View:
United States securities and exchange commission logo
October 24, 2022
Mr. Brian Carrico
Chief Executive Officer
Neuraxis, Inc.
11550 N. Meridian Street, Suite 325
Carmel, IN 46032
Re: Neuraxis, Inc.
Draft Registration
Statement on Form S-1
Submitted September
27, 2022
CIK No. 0001933567
Dear Mr. Brian Carrico :
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1, submitted September 27, 2022
Cautionary Note Regarding Forward-Looking Statements, page ii, page ii
1. Your disclosure on page
ii which states that you "do not assume any responsibility for the
accuracy or
completeness of any of these forward-looking statements" may imply
an inappropriate
disclaimer of responsibility with respect to this information. Please either
delete this statement
or specifically state that you are responsible for such information.
Prospectus Summary, page 1, page 1
2. The disclosure in the
Summary should be a balanced presentation of your business. Please
balance the description
of the opportunity you see in your market, your value proposition
and your growth
strategy with equally prominent disclosure of the challenges you face and
Mr. Brian Carrico
FirstName LastNameMr. Brian Carrico
Neuraxis, Inc.
Comapany
October 24,NameNeuraxis,
2022 Inc.
October
Page 2 24, 2022 Page 2
FirstName LastName
the risks and limitations that could harm your business or inhibit
your strategic plans. For
example, but without limitation, revise your disclosure to also
discuss your history of
recurring net losses, accumulated deficit, and the going concern
opinion issued by your
auditor.
3. We note your statement on page 1 that you are "already cleared for the
first-ever therapy
(IB-Stim) for functional abdominal pain, associated with IBS, in
children." Please revise
your disclosure to support your statement that IB-Stim is the
"first-ever therapy" for this
indication, including a statement that the company is not aware of any
other therapy
available to treat the same indication and patient population at this
time.
4. Please revise both the Summary and Business sections to clarify
whether the IB-Stim
device was developed internally by the company or whether the company
acquired the
technology from a third party.
5. Please revise your pipeline table here and in the Business section as
follows:
Clarify that your IB-Stim device is to be used for each of the
listed indications;
Reconcile in the narrative accompanying the table the listed
indication for adults, as
you state throughout the filing that you are focused on addressing
chronic and
debilitating conditions in children;
Revise to remove the timeline aspect of the table, as the timeline
for FDA review and
approval are not assured or within the company's control and
implications of assured
approval are not appropriate;
Include columns for required human clinical trials, broken down
into phases if
applicable, as well as FDA regulatory milestones that must be
achieved, such as the
filing of a 510(k) premarket notification or PMA application,
prior to
commercialization; and
Revise the arrows in the table to reflect the current status for
each indication in
relation to the regulatory milestone columns.
6. We note your disclosure on page 2 that "81% of patients had
improvements in global
symptoms with no serious adverse events, and minimal to no side
effects" using the IB-
Stim device. Please revise your disclosure to include a brief summary
of the pre-clinical
and clinical trial data supporting this statement. In addition, the
circles in the graphic on
page 2 show equally shaded orange areas despite differing identified
percentages. Please
explain or revise.
7. We note your statements on pages 3 and 51 that the pediatrics
industry has "efficient,
low-barrier market entry". Please explain what is meant by this phrase
and provide
support.
8. We note your statements on pages 4 and 52 that "recent published,
peer-reviewed studies
and data presented at national meetings, such as NASPGHAN, show
compelling safety
and efficacy data for this device. Studies have demonstrated long-term
benefits in
functional disability, psychological co-morbidities and pain." Please
revise your
disclosure to cite the referenced studies and provide support for
these statements.
Mr. Brian Carrico
FirstName LastNameMr. Brian Carrico
Neuraxis, Inc.
Comapany
October 24,NameNeuraxis,
2022 Inc.
October
Page 3 24, 2022 Page 3
FirstName LastName
9. We note your statement on pages 4 and 52 that you have received
"society endorsement,
including [from] the American Academy of Pediatrics and NASPGHAN."
