Helius Medical Technologies (T:HSDT) Brain Injury Treatment Continues Despite Analyst Flip-Flop

Summary

• Helius Medical Technologies will continue to develop its Portable Neuromodulation Stimulator (PoNS) device in spite of a cancellation of analyst coverage by Mackie Research in November.
• Helius is a medical technology company focused on developing platform technologies that advance the field of neurological wellness.

Helius Medical Technologies’ promising breakthrough medical device for the treatment of patients with cerebral palsy and traumatic brain injury (TBI) will continue despite a Mackie Research analyst’s abrupt and puzzling cancellation of coverage in light of his claim that a “pivotal trial failed.”

Helius Medical Technologies (T:HSDT) got its start in the late 1990s in a research lab at the University of Wisconsin in Madison, where its principals developed the Portable Neuromodulation Stimulator (PoNS) device.

The device focuses on the tongue’s pathway to the brain’s learning centers. Placed in the mouth, it stimulates cranial nerves in the tongue as cognitive or physical exercise is being undertaken. It becomes a safe and non-invasive way for the brain to learn or relearn certain functions.

Helius’ pilot study of the device in 2016 tested its efficacy in treating cerebral palsy in children aged 3 to 13 in Russia, with statistically significant positive primary outcomes in terms of spasticity, balance and gross motor function. The study also found the PoNS created positive changes in terms of quality of life and cognitive function.

As recently as May this year, Mackie Research analyst Andre Uddin was bullish on Helius’ prospects, despite a greater fourth quarter loss in 2016. Uddin, managing director of Healthcare Research at Mackie, called the stock undervalued and maintained his “speculative buy” rating.

At the same time, the analyst touted the greater importance of Helius’ ongoing testing of its exciting new device to aid patients with cerebral palsy and traumatic brain injury, noting that new trial data was expected out in November. His report noted: “Achieving positive results of these trials should be sufficient to support PoNS’ regulatory application. We expect Helius to file the application with the FDA via the de novo pathway.”

However, 15 minutes before Helius’ scheduled presentation call in November this year to share the latest trial outcomes with investors and analysts, Uddin abruptly announced that the company’s “pivotal trial failed” and terminated his coverage of the stock.

His call was puzzling to many and a concern to the company. It wasn’t just the potential damage of Uddin’s total about-face, given the weight analyst recommendations carry with current and future investors. By not even going to from a speculative buy to a bearish sell, but instead discontinuing coverage altogether, he told the market there was no reason to keep the faith.

And Uddin’s read of the study outcomes was wrong.

In fact, the latest study with traumatic brain injury patients at the University of Wisconsin over five weeks revealed positive results. The PoNS device, used in high frequency and combined with physical therapy, showed a three times greater level of improvement in five weeks than is seen with physical therapy alone over nine months. 

The analyst’s action raised concerns among those who see Helius’ device as a major step forward, giving them hope for what were previously hopeless circumstances for their loved ones. Writing on Medium, Laurie McGrath, mother of an 8-year-old boy with severe cerebral palsy and a limited life expectancy because of it, expressed disbelief at Uddin’s “reckless” Nov. 9 report on Helius.

“As I looked through the company’s materials and early data, for the first time since my son was born, I felt hope that there might be some treatment to improve his function, and not only his function, but his quality of life and most importantly, his life expectancy,” McGrath wrote. The results of the latest study were so positive, she added, that she believed he was one step closer to having a chance to walk.

She suggested that Uddin had “cherrypicked” a minor point and blown it out of proportion, jeopardizing the chances of millions to benefit by brain rehabilitation through the PoNS device. “One cannot help but wonder what Mr. Uddin had to gain by writing such a piece. It certainly wasn’t the truth,” McGrath wrote.