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*Delayed quote courtesy of Google.

NEWTOWN, Pa., Nov. 12, 2020 (GLOBE NEWSWIRE) -- 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 September 30, 2020.

Third Quarter and Recent Business Updates

  • The Company made a leadership change by appointing Dane C. Andreeff to the position of Interim President and Chief Executive Officer (“CEO”), and Blane Walter as Chairman of the Board of Directors. These moves followed the departure of Philippe Deschamps from his role as President, CEO and Chairman of the Board of Directors.
  • Following the receipt of Breakthrough Designation earlier this year, the Company submitted a request to the U.S. Food and Drug Administration (“FDA”) for de novo classification and clearance of the Portable Neuromodulation Stimulator (PoNS™) device as a potential treatment for gait deficit due to symptoms of Multiple Sclerosis (“MS”). The Company received a request for additional information from the FDA which includes requests for additional analysis of clinical data and proposes certain labeling modifications.  
  • Subsequent to quarter-end the Company closed a private placement for total gross proceeds of approximately $3.4 million led by a syndicate consisting of current members of the management team and other current investors which the Company expects will be sufficient to fund our operations throughout most of the first quarter of 2021.
  • The Company expanded its authorized clinic network to a total of 27 Authorized PoNS Treatment™ Clinic locations spanning across Canada, up from 7 clinics at the beginning of the year.
  • The Company announced the publication of an important study, titled Translingual Neural Stimulation with the Portable Neuromodulation Stimulator (PoNS™) Induces Structural Changes Leading to Functional Recovery in Patients with Mild-to-Moderate Traumatic Brain Injury, in the peer-reviewed journal, EMJ Radiology.
  • The putative shareholder class action lawsuit against the Company in the Southern District of New York was dismissed without prejudice in July 2020.

Third Quarter 2020 Financial Summary

  • Revenue of $131 thousand, compared to revenue of $150 thousand in third quarter of 2019.
  • Operating loss of $3.7 million, compared to operating loss of $5.7 million in third quarter of 2019.
  • Net loss of $3.5 million, compared to net loss of $5.6 million in third quarter of 2019.
  • As of September 30, 2020, the Company had cash of $2.7 million, compared to $5.5 million at December 31, 2019. The Company had no debt outstanding at September 30, 2020.

“I’m very pleased by our team’s performance during the third quarter, especially given the challenging environment created by the COVID pandemic,” said Dane Andreeff, Interim President and Chief Executive Officer of Helius. “We continued to make strong progress in our strategy to obtain regulatory clearance in the U.S. and submitted our request for de novo classification and clearance to the FDA on August 4th. We look forward to working with the FDA within the context of our Breakthrough Device Designation to facilitate the review of our PoNS device, with the goal of making it available to the estimated 1 million U.S. MS patients as quickly as possible. While our sales performance in Canada continued to be impacted by the disruption due to COVID, our commercial team has done an impressive job of engaging and training Canadian clinics to provide PoNS Treatment, expanding our network to a total of 27 PoNS authorized clinics as of last week.”

“Looking ahead, Helius remains committed to driving continued progress with respect to the two primary aspects of our near-term strategy: pursuing regulatory clearance in the U.S. and advancing our commercialization in the Canadian market. By focusing on these priorities, and continuing to operate as efficiently as possible, we believe we are pursuing the best course to benefit our customers, patients and shareholders. We look forward to building on our recent successes and facilitating awareness, accessibility and adoption of our revolutionary PoNS Treatment to bring 2020 to a strong close.”

Third Quarter 2020 Financial Results

Total revenue for the third quarter of 2020 was $131 thousand, compared to $150 thousand in the third quarter of 2019. Product sales represented approximately 95% of total revenue in the third quarter of 2020 compared to 100% of total revenue in the third quarter of 2019. Product sales in both periods were generated through sales of the PoNS device pursuant to supply agreements with PoNS Authorized clinic locations in Canada. License and fee revenue represented 5% of sales in the third quarter of 2020, compared to 0% of sales in the third quarter of 2019.

Gross profit for the third quarter of 2020 was $109 thousand, compared to gross profit of $61 thousand in the third quarter of 2019. Operating expenses for the third quarter of 2020 decreased $2.0 million, or 35% year-over-year, to $3.8 million, compared to $5.8 million in the third quarter of 2019.

Operating loss for the third quarter of 2020 decreased $2.1 million, or 36% year-over-year, to $3.7 million, compared to $5.7 million in the third quarter of 2019.