Please explain
what you mean by "endorsement" in this context.
10. Please provide support for your references to your "unparalleled body
of clinical
evidence" where used.
11. We note your statements throughout the prospectus that additional
clinical trials of
PENFS in multiple pediatric conditions are "underway" focused on unmet
healthcare
needs in children. Please revise both the Summary and Business
sections to clarify the
stage or progress of these trials, the indications currently under
evaluation, and any
preclinical data available.
12. We note the first paragraph of the section entitled Our Solutions on
pages 4 and 52. Please
expand this section to discuss any additional regulatory submissions
made by the
company and evaluated by the FDA in addition to the de novo
classification request. In
this regard, please disclose whether a 510(k) premarket notification
was submitted and the
status thereof.
13. We note your statement that you have "concentrated market access with
focus on 260
children s hospitals." Please clarify what you mean by "concentrated
market access" and
whether you have, in fact, partnered with or sold your IB-Stim device
to the referenced
260 hospitals. If not, please revise the statement to clarify.
14. We note your disclosure of several Securities Purchase Agreements and
a Pledge and
Security Agreement on page 6. Please revise your disclosure to name
the parties to these
agreements.
Implications of Being an Emerging Growth Company, page 7
15. Your disclosure on pages 7, 38, 49 and 62 indicates that you have
elected to avail
yourselves of the extended transition period for complying with new or
revised accounting
standards. On the cover page, however, you indicate the opposite.
Please revise to address
this apparent inconsistency.
Use of Proceeds, page 39
16. We note your disclosure in this section that you intend to use the
proceeds of this offering
for working capital, sales and marketing, and research and
development. Please revise this
section to more specifically identify how the proceeds will be used.
For instance, you state
elsewhere that you plan to repay your convertible notes with proceeds
of the offering;
however, this purpose is not included in the table on page 39. Please
reference General
Instruction 4 to Item 504 of Regulation S-K in relation to this
purpose. In relation to the
categories listed, please revise to provide more granularity regarding
the intended use, and
clarify whether additional funds will be required to accomplish any
specifically stated
purpose (i.e., to achieve certain regulatory milestones). If any
material amount of other
funds are necessary to accomplish the specified purposes for which the
proceeds are to be
Mr. Brian Carrico
FirstName LastNameMr. Brian Carrico
Neuraxis, Inc.
Comapany
October 24,NameNeuraxis,
2022 Inc.
October
Page 4 24, 2022 Page 4
FirstName LastName
obtained, state the amounts of such other funds needed for each such
specified purpose
and the sources thereof.
Management's Discussion and Analysis Of Financial Condition and Results Of
Operations
Results of Operations, page 44
17. We note that you had a gross profit representing 82.8% of net sales in
2021 and 75.1% of
net sales in 2020. Please tell us how this reconciles with your
disclosures regarding
growth strategies on pages 5 and 53 which state a 93% gross margin.
Liquidity and Capital Resources, page 46
18. We note your statement on page 46 that you expect proceeds from the
offering to fund
your capital needs for the following 12 months. However, on page 39
you state that the
proceeds will fund your operating expenses and capital expenditure
requirements through
at least the next 24 months. Please reconcile.
Business, page 50
19. Please ensure that all graphics and charts are legible. For example,
the "Technology"
graphic of the medical device on page 55 and "Table 2" in your
"Clinical Data" section on
page 57 are not entirely legible due to pixilation.
20. We note your disclosure on page 53 which states that Helius Medical
Technologies, Inc. is
your main competitor. Please briefly explain how Helius' Portable
Neuromodulation
Stimulator competes directly with the company's IB-Stim device.
21. We note your disclosure on page 56 discussing your Clinical Data
results. Please revise
your disclosure to include further information about the trial
development phases, number
of participants, endpoints, p-value, etc.
22. Please revise your patent table starting on page 59 to disclose
whether the listed patents
are owned, in-licensed or out-licensed, the type of patent protection
granted or applied for,
and the expiration year or anticipated expiration year of each.
