Helius Medical Technologies, Inc. (Nasdaq:HSDT) (TSX:HSM) (“Helius”
or the “Company”), a neurotech company focused on neurological
wellness, today reported financial results for the quarter ended
March 31, 2020.
First Quarter 2020 Financial Summary
- Revenue of $0.2 million, compared to revenue of $0.7 million in
first quarter of 2019.
- Total revenue comprised of:
- Product sales of $191 thousand, compared to product sales of
$677 thousand in first quarter of 2019.
- Fee and license revenue of $16 thousand, compared to no fee and
license revenue in first quarter of 2019.
- Operating loss of $4.0 million, compared to operating loss of
$6.8 million in first quarter of 2019.
- Net loss of $4.8 million, compared to net income of $1.3
million in first quarter of 2019.
- As of March 31, 2020, the Company had cash of $4.4 million,
compared to $5.5 million at December 31, 2019. The Company had
no debt outstanding at March 31, 2020.
- Net cash provided by financing activities during the three
months ended March 31, 2020 was $2.7 million, which consisted of
proceeds from the issuance of common stock in connection with the
Company’s At The Market Offering Agreement (“ATM”) during the first
quarter of 2020, and proceeds from the issuance of common stock and
unregistered warrants in connection with Helius’ registered direct
offering and concurrent private placement on March 20, 2020.
First Quarter and Recent Business Updates
- On January 10, 2020, the Company announced that it received the
Pioneer Technology Development Award for its development of the
PoNS™ device.
- On January 16, 2020, the Company announced that its fully owned
subsidiary, Helius Medical Inc, entered into an agreement with the
University Health Network to perform a clinical experience program
to enable it, and three independent neurorehabilitation clinics in
Canada, to evaluate Helius’ PoNS device, in conjunction with
physical therapy, on patients with chronic balance deficit due to
mmTBI in Canada.
- On February 7, 2020, the Company announced the authorization of
Clinic Medical Centre in Nanaimo, British Columbia, the eighth
clinic to be authorized as a PoNS Treatment center in Canada.
- On February 24, 2020, the Company announced that Helius CEO,
Philippe Deschamps, had been invited to brief the U.S. Congress on
the latest technologies, innovations and policies in clinical
neuroscience at the 9th Annual Brain Mapping Foundation
Congressional briefing at the U.S. Congress on February 25,
2020.
- On March 2, 2020, the Company reported preliminary unaudited
financial results for the fourth quarter and full year ended
December 31, 2019, provided an update on its commercial and
regulatory activities and announced it has submitted a Canadian
Class II license amendment application for the treatment of gait
deficit in patients with mild and moderate Multiple Sclerosis.
- On March 9, 2020, the Company provided details on five
additional PoNS Treatment clinics that were recently authorized in
the Greater Toronto Area and Southwestern Ontario.
- On March 18, 2020, the Company entered into definitive
agreements with healthcare focused institutional investors that
provide for the purchase and sale of an aggregate of approximately
6.3 million shares of its Class A Common Stock and warrants,
resulting in total gross proceeds of approximately $2.2
million.
- On March 24, 2020, the Company announced that its Canadian
Class II license amendment application for the treatment of gait
deficit in patients with mild and moderate symptoms from multiple
sclerosis (“MS”) was successful and that Health Canada
granted marketing authorization to the PoNS for the new MS
indication.
- On April 22, 2020, the Company announced the appointment of
Jeffrey S. Mathiesen, CPA, to its Board of Directors, effective as
of June 9, 2020. Upon his appointment, Mr. Mathiesen will serve as
Chair of the Company’s Audit Committee.
- On April 30, 2020, the Company announced that its
registrational clinical trial, TBI-001, was published on April 29,
2020 in Neuromodulation: Technology at the Neural Interface.
The TBI-001 trial found that PoNS Treatment™ provided significant
improvement in balance in patients with a chronic balance deficit
following a mild-to-moderate traumatic brain injury (“mmTBI”).