Total other income for the third quarter of 2020 was $183 thousand, compared to $148 thousand in the third quarter of 2019.

Net loss for the third quarter of 2020 was $3.5 million, or $(0.08) per basic and diluted common share, compared to a net loss of $5.6 million, or $(0.22) per basic and diluted common share, in the third quarter of 2019. Weighted average shares used to compute basic and diluted net loss per common share were 45.1 million and 25.9 million for the third quarters of 2020 and 2019, respectively.

Nine Months Ended September 30, 2020 Financial Results

Total revenue for the nine months ended September 30, 2020 was $0.5 million, compared to $1.3 million in the prior year period. Product sales represented 94% of total revenue for the nine months ended September 30, 2020, compared to 96% of total revenue in the prior year period. Product sales in both periods were generated through sales of the PoNS device pursuant to supply agreements with PoNS Authorized clinic locations in Canada. License and fee revenue represented 6% of total revenue for the nine months ended September 30, 2020, compared to 4% of total revenue in the prior year period.

Gross profit for the nine months ended September 30, 2020 was $0.3 million, compared to gross profit of $0.8 million in the prior year period. Operating expenses for the nine months ended September 30, 2020 decreased $7.5 million, or 39% year-over-year, to $11.7 million, compared to $19.2 million in the prior year period.

Operating loss the nine months ended September 30, 2020 decreased $7.0 million, or 38% year-over-year, to $11.4 million, compared to operating loss of $18.4 million in the prior year period.

Total other expense for the nine months ended September 30, 2020 was $211 thousand, compared to $13.9 million of other income in the prior year period. The year-over-year change is driven primarily by the change in fair value of derivative instruments which is primarily attributable to the change in our stock price, volatility and the number of derivative financial instruments being measured during the period.

Net loss for the nine months ended September 30, 2020 was $11.6 million, or $(0.30) per basic and diluted common share, compared to net loss of $4.5 million, or $(0.17) per basic and diluted common share, in the prior year period. Weighted average shares used to compute basic and diluted net loss per share were 39.2 million and 25.9 million for the nine months ended September 30, 2020 and 2019, respectively.

Net cash provided by financing activities during the nine months ended September 30, 2020 was $6.7 million.

As of September 30, 2020, the Company had cash of $2.7 million, compared to $5.5 million at December 31, 2019. The Company had no debt outstanding at September 30, 2020. Subsequent to quarter end, the Company raised $3.4 million of gross proceeds in a private placement, which the Company expects will extend its cash runway throughout most of the first quarter of 2021.

Full Year 2020 Outlook

On May 7, 2020, the Company withdrew its previously announced 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.

Conference Call

Management will host a conference call at 5:45 p.m. Eastern Time on November 12, 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 13711025. 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 13711025. 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 commercial product 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 in Canada intended for use as a short term treatment (14 weeks) of gait deficit due to mild and moderate symptoms from multiple sclerosis (MS), and chronic balance deficit due to mild-to-moderate traumatic brain injury (mmTBI) and is to be used in conjunction with physical therapy. The PoNS™ is an investigational medical device in the United States, the European Union (“EU”), and Australia (“AUS”). The device is currently under review for de novo classification and clearance by the FDA. It is also under premarket review by the AUS Therapeutic Goods Administration. PoNS™ 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,” “expect,” “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 growth and operational progress, including clinical and regulatory development plans for the PoNS device, the Company’s expectations regarding the sufficiency of funds for anticipated future operations, potential receipt of regulatory clearance of the PoNS device in the United States, the success of the Company’s planned study, business and commercialization initiatives and objectives, and expectations for full year 2020.

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 impact of the COVID-19 pandemic, 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 year ended December 31, 2019, its Quarterly Report on Form 10-Q for the quarter ended September 30, 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)

