The Richmond Club

Biotech

Breakthrough designation represents tremendous opportunities for Helius Medical

June 26, 2020

4 min. read

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Here's what you need to know

  • Helius wants to penetrate 20% of the market in Canada by 2024, representing revenue of approximately $50 million — even if Helius only achieves half of that, it will generate an enterprise value in the hundreds of millions of dollars. 
  • With a market cap of $18 million, Helius is trading at about 8.5 times earnings per share — with medical device companies typically trading at approximately 20 times earnings, we see tremendous upside for the company. 
  • Helius is working closely with the FDA to get its device cleared in the United States, where the target market is 10 times larger than in Canada — this means the company’s valuation has the potential to increase exponentially over the next several years. 
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When used during physical therapy, the PoNSTM device (above) seems to put the brain into a plastic state that allows the brain to create new pathways. Courtesy of Helius Medical Technologies

Helius Medical Technologies (Helius) received the breakthrough designation for its PoNSTM device from the U.S. Food and Drug Administration (FDA) last month. PoNSTM is a portable neuromodulation stimulator that helps people recover from neurological symptoms of disease or trauma including multiple sclerosis (MS) and traumatic brain injury (TBI). 

“The breakthrough designation is part of a program the FDA has in place that selects medical devices that satisfy high unmet medical need,” explains Phillippe Deschamps, president, CEO, and chairman of the board for the biotech company headquartered in Pennsylvania. 

The FDA breakthrough designation is a foot in the door to a massive potential market for Helius and its PoNSTM device. The company has already received approval to distribute the device in Canada, where it is “being used at 14 clinics across the country to treat gait deficit in MS patients and balance deficit in TBI patients.” 
With approval to distribute the PoNSTM device in Canada and the granting of the breakthrough designation in the U.S., Helius is well on its way to realizing its goals in 2020 and beyond 
Greg Beckett, Senior Analyst and Chartered Investment Manager for the Richmond Club

Multiple sclerosis is a horrific autoimmune, degenerative disease with no known cure that affects an astonishing one in 385 Canadians. Symptoms of the disease include extreme fatigue, exasperating tingling, and weakness, among other debilitating complications. 

“Most frightening of all, it becomes significantly more difficult for patients to walk on their own,” says Deschamps. “Imagine knowing that every next step you take is one step closer to walking with braces, a cane, or even not walking at all. If you have multiple sclerosis, this is a reality you live with every day.” 

 A life-changing option for MS patients 

Some remedies like physiotherapy may help in the short term, but the Helius team believes PoNSTM has the potential to offer a longer term, and longer lasting, option.  

The PoNSTM device is a pulse generator that fits over your shoulders. It’s tethered to a small paddle that sits inside the mouth and gently stimulates the tongue during treatment, which results in pulses travelling along the trigeminal nerve to the back of the brain. This seems to put the brain into a plastic state that allows the brain to create new pathways for the signals to travel through that bypass the areas damaged by disease or trauma. 

Studies conducted by Helius showed that 70 per cent of MS patients who wore the device during physiotherapy found their ability to walk improved over the course of 14 weeks, compared to only 30 per cent of patients who did physical therapy with a placebo device. 

“If you’re one of the 93,000 Canadians living with MS, that could mean fighting back the symptoms of the disease and walking on your own for much longer than you ever thought possible,” says Deschamps. 

Helius is also looking at penetrating the Canadian TBI market, and in time, the American market as well.  

 A $3 billion opportunity 

“With over 350,000 TBI patients in Canada at an estimated $9,500 revenue per patient, that’s a $3 billion opportunity,” says Deschamps. Studies on the impact of PoNSTM on the balance symptoms on patients with mild to moderate TBI have shown positive results. 

 About three and half years after an injury, an average number of patients who have plateaued after eight months of physical therapy are able to regain their ability to balance normally after 14 weeks of physiotherapy while using the device. 

“And the news gets better,” adds Deschamps. “The PoNSTM has compelling potential to treat other conditions like stroke and cerebral palsy, as demonstrated in pilot studies on these conditions. Larger studies have not yet been submitted to regulatory authorities at this time, but we anticipate completing those in due course.” 

“It is impressive to see everything that Helius has been able to accomplish in the last 12 months,” says Greg Beckett, senior analyst and chartered investment manager for the Richmond Club. “With approval to distribute the PoNSTM device in Canada and the granting of the breakthrough designation in the U.S., Helius is well on its way to realizing its goals in 2020 and beyond.” 

Beckett sums up the reasons for investing in Helius Medical Technologies as follows:

  • Helius wants to penetrate 20% of the market in Canada by 2024, representing revenue of approximately $50 million — even if Helius only achieves half of that, it will generate an enterprise value in the hundreds of millions of dollars. 
  • With a market cap of $18 million, Helius is trading at about 8.5 times earnings per share — with medical device companies typically trading at approximately 20 times earnings, we see tremendous upside for the company. 
  • Helius is working closely with the FDA to get its device cleared in the United States, where the target market is 10 times larger than in Canada — this means the company’s valuation has the potential to increase exponentially over the next several years. 
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