NeuroOne Medical Technologies (NASDAQ: NMTC) is shaking off the effects of a weak broader market. In fact, since the start of February, NMTC shares are trading higher by more than 21% to $2.10* intraday on Friday. And while its down from its more impressive leap to $2.96 earlier in the month, holding its double digit gains shows that NMTC can decouple from general market weakness. Not only that, recent movement suggests that bullish momentum is on its side. Why? All indicators point toward investors embracing NeuroOne’s innovative electrode technology, which revolutionizes the industry and could capture a significant share of the multi-billion-dollar electrode market. Better yet, NMTC could be capitalizing on market opportunities with little to no competition. (*share price noted reflects price on 2/25/22, 1:53pm est, Yahoo! Finance)
In fact, NMTC’s electrode technology is so compelling that its products could revolutionize the electrode treatment space and become the de facto solutions to numerous medical demands. And with IP to protect its space, that’s likely. Thus, in the face of weak markets, NMTC’s new bullish run should signal to investors that the investment proposition in NeuroOne is getting too big to ignore.
Video Link: https://www.youtube.com/embed/OG277VLQd9I
NeuroOne Changes Electrode Landscape
There’s plenty of firepower to support that assumption. And Neuroone’s most impressive asset is its flagship line of thin-film electrodes for continuous and stereo Electroencephalography (cEEG and sEEG) recording. These technologies aid in conducting brain activity scans that are integral to diagnosing and treating countless neurological disorders, including traumatic brain injury, hemorrhages, sleep disorders, Alzheimer’s disease, seizures, and more.
The industry is doing more than paying attention; they want in. Already, NMTC has secured the interest of industry giants such as development partner and shareholder Mayo Clinic, and Zimmer Biomet (NYSE: ZBH), a strategic marketing partner helping NMTC better serve its markets and lead the charge to revolutionize EEG recording, deep brain stimulation (DBS), and ablation technologies.
As a matter of fact, with the support of both, NeuroOne is better positioned than ever to penetrate these specialized markets faster than expected.
Developing Industry-Changing Electrode Technologies
Actually, that’s likely. Of all companies in the space, NeuroOne is most ideally positioned to capture a substantial piece of an emerging electrode market, replacing the long-stagnant EEG technology market. Moreover, that mission can be accelerated by leveraging ample cash reserves and partnerships that bolster NeuroOne’s own development and marketing talents. Not only that, NMTC’s strength comes from being different.
And beyond differences, its products are better, showing best-in-class abilities, including unrivaled versatility and proven effectiveness compared to other products. In fact, an inherent and critically important advantage of NeuroOne’s innovative thin-film electrodes over competing products is that they can be used in multiple applications of EEGs, including recording, monitoring, and stimulating areas of the brain. Competing products typically have a single-use per application.
NeuroOne’s thin-film electrodes are so effective, in fact, that the Mayo Clinic, one of the world’s leading medical organizations, came on board as a development partner and shareholder. This alone essentially validates its industry-changing technology, but its connections extend beyond that relationship. NeuroOne is also working with Zimmer Biomet (NYSE: ZBH), a leading medical technology and strategic marketing firm with a market cap of more than $24 billion.
These connections put NMTC in an excellent position for swift progress toward their destination as the industry leader in sEEG and cEEG recording, DBS, and ablation technology. Keep in mind, though, NMTC doesn’t want to just compete in the market; their plan is to dominate this multi-billion market opportunity with technology that supports patients from diagnosis all the way through the rest of the treatment process.
Best-In-Class Electrodes Targeting Diverse Markets
The more excellent news is that NeuroOne is also on a path to becoming the preferred technology for more than just cEEG and sEEG electrodes. NMTC is also working quickly toward its goal of supplying the best electrode options on the market for an expanded range of imaging procedures. In fact, NMTC has already received regulatory clearance for the use of its patented thin film electrode technology in additional applications, including intracranial EEG (iEEG) and electrocorticography (ECOG) procedures. In addition, NeuroOne is currently expediting commercializing its technologies, which not only puts a potentially exponential increase to its revenues in the crosshairs but can do so by meeting tremendous demand for novel EEG tech, which should keep those new revenue streams churning.
There’s another distinguishing factor inherent to the NeuroOne pipeline of products. Its patented Evo Cortical Electrode products are apart from the competition by being the first cortical electrodes to receive 510(k) clearance from the FDA for in-person use. This was likely earned by NeuroOne using a unique, fully automated photolithographic process to produce thin-film printed microcircuit technology that can record, monitor, and stimulate brain tissue for up to a month. Moreover, unlike competing electrodes, NeuroOne’s electrodes are ultra-flexible for optimal surgical placement and use a single substrate to optimize signal clarity. What’s more, the electrode requires fewer incisions to place than prior electrodes because of additional safety measures.
While the design speaks for itself, there is even more evidence that NeuroOne’s products are best-in-class. The Mayo Clinic has published compelling data that NeuroOne’s electrodes cause less inflammation in brain tissue after seven days of implantation than other electrodes, an advantage pointing toward expedited adoption. NeuroOne makes its option even better by using disposable cables with its electrodes, saving precious and potentially life-saving time in surgery.
By the way, the applications of these electrodes are as plentiful as they are important. They are expected to be a vital tool used to diagnose and treat many neurological conditions, including Alzheimer’s, epilepsy, brain injuries, and more. Notably, the first commercial application of the Evo Cortical Electrode was completed in 2020 at the Mayo Clinic, solidifying the electrode’s medical validity and opening a tremendous opportunity for NMTC to generate substantial new revenues in the coming quarters.
Even still, this is not all NeuroOne has to offer.