23. Please revise your disclosure on page 61 to discuss the nature and
scope of the intellectual
property transferred to Masimo in relation to the NSS-2 Bridge device.
24. We note that the TKBMN Exclusive License Agreement was granted for
$1.00. Please
disclose TKBMN's relationship to the company, if any. In addition,
please clarify the
terms of the agreement, providing more detail regarding the year of
the last to expire valid
claim within the Patent Rights.
Legal Proceedings, page 76
25. Please revise your disclosure regarding the disclosed lawsuit to
provide a description of
the factual basis alleged to underlie the proceedings. See Item 103 of
Regulation S-K.
Mr. Brian Carrico
FirstName LastNameMr. Brian Carrico
Neuraxis, Inc.
Comapany
October 24,NameNeuraxis,
2022 Inc.
October
Page 5 24, 2022 Page 5
FirstName LastName
Principal Stockholders, page 91
26. Please revise the table to address the following:
identify by footnote the natural persons who are the beneficial
owners of the shares
held by Masimo Corporation; and
reconcile the figures provided in the column titled "Percent of
Class Before the
Offering" with the total shown for the officers and directors as a
group.
Note 2. Summary of Significant Accounting Policies
Basic and Diluted Net Income (Loss) per Share, page F-13
27. Please add a table here to disclose the effect given to preferred
dividends and the income
available to common stockholders or add such disclosure to your
statement of operations.
Refer to ASC 260-10-50-1 and 260-10-55-52.
Note 8. Common Stock and Warrants, page F-23
28. Please correct the weighted average exercise prices in the table
presented. Also, revise the
table to distinguish between warrants for the purchase of common stock
and
preferred stock.
29. You have disclosed a warrant issued to Masimo Corporation to purchase
144,890 shares
of Series A Preferred Stock at $18.87 per share that is subject to
adjustment for certain
equity events. The table of outstanding warrants shows this warrant
has a strike price of
$0.0001. Please tell us the reason for this difference. If the reason
is due to an adjustment
for certain equity events, describe the events and how the adjustment
in strike price was
measured and recognized in the financial statements.
30. The Masimo Corporation Series A warrant has provisions that allow for
further
adjustments thereafter from time to time. Please explain the terms of
these provisions and
how you accounted for them, including the accounting guidance relied
upon.
Note 9. Preferred Stock, page F-24
31. The original purchase price of the Series A Preferred and Series Seed
Preferred appear to
be relevant to the Accruing Dividend and liquidation rights. Please
disclose the aggregate
purchase price of the Series A Preferred and Series Seed Preferred
shares.
32. Please tell us when the conversion of common stock into Series Seed
Preferred stock
occurred. Also, please tell us the relevance of the disclosure as to
the $100 million
valuation and how it was determined. Refer to ASC Topic 820.
Note 14. Commitments and Contingencies
Manufacturing Services Agreement, page F-27
33. This agreement indicates you have a concentration of business with a
single supplier as
described under ASC 275-10-50-18.a. Please tell us your assessment as
to whether the
Mr. Brian Carrico
Neuraxis, Inc.
October 24, 2022
Page 6
criteria of ASC 275-10-50-16 are met as of the date your financial
statements were
issued. If you conclude all of the criteria are met, provide the
disclosures under the
guidance of ASC 250-10-55-8.
Item 16. Exhibits and Financial Statement Schedules, page II-4
34. We note your discussion of a Manufacturing Services Agreement on page
F-27. Please
file this agreement as an exhibit or provide an analysis supporting your
decision not to file
the agreement, referencing Item 601(b)(10) of Regulation S-K.
You may contact Gary Newberry at 202-551-3761 or Lynn Dicker at
202-551-3616 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Cindy Polynice at 202-551-8707 or Laura Crotty at 202-551-7614 with any
other
questions.
Sincerely,
FirstName LastNameMr. Brian Carrico
Division of
Corporation Finance
Comapany NameNeuraxis, Inc.
Office of Life
Sciences
October 24, 2022 Page 6
cc: Lahdan Rahmati
FirstName LastName