“We continued to make progress on our U.S.
regulatory strategy during the first quarter of 2020, and while our
pursuit of regulatory clearance for Multiple Sclerosis (“MS”)
continued relatively unaffected by the COVID-19 pandemic, our
regulatory activity may be adversely affected by Covid-19 going
forward.” said Philippe Deschamps, Chief Executive Officer of
Helius. “Based on the quality of the data included in our Health
Canada application for an MS indication – including a statistically
significant, peer-reviewed clinical trial and real-world treatment
data from Canada – and the fact that more than 1 million patients
suffer from MS in the U.S., we made the strategic decision to
prioritize the MS indication as the pathway to pursue our first
U.S. regulatory clearance. We are pleased with our pace of progress
in pursuing our MS indication in the U.S., and continue to
anticipate submitting a request for de novo classification for this
indication in the second half of 2020. During the first quarter, we
obtained marketing authorization from Health Canada in March for a
new clinical indication to treat gait deficit in patients with mild
and moderate symptoms from MS, significantly expanding our
addressable patient population. Lastly, we finalized the design of
new trial, TBI-002, to support our U.S. submission for an
indication to treat chronic balance deficit due to mmTBI.
COVID-19 has temporarily halted clinical trial activity across the
U.S. and Canada, we have thus put this project on hold for the
foreseeable future until the clinical trial environment and
financial conditions allow us to reengage this project.
Mr. Deschamps continued: “During the first
quarter, we also made important progress with respect our
commercial strategy in Canada. We expanded our network of
authorized clinics to a total of fourteen clinic locations and
generated revenue of $0.2 million from sales of our PoNS device.
While our performance during the first two months of 2020 was
consistent with expectations, our business trends slowed materially
in the last two weeks of March as a result of the disruption caused
by the COVID-19 pandemic. Specifically, our authorized clinics in
Canada suspended in-patient treatments and announced temporary
closures in order to adhere to enacted mandates from the government
in an effort to slow the spread of the virus. In response to
COVID-19, we quickly implemented health and safety measures to
protect our employees and enable them to operate remotely. We are
closely monitoring the activities of the PoNS authorized clinics in
Canada and continue to support their staff and patients during this
difficult time.”
Mr. Deschamps continued: “Given the uncertainty
surrounding the duration and impact of the COVID-19 pandemic on our
financial and operating performance, we are withdrawing our full
year 2020 outlook at this time. However, our team is executing
efficiently to help mitigate the impact of this pandemic on our
business and to continue pursuing the commercial and regulatory
priorities we have outlined for this year. We are engaging
virtually with new clinics, key opinion leaders and industry
associations to raise awareness of our PoNS Treatment and our new
clinical indication in MS. Most importantly, we remain confident in
the potential of our PoNS technology and committed to expanding its
access as effectively and efficiently as possible for the benefit
of our patients and shareholders.”
First Quarter 2020 Financial Results
Total revenue for the first quarter of 2020 was
$0.2 million, compared to $0.7 million in the first quarter of
2019. Product sales represented 92% of total revenue in the first
quarter of 2020 compared to 100% of total revenue in the first
quarter of 2019. Product sales in the first quarter of 2020 was
generated through sales of the PoNS device pursuant to supply
agreements with 14 neuroplasticity clinics in Canada. License and
fee revenue represented 8% of total revenue in the first quarter of
2020, compared to 0% of total revenue in the first quarter of
2019.
Gross profit for the first quarter of 2020 was
$0.1 million, compared to gross profit of $0.4 million in the first
quarter of 2019. Operating expenses for the first quarter of 2020
decreased $3.2 million, or 43% year-over-year, to $4.1 million,
compared to $7.3 million in the first quarter of 2019.
Operating loss for the first quarter of 2020
decreased $2.8 million, or 41%, to $4.0 million, compared to $6.8
million in the first quarter of 2019.
Total other expense for the first quarter of
2020 was $0.8 million, compared to $8.1 million of other income in
the first quarter of 2019.
Net loss for the first quarter of 2020 was $4.8
million, or $(0.15) per basic and diluted common share, compared to
net income of $1.3 million, or $0.05 per basic common share and
$(0.06) per diluted common share, in the first quarter of 2019.