  September 30, 2020  December 31, 2019 
ASSETS        
Current assets        
Cash $2,680  $5,459 
Accounts receivable, net  80   210 
Other receivables  138   364 
Inventory, net of reserve  572   598 
Prepaid expenses  666   610 
Total current assets  4,136   7,241 
Property and equipment, net  463   712 
Other assets        
Goodwill  725   1,242 
Intangible assets, net  579   582 
Operating lease right-of-use asset, net  105   552 
Other assets  18   18 
Total other assets  1,427   2,394 
TOTAL ASSETS $6,026  $10,347 
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities        
Accounts payable $720  $1,676 
Accrued liabilities  1,399   1,519 
Operating lease liability  107   172 
Derivative financial instruments     5 
Deferred revenue  339   430 
Total current liabilities  2,565   3,802 
Non-current liabilities        
Operating lease liability  47   465 
Deferred revenue  217   245 
TOTAL LIABILITIES  2,829   4,512 
STOCKHOLDERS’ EQUITY        
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2020 and December 31, 2019      
Class A common stock, $0.001 par value; 150,000,000 shares authorized; 45,354,612 and 30,718,554 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively  45   31 
Additional paid-in capital  120,213   111,479 
Accumulated other comprehensive loss  (693)  (902)
Accumulated deficit  (116,368)  (104,773)
TOTAL STOCKHOLDERS’ EQUITY  3,197   5,835 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $6,026  $10,347 


Helius Medical Technologies, Inc.
Unaudited Consolidated Statements of Operations and Comprehensive Loss
(Amounts in thousands except share and per share data)

  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2020  2019  2020  2019 
Revenue:                
Product sales, net $124  $150  $441  $1,295 
Fee revenue        9   49 
License revenue  7      20    
Total operating revenue  131   150   470   1,344 
Cost of sales:                
Cost of product sales  22   89   187   538 
Gross profit  109   61   283   806 
Operating expenses:                
Research and development  1,327   1,506   3,755   6,462 
Selling, general and administrative  2,370   4,291   7,625   12,715 
Amortization expense  72      287    
Total operating expenses  3,769   5,797   11,667   19,177 
Operating loss  (3,660)  (5,736)  (11,384)  (18,371)
Other income (expense):                
Other income     11   63   35 
Change in fair value of derivative financial instruments  1   196   4   14,033 
Foreign exchange gain (loss)  182   (59)  (278)  (147)
Total other income (expense)  183   148   (211)  13,921 
Net loss  (3,477)  (5,588)  (11,595)  (4,450)
Other comprehensive loss:                
Foreign currency translation adjustments  (172)  68   209   (168)
Comprehensive loss $(3,649) $(5,520) $(11,386) $(4,618)
Net loss per share                
Basic $(0.08) $(0.22) $(0.30) $(0.17)
Diluted $(0.08) $(0.22) $(0.30) $(0.17)
Weighted average shares outstanding                
Basic  45,137,995   25,903,544   39,187,370   25,869,039 
Diluted  45,137,995   25,903,544   39,187,370   25,869,039 


Helius Medical Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)

  Nine Months Ended 
  September 30, 
  2020  2019 
Cash flows from operating activities:        
Net loss $(11,595) $(4,450)
Adjustments to reconcile net loss to net cash used in operating activities:        
Change in fair value of derivative financial instruments  (4)  (14,033)
Stock-based compensation expense  2,021   3,336 
Unrealized foreign exchange loss  245   211 
Depreciation expense  92   89 
Amortization expense  287    
Provision for doubtful accounts  160    
Intangible asset impairment  182    
Loss from disposal of property and equipment  110    
Gain from lease modification  (56)   
Changes in operating assets and liabilities:        
Accounts receivable  (30)  (380)
Other receivables  226   (123)
Inventory  26   (897)
Prepaid expenses  (56)  285 
Other current assets     264 
Operating lease liability  20   (9)
Accounts payable  (956)  (678)
Accrued liabilities  (120)  (75)
Deferred revenue  (119)   
Net cash used in operating activities  (9,567)  (16,460)
Cash flows from investing activities:        
Purchase of property and equipment  (14)  (260)
Proceeds from sale of property and equipment  61    
Internally developed software  (7)   
Net cash provided by (used in) investing activities  40   (260)
Cash flows from financing activities:        
Proceeds from the issuance of common stock and accompanying warrants  7,233    
Share issuance costs  (506)  (52)
Proceeds from the exercise of stock options and warrants     215 
Proceeds from Paycheck Protection Program Loan  323    
Repayment of Paycheck Protection Program Loan  (323)   
Net cash provided by financing activities  6,727   163 
Effect of foreign exchange rate changes on cash  21   (7)
Net decrease in cash  (2,779)  (16,564)
Cash at beginning of period  5,459   25,583 
Cash at end of period $2,680  $9,019 


CONTACT: Investor Relations Contact:

Westwicke Partners on behalf of Helius Medical Technologies, Inc.
Mike Piccinino, CFA
investorrelations@heliusmedical.com