Huge upside to Helius Medical, says Roth Capital

Roth Capital Partners analyst Jonathan Aschoff continues to like the look of medical device company Helius Medical Technologies (Helius Medical Technologies Stock Quote, Charts, News, Analysts, Financials NASDAQ:HSDT). Aschoff delivered a company update to clients on Wednesday where he reiterated a “Buy” rating and $5.00 per share target price, which at the time of publication represented a projected one-year return of 1900 per cent. 

Newtown, Pennsylvania-headquartered Helius Medical focuses on treating neurologic deficits using non-implantable technologies to amplify the brain’s ability to compensate and promote neuroplasticity. Helius is currently commercializing the Portable Neuromodulation Stimulator (PoNS) and is sponsoring an open-label research trial — called the Therapeutic Experience Program (TEP) — to assess PoNS therapy’s impact on gait deficits for patients with multiple sclerosis (MS). 

On Wednesday, the company announced the participation of the MGH Institute of Health Professions in the TEP, which puts the count at four centres of excellence now taking part in the observational trial.

“We are thrilled to have Dr. Plummer and the MGH Institute of Health Professions, one of the country’s preeminent health and rehabilitation institutions, as one of our Centres of Excellence for TEP,” said Antonella Favit-Van Pelt, M.D., Ph.D., Helius’ Chief Medical Officer, in a press release.

“The purpose of our Therapeutic Experience Program is to gain insight about the functional outcome of PoNS therapy used with MS by treating patients in a real-world environment. The TEP study will provide information about PoNS therapy to key opinion leaders in MS management, providing an opportunity for early adopters of the technology,” Favit-Van Pelt said.

Commenting on the announcement, Aschoff said he expects TEP enrolment to start by the end of 2022 and continue into 2023, aiming at 50-60 MS patients.

“Given the participation of three centres of excellence thus far, we expect seven to nine more U.S. centres of excellence to join TEP to enable clinicians to evaluate the effectiveness of PoNS plus physical therapy, which will likely enrol 50-60 patients,” Aschoff wrote.

“TEP’s primary endpoint is maintenance of gait improvement from the end of supervised therapy (Phase 1) to the end of unsupervised therapy (Phase 2) in relation to the subject’s adherence to PoNS therapy. The secondary endpoint is improvement of gait and balance deficit over time and clinical global impression of change,” he said.

On Helius’ valuation, Aschoff said his $5 target is based on a discounted cash flow analysis using a 35 per cent discount rate applied to all cash flows and the terminal value, which is based on a 4x multiple of Roth Capital’s 2031 operating income projection of $230 million. (All figures in US dollars.)