Helius Medical Technologies, Inc. (NASDAQ:HSDT) is a neurotechnology company focused on developing innovative non-implantable medical devices to treat neurological conditions. The company's flagship product, the Portable Neuromodulation Stimulator (PoNS®), is a unique device that delivers mild electrical stimulation to the surface of the tongue to provide treatment for gait deficit and chronic balance deficit.

Business Overview

Helius Medical's PoNS device has received marketing clearance in the U.S. for use as a short-term treatment of gait deficit due to mild-to-moderate symptoms of multiple sclerosis (MS). The company began accepting prescriptions for PoNS in the U.S. in March 2022 and commenced commercial sales in April 2022. In Canada, PoNS is authorized for three indications: chronic balance deficit due to mild-to-moderate traumatic brain injury, gait deficit due to mild and moderate symptoms from MS, and gait deficit due to mild and moderate symptoms from stroke. PoNS has been commercially available in Canada since March 2019.

The company's primary focus is on securing widespread reimbursement for PoNS therapy and obtaining FDA approval for the use of PoNS in the treatment of stroke. In the first quarter of 2024, Helius made significant progress on both fronts.

Reimbursement Efforts

A key milestone was the assignment of unique Healthcare Common Procedure Coding System (HCPCS) codes for the PoNS controller and mouthpiece by the Centers for Medicare & Medicaid Services (CMS), effective April 1, 2024. This was a critical step in the reimbursement process, as it allows Helius to begin negotiating coverage and payment rates with third-party payers.

In May 2024, CMS released its preliminary Medicare payment determinations for the PoNS controller and mouthpiece. Helius is scheduled to present arguments at the CMS public meeting on May 29, 2024, to advocate for higher reimbursement rates. The company believes it is well-positioned to secure more favorable rates than those in the preliminary determination, which would facilitate its efforts to expand reimbursement across commercial payers.

Dane Andreeff, Helius' President and CEO, commented, "Once finalized, the payment rates are expected to be effective October 1, 2024. We believe the final determination of these rates will make it easier to expand reimbursement across third-party payers, creating a pathway to positive cash flow as we continue working to secure FDA authorization under PoNS breakthrough designation for stroke."

Stroke Approval Efforts

Helius also made significant progress in its pursuit of FDA approval for the use of PoNS in the treatment of stroke. During the first quarter of 2024, the company added six more sites to its stroke clinical program in both the U.S. and Canada. The program aims to establish the effects of PoNS therapy on gait and dynamic balance in chronic stroke survivors, as well as confirm real-world evidence that PoNS therapy can significantly reduce the risk of falling in stroke patients.

Helius has aligned with the FDA on its development plan, which is expected to streamline the size, timeline, and cost of the registrational program. The company is targeting a regulatory submission by early 2025 and aims to receive marketing authorization utilizing PoNS' breakthrough designation in stroke later that year.

Dane Andreeff stated, "Well over 5 million stroke survivors in the United States are affected by walking and balanced disability, and we are excited for this groundbreaking treatment to reach those who need it."

Financial Performance

For the first quarter of 2024, Helius reported total revenue of $135,000, an increase of $24,000 compared to the same period in 2023. Product sales, net, were $124,000, up from $106,000 in the prior-year quarter, with increases in both the U.S. and Canada.

The company's operating loss for the first quarter of 2024 was $3.4 million, compared to a loss of $3.8 million in the same period of 2023. Net loss for the quarter was $2.5 million, or $3.08 per basic and diluted share, compared to a net loss of $2.5 million, or $4.42 per share, in the prior-year quarter.

Cash burn from operations decreased to $3.0 million in the first quarter of 2024, compared to $3.2 million in the same period of 2023. As of March 31, 2024, the company had $3.6 million in cash and no debt.

In May 2024, Helius closed a $6.4 million public offering, which provided net proceeds of approximately $5.6 million and extended the company's cash runway into 2025. The offering also included warrants that, if exercised, could provide an additional $6.4 million in gross proceeds, further strengthening Helius' financial position.

Outlook

While PoNS sales remain on a cash pay basis and at a price point that is not feasible for the vast majority of patients in Helius' addressable markets, the company expects revenues to continue to be muted in the near term. However, the recent access to the Department of Veterans Affairs (VA) patient population through the Lovell Government Services partnership, combined with the anticipated CMS reimbursement effective October 1, 2024, are expected to significantly boost the company's revenues and provide a pathway to positive cash flow.

Dane Andreeff commented, "Achieving reimbursement and making progress on our registrational program remain our top priorities, and both goals are in sight. We could achieve CMS reimbursement as early as October 1, which would enable us to expand reimbursement across third-party payers, significantly boosting our revenues and giving us a pathway to positive cash flow as we pursue authorization for stroke."

Risks and Challenges

Helius faces several risks and challenges, including the ability to secure widespread reimbursement for PoNS therapy, the successful completion of its stroke clinical program and regulatory approval, and the ongoing impact of global macroeconomic conditions on its operations and access to capital.

The company's ability to generate sufficient product revenues to achieve profitability will depend heavily on the successful commercialization of PoNS Therapy in the U.S. As of March 31, 2024, Helius had an accumulated deficit of $162.5 million and expects to continue incurring significant expenses and operating losses for the foreseeable future.

Conclusion

Helius Medical Technologies is at a pivotal juncture, with significant milestones on the horizon that could transform the company's financial and operational trajectory. The pursuit of reimbursement for PoNS therapy and the advancement of its stroke clinical program are critical priorities that, if successful, could unlock substantial growth opportunities for the company.

While Helius faces ongoing challenges, including the need for additional capital to fund its operations, the recent financing and the potential for CMS reimbursement and expanded third-party coverage provide a pathway to positive cash flow. Investors will want to closely monitor the company's progress on these key initiatives in the coming quarters.