Weighted average shares used to compute basic net loss per common
share were 31.0 million and 25.8 million for the first quarters of
2020 and 2019, respectively. Weighted average shares used to
compute diluted net loss per common share were 31.0 million and
26.8 million for the first quarters of 2020 and 2019,
respectively.
Full Year 2020 Outlook
The Company is currently unable to estimate the
duration and impact of the COVID-19 pandemic on its financial and
operating results for the full year 2020. As a result, the Company
is withdrawing its previously announced full year 2020 outlook,
which was introduced on March 12, 2020.
Conference Call
Management will host a conference call at 5:00
p.m. Eastern Time on May 7, 2020 to discuss the results of the
quarter and business outlook. Those who would like to participate
may dial 877-407-2988 (201-389-0923 for international callers) and
provide access code 13701495. A live webcast of the call will also
be provided on the Events section of the Company's investor
relations website at:
https://heliusmedical.com/index.php/investor-relations/events/upcoming-events.
For those unable to participate, a replay of the
call will be available for two weeks at 877-660-6853 (201-612-7415
for international callers); access code 13698861. The webcast will
be archived on the Events section of the Company’s investor
relations website.
About Helius Medical Technologies,
Inc.
Helius Medical Technologies is a neurotech
company focused on neurological wellness. The Company’s purpose is
to develop, license and acquire unique and non-invasive platform
technologies that amplify the brain’s ability to heal itself. The
Company’s first product in development is the Portable
Neuromodulation Stimulator (PoNS™). For more information, visit
www.heliusmedical.com.
About the PoNS Device and PoNS
Treatment
The Portable Neuromodulation Stimulator (PoNS) is an authorized
class II, non-implantable medical device authorized for sale in
Canada. PoNS is intended as a short term treatment (14 weeks) of
chronic balance deficit due to mild-to-moderate traumatic brain
injury and is to be used in conjunction with physical therapy and
is indicated as a short term treatment (14 weeks) of gait deficit
due to mild and moderate symptoms from MS and is to be used in
conjunction with physical therapy. The PoNS is an investigational
medical device in the United States, the European Union, and
Australia, and is currently under review for clearance by the AUS
Therapeutic Goods Administration. PoNS Treatment is currently not
commercially available in the United States, the European Union or
Australia.
Cautionary Disclaimer Statement:
Certain statements in this news release are not based on
historical facts and constitute forward-looking statements or
forward-looking information within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 and Canadian securities
laws. All statements other than statements of historical fact
included in this news release are forward-looking statements that
involve risks and uncertainties. Forward-looking statements are
often identified by terms such as “believe,” “continue,” “look
forward,” “will” and similar expressions. Such forward-looking
statements include, among others, statements regarding the COVID-19
pandemic, including its impact on the Company, the Company’s future
clinical and regulatory development plans for the PoNS, the success
of the Company’s planned study, business and commercialization
initiatives and objectives, the potential receipt of regulatory
clearance of the PoNS device in the United States and the Company’s
revenue guidance.
There can be no assurance that such statements will prove to be
accurate and actual results and future events could differ
materially from those expressed or implied by such statements.
Important factors that could cause actual results to differ
materially from the Company’s expectations include the
uncertainties associated with clinical trial enrollments and the
results of the planned study, uncertainties associated with the
clinical development process and FDA regulatory submission and
approval process, including the Company’s capital requirements to
achieve its business objectives and other risks detailed from time
to time in the filings made by the Company with securities
regulators, and including the risks and uncertainties about the
Company’s business described in the “Risk Factors” sections of the
Company’s Annual Report on Form 10-K for the years ended December
31, 2019 and December 31, 2018, its Quarterly Report on Form 10-Q
for the quarter ended March 31, 2020 and its other filings with the
United States Securities and Exchange Commission and the Canadian
securities regulators, which can be obtained from either at
www.sec.gov or www.sedar.com.
The reader is cautioned not to place undue reliance on any
forward-looking statement. The forward-looking statements contained
in this news release are made as of the date of this news release
and the Company assumes no obligation to update any forward-looking
statement or to update the reasons why actual results could differ
from such statements except to the extent required by law.
The Toronto Stock Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of the content of this
news release.