Adaptable Technologies Target Niche Opportunities
In addition to the Evo Cortical Electrodes for long-term use, NeuroOne is breaking into the sEEG component market with its Evo sEEG Depth Electrode products. Designed for temporary use (24 hours or less), these electrodes work alongside other specialized equipment to record and stimulate electrical signals below the brain’s surface. The Depth Electrode is ideal for diagnostic brain mapping procedures and comes with a range of benefits that make it preferable to the competition.
Like the Cortical Electrodes, the Depth Electrodes use new technology to improve the clarity of their signals and are also specially designed to require less invasive procedures to use, as well as offer a more straightforward application for medical professionals. NeuroOne’s Depth Electrodes received FDA 510(k) clearance in September of last year, representing yet another product certified by the FDA’s regulatory bodies. Keep in mind there is a plan. NeuroOne is looking to fulfill tremendous demand with this product and is already prepared to ramp up production through its automated photolithographic processes to meet those needs.
There’s more in the quiver to potentially catapult NeuroOne to become the industry standard in EEG technology markets. The company announced earlier this month that its thin-film electrode technology had completed initial pre-clinical long-term testing for its recording capabilities. Essentially, this tested the electrode’s ability to record electrical activity over five years, measured with an accelerated aging test model. The results of this testing indicate that NeuroOne’s electrodes are resistant to environmental factors that typically pose a considerable threat to other technologies.
These results could be more than a milestone reached; they can be a catalyst for growth. Why? First, NMTC’s electrodes’ resistance to environmental factors indicates that they could be a perfect candidate for long-term applications, including pressing neurological conditions such as Parkinson’s and chronic pain. And not only do their electrodes show promise in additional long-term applications, but NeuroOne also has the opportunity to break into the medical research market as well, leveraging data that could be transformative to the industry. This diverse range of income-producing potential places NMTC in an extremely promising marketing position. Better still, they are already showing signs that they are more than ready to take the lion’s share of a multi-billion dollar electrode products market.
Indeed, while NeuroOne’s electrodes present an enormous and untapped potential for themselves, their investors are also positioned to join the ride. And don’t think the above has detailed all the opportunities in play. The company’s upsides don’t stop there.
Multiple Applications For NMTC Electrodes
In addition to applications of its patented thin-film electrodes for short- and long-term imaging, NeuroOne is developing therapeutic electrode procedures to treat brain tissue ablation.
The company’s sEEG electrodes and RF generators work together with temperature sensors to quickly diagnose and treat seizure-causing brain lesions and tumors. The best part of this technology is that it’s so “simple” that it can be done at the bedside rather than requiring extensive and invasive surgery.
Another application of NeuroOne’s sEEG electrodes is developing for a Deep Brain Stimulation (DBS) treatment. This application involves the detection of microseizures, which helps improve responsive stimulation algorithms. These algorithms are integral to treating major neurological conditions like Parkinson’s Disease and epilepsy – huge markets representing significant opportunities for NMTC to increase shareholder value. In fact, beyond the $10 billion traditional electrode opportunity for neurological disorders, NMTC says its devices can also be used for drug delivery, which presents an additional $6 billion market opportunity.
That’s not all that NeuroOne has in the works. The company is also developing a treatment for chronic back pain that uses cylinder electrodes to administer spinal cord stimulation. This treatment presents an advantage in that it can be placed percutaneously with an expandable midsection, which allows it to be extended without displacement. This ease of adjustment allows the electrode to target specific areas conveniently. Entering this market presents yet another exciting opportunity for NeuroOne, with the industry being valued at over $2 billion.
That said, adequate intellectual property protections are integral to maintaining and protecting NMTC’s interests.
Impressive IP Protections
Fortunately, NeuroOne is well-fortified to protect its interests. The Wisconsin Alumni Research Foundation has issued three patents to NeuroOne for their neural probe array and thin-film microelectrode technology and procedures, giving the company almost a decade of protection of their products.
In addition to these patents, NMTC filed another patent in October of 2018 that would cover other technologies and surgical methods associated with their Cortical and Depth Electrodes, used to treat conditions like ablation. Furthermore, the company has two patents pending from 2017 for drug delivery through their electrodes. All things considered, NeuroOne’s groundbreaking technologies are well insulated from potential competition for upwards of a decade, solidifying their position as one of the industry’s foremost technological developers.
Here’s another thing you don’t usually see in a small-cap, NeuroOne’s financials and capital structure are impressive. NMTC has only a little over 16 million shares outstanding, with insiders and institutions owning about 42% of the float. Thus, with a relatively small trading float, while the company’s roughly $34 million market cap may be attractive now, that number could skyrocket when considering the multi-billion-dollar markets that NeuroOne is set to enter. The company also enjoys healthy cash reserves, having raised roughly $13.35 million before expenses at the end of last year.
Analysts see the potential as well. Two covering the stock model an average price target of $5.88, indicating more than 182% upside from current levels.
Assets And Technology front A Breakout 2022
From a sum of its parts calculation, all signs suggest a breakout year for NeuroOne in 2022. There are simply too many things coming together at NMTC to not have a bullish bias, including an asset rich product portfolio, an impressive financial structure, industry-best partnerships, and groundbreaking technologies that are aligned to foster significant near-term growth.
Better yet, NeuroOne today has the capital, products, partnerships, and competitive advantages to justify a valuation significantly higher than current levels. That’s not all. The better news is that by leveraging its assets, revenues are expected to surge this year, meaning that a higher multiple and corresponding share price could also be in the queue. Thus, while the recent jump in NMTC is impressive, there’s likely more to come, giving investors who missed the mid-February surge a second chance to take advantage of share prices that still look appreciably undervalued.
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