetrix ($NURO) has managed to raise $14.7 million via a complex, warrant-laden deal, despite the fact that its market cap continues to hover right around $10 million. The company is betting that it has a winner in its Quell over-the-counter pain relief device that FDA cleared in July 2014.
The company did get a taste of marketing success earlier this year. An Indiegogo crowdfunding campaign that ended in April sold the device for $199, said to be a discount on a regular $250 price tag, and raised almost $400,000 from about 2,000 people. The devices sold in the stint on Indiegogo are supposed to be delivered in June. In addition, Quell attracted some media attention at the Consumer Electronics Show in January.
The Quell device is worn just below the knee, wrapped around the calf. It's intended to be used in alternating on and off periods of one hour. It's the only wearable pain relief device that is cleared by FDA for use during sleep, according to the company. The device connects to an app via Bluetooth that can be used to track and manage use.
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| Accompanying smartphone app--Courtesy of NeuroMetrix |
The Quell wearable intensive nerve stimulation (WINS) technology is "double the strength of conventional TENS products," according to the company. Transcutaneous electrical nerve stimulation (TENS) devices have somewhat controversial efficacy but are commonly used for pain management, but typically have a less convenient form factor that involves a series of electrodes and wires.
The device is said to calibrate to the optimal stimulation level to create maximum pain relief. It can sense the when a patient is lying down and automatically switch to a "night therapy" mode. The device is intended for people with conditions such as diabetic nerve pain, low back and leg pain, fibromyalgia, and pain associated with osteoarthritis. NeuroMetrix already markets a similar device for pain management, known as Sensus, that requires a doctor's prescription.
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| NeuroMetrix CEO Shai Gozani |
NeuroMetrix was founded in 1996 as a spinoff from the Massachusetts Institute of Technology. In 2004, it went public in an IPO that raised $24 million. The company has languished largely among the ranks of the micro-cap stocks since then. The company was founded by Dr. Shai Gozani, who continues to lead it as chairman, president and CEO. It was previously focused on diagnostics, but shifted gears to wearables in 2011.
The new financing will back the ongoing U.S. launch of Quell. But it came at a steep price. The offering sold one share of stock plus 99 warrants for $100 per unit. The offering sold 147,000 of these units; the warrants have an exercise price of $1.25 each. The warrants are tradable on the Nasdaq Capital Market with the symbol NUROW. In addition to marketing Quell, NeuroMetrix will also use the financing to repurchase about $3.2 million worth of shares. The offer is slated to close on May 29.
Investors pushed the volatile shares down 10% in early trading on news of the financing--to just around $1.
- here is the release