Today, we are assessing a new business profile that has surprised us in 2017.
It is Helius Medical Technologies Inc (OTCMKTS:HSDT), which focuses on the medical technology industry and is specialized in neurological wellness.
In November, the company released results of its registrational trial evaluating the safety and effectiveness of the Portable Neuromodulation Stimulator (PoNS™). It was the last announcement that excited the market, but in 2017, there were many others.
These announcements made the share price creep up from $1.5 to touch the level of $4.0 in less than six months.
Have a look at the stock chart:
But, what happened in November?
The share price collapsed from $4.00 to hit the $2.5 share price mark without a clear justification. We will provide our take on this move.
We encourage readers to read the article until the end to figure out!
Have a look at the following one month chart:
HSDT is a medical technology company developing products for treating neurological symptoms caused by disease or trauma. It develops as well as acquires “noninvasive platform technologies that amplify the brain’s ability to heal itself.”
The flagship product is the PoNS device, which is an application of the concept of neuroplasticity to rehabilitation. It is based on the research work of the University of Wisconsin-Madison Tactile Communication and Neurorehabilitation Laboratory. The research in the field is not new; it started 40 years ago.
The following text is from the company’s website. It helps explain the concept:
“It is believed that neuromodulation enhances neuroplasticity, the brain’s ability to restructure or relearn in response to new experiences, sensory input, and functional demands. Research has shown that the process of neuroplasticity underlies all cerebral learning, training and rehabilitation.” Source
Please watch the following video, wherein the business plan is explained by the President and CEO, Philippe Deschamps:
What’s the market size?
According to a study by GBI Research, the neurostimulation market will be growing at 15.3% from 2011 to 2018. Additionally, the total forecasted U.S. revenue is expected to be $4 billion in 2018.
Are there many others developing other non-invasive devices?
That seems to be the key feature in this company. The company noted in its annual report that only 3% of the overall neurostimulation market is non-invasive.
That’s not all. The PoNS™ device is said to be the first device that focuses on “the high unmet needs of brain injury patients with balance and gait disorders.” We appreciate this fact.
The following are the news items that seemed to push up the share price.
On August 14, 2017, the company released that it had expanded its headquarters. The new office is larger, 10,400-square-foot, has a new physical rehabilitation clinic and will house the company’s corporate and clinical teams.
Additionally, it was good to get to know that Portable Neuromodulation Stimulator (PoNS™) is expected to be commercialized in the first half of 2018. Philippe Deschamps, CEO of Helius, highlighted:
“We are pleased to formally extend our development partnership with the U.S. Army, and the commitment to explore other war-fighter indications for the PoNS™ Therapy upon FDA clearance,” Source
One day later, it was noted that Dane Andreeff will join the Board of Directors immediately. We appreciate his profile. He has been Director of TraceSecurity Inc., HDL Therapeutics, Inc., and Myocardial Solutions, Ltd. He has a finance background, which will help the company communicate with market participants. This is always good for the stock.
Furthermore, on October 2, 2017, it was highlighted that the company had been able to publish in the journal “Brain Stimulation” (2017) with “Cranial Nerve Non-invasive Neuromodulation Improves Gait and Balance in Stroke Survivors: A Pilot Randomised Controlled Trial.” We believe that the news excited the market quite a bit, which reacted by pushing up the share price.
Furthermore, on November 8, 2017, the company noted its registrational trial, investigating the safety and effectiveness of the Portable Neuromodulation Stimulator (PoNS™). The market again pushed up the share price even if the results were not ready yet.
We needed to wait until November 9, 2017 when the company released positive results from its registrational trial. Helius’ Chief Medical Officer, Dr. Jonathan Sackier, explained the results:
“We are very pleased with the findings from our registrational trial that demonstrate that PoNS™ Therapy, deployed independently across our seven study sites, produced statistically significant improvements in balance from baseline, on average over three times the clinically significant amount,” Source
The next step is testing the device with the U.S. Food and Drug Administration and other foreign regulatory bodies. This may be when market participants may commence to take seriously the developments. The share price could move quite a bit, be alert!
What happened in November? – Short Sellers
We believe that some short sellers may be manipulating the stock. That’s the only way to explain the share price decline seen in November.
The market expected the share price to move up, instead these unethical market participants pushed down the stock.
In October, they started to pile up stock and we believe that they continued in November.
Have a look at it:
|Date||Short Interest||% Change||Avg. Daily Share Volume||Days to Cover||Split||New Issue|
|Oct 13, 2017||19,114||93.95||144,567||1.00||No||No|
|Sept 29, 2017||9,855||56.43||83,047||1.00||No||No|
|Sept 15, 2017||6,300||-56.67||47,797||1.00||No||No|
Financials and conclusion
On November 9, 2017 the company released its latest balance sheet situation (September 30, 2017):
- Cash: $2.6 million
- Total assets: $3.7 million
- Total liabilities: $13.7 million
Currently trading with a market cap of $268 million, HSDT is an exciting story among small caps. Still in a pre-revenue stage, we believe that company will achieve its goals.
To sum up, there seems a lot to like with HSDT. It’s why we see it as a top medical technology play.
We will be updating our subscribers as soon as we know more. For the latest updates on HSDT, sign up below!
Image courtesy of U.S. Army via Flickr
Disclosure: We have no position in HSDT and have not been compensated for this article.