Helius Medical Technologies,
Inc.Unaudited Consolidated Balance
Sheets(Except for share data, amounts in
thousands)
|
|
March 31, 2020 |
|
|
December 31, 2019 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
4,360 |
|
|
$ |
5,459 |
|
Accounts receivable, net |
|
|
110 |
|
|
|
210 |
|
Other receivables |
|
|
124 |
|
|
|
364 |
|
Inventory, net of reserve |
|
|
594 |
|
|
|
598 |
|
Prepaid expenses |
|
|
687 |
|
|
|
610 |
|
Total current assets |
|
|
5,875 |
|
|
|
7,241 |
|
Property and equipment, net |
|
|
678 |
|
|
|
712 |
|
Other assets |
|
|
|
|
|
|
|
|
Goodwill |
|
|
686 |
|
|
|
1,242 |
|
Intangible assets, net |
|
|
687 |
|
|
|
582 |
|
Operating lease right-of-use asset, net |
|
|
517 |
|
|
|
552 |
|
Other assets |
|
|
18 |
|
|
|
18 |
|
Total other assets |
|
|
1,908 |
|
|
|
2,394 |
|
TOTAL
ASSETS |
|
$ |
8,461 |
|
|
$ |
10,347 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,111 |
|
|
$ |
1,676 |
|
Accrued liabilities |
|
|
1,005 |
|
|
|
1,519 |
|
Operating lease liability |
|
|
180 |
|
|
|
172 |
|
Derivative financial instruments |
|
|
— |
|
|
|
5 |
|
Deferred revenue |
|
|
321 |
|
|
|
430 |
|
Total current liabilities |
|
|
2,617 |
|
|
|
3,802 |
|
Non-current liabilities |
|
|
|
|
|
|
|
|
Operating lease liability |
|
|
417 |
|
|
|
465 |
|
Deferred revenue |
|
|
218 |
|
|
|
245 |
|
TOTAL
LIABILITIES |
|
|
3,252 |
|
|
|
4,512 |
|
Commitments and contingencies
(Note 6) |
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no
shares issued and outstanding as of March 31, 2020 and December 31,
2019 |
|
|
— |
|
|
|
— |
|
Class A common stock, $0.001 par value; 150,000,000 shares
authorized; 38,041,666 and 30,718,554 shares issued and outstanding
as of March 31, 2020 and December 31, 2019, respectively |
|
|
38 |
|
|
|
31 |
|
Additional paid-in capital |
|
|
114,967 |
|
|
|
111,479 |
|
Accumulated other comprehensive loss |
|
|
(266 |
) |
|
|
(902 |
) |
Accumulated deficit |
|
|
(109,530 |
) |
|
|
(104,773 |
) |
TOTAL STOCKHOLDERS’
EQUITY |
|
|
5,209 |
|
|
|
5,835 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
8,461 |
|
|
$ |
10,347 |
|
|
|
|
|
|
|
|
|
|
Helius Medical Technologies,
Inc.Unaudited Consolidated Statements of
Operations and Comprehensive (Loss) Income(Amounts
in thousands except share and per share data)
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2020 |
|
|
2019 |
|
Revenue: |
|
|
|
|
|
|
|
|
Product sales, net |
|
$ |
191 |
|
|
$ |
677 |
|
Fee revenue |
|
|
9 |
|
|
|
— |
|
License revenue |
|
|
7 |
|
|
|
— |
|
Total operating
revenue |
|
|
207 |
|
|
|
677 |
|
Cost of
sales: |
|
|
|
|
|
|
|
|
Cost of product sales |
|
|
101 |
|
|
|
236 |
|
Gross
profit |
|
|
106 |
|
|
|
441 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
|
1,120 |
|
|
|
2,681 |
|
Selling, general and administrative |
|
|
2,862 |
|
|
|
4,581 |
|
Amortization expense |
|
|
126 |
|
|
|
— |
|
Total operating expenses |
|
|
4,108 |
|
|
|
7,262 |
|
Operating
loss |
|
|
(4,002 |
) |
|
|
(6,821 |
) |
Other income
(expense): |
|
|
|
|
|
|
|
|
Other (expense) income |
|
|
6 |
|
|
|
11 |
|
Change in fair value of derivative financial instruments |
|
|
4 |
|
|
|
8,289 |
|
Foreign exchange gain (loss) |
|
|
(765 |
) |
|
|
(155 |
) |
Total other (expense)
income |
|
|
(755 |
) |
|
|
8,145 |
|
Net (loss)
income |
|
|
(4,757 |
) |
|
|
1,324 |
|
Other comprehensive
(loss) income: |
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
636 |
|
|
|
(112 |
) |
Comprehensive (loss)
income |
|
$ |
(4,121 |
) |
|
$ |
1,212 |
|
Net (loss) income per
share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.15 |
) |
|
$ |
0.05 |
|
Diluted |
|
$ |
(0.15 |
) |
|
$ |
(0.06 |
) |
Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
30,972,064 |
|
|
|
25,832,190 |
|
Diluted |
|
|
30,972,064 |
|
|
|
26,785,708 |
|
|
|
|
|
|
|
|
|
|
Helius Medical Technologies,
Inc.Unaudited Condensed Consolidated Statements of
Cash Flows(Amounts in thousands)
|
|
|
|
|
|
March 31, |
|
|
|
2020 |
|
|
2019 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(4,757 |
) |
|
$ |
1,324 |
|
Adjustments to reconcile net loss
to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Change in fair value of derivative financial instruments |
|
|
(4 |
) |
|
|
(8,289 |
) |
Stock-based compensation expense |
|
|
842 |
|
|
|
835 |
|
Unrealized foreign exchange (gain) loss |
|
|
738 |
|
|
|
176 |
|
Depreciation expense |
|
|
37 |
|
|
|
22 |
|
Amortization expense |
|
|
126 |
|
|
|
— |
|
Provision for doubtful accounts |
|
|
139 |
|
|
|
— |
|
Intangible asset impairment |
|
|
174 |
|
|
|
— |
|
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(39 |
) |
|
|
(740 |
) |
Other receivables |
|
|
240 |
|
|
|
(84 |
) |
Inventory |
|
|
4 |
|
|
|
(339 |
) |
Prepaid expenses |
|
|
(77 |
) |
|
|
95 |
|
Other current assets |
|
|
— |
|
|
|
264 |
|
Operating lease liability |
|
|
(5 |
) |
|
|
(3 |
) |
Accounts payable |
|
|
(626 |
) |
|
|
83 |
|
Accrued liabilities |
|
|
(459 |
) |
|
|
(144 |
) |
Deferred revenue |
|
|
(84 |
) |
|
|
— |
|
Net cash used in
operating activities |
|
|
(3,751 |
) |
|
|
(6,800 |
) |
Cash flows from investing
activities: |
|
|
|
|
|
|
|
|
Purchase of property and
equipment |
|
|
(3 |
) |
|
|
(161 |
) |
Internally developed
software |
|
|
(7 |
) |
|
|
— |
|
Net cash used in
investing activities |
|
|
(10 |
) |
|
|
(161 |
) |
Cash flows from financing
activities: |
|
|
|
|
|
|
|
|
Proceeds from the issuances of
common stock and warrants |
|
|
2,992 |
|
|
|
— |
|
Share issuance costs |
|
|
(340 |
) |
|
|
(52 |
) |
Proceeds from the exercise of
stock options and warrants |
|
|
— |
|
|
|
92 |
|
Net cash provided by
financing activities |
|
|
2,652 |
|
|
|
40 |
|
Effect of foreign
exchange rate changes on cash |
|
|
10 |
|
|
|
(6 |
) |
Net (decrease) increase
in cash |
|
|
(1,099 |
) |
|
|
(6,927 |
) |
Cash at beginning of
period |
|
|
5,459 |
|
|
|
25,583 |
|
Cash at end of
period |
|
$ |
4,360 |
|
|
$ |
18,656 |
|
|
|
|
|
|
|
|
|
|
Investor Relations Contact:
Westwicke Partners on behalf of Helius Medical Technologies, Inc.
Mike Piccinino, CFA
investorrelations@heliusmedical.com
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