With 2 FDA Catalysts Looming, Could This Obscure Epilepsy Stock Generate 5x Returns?

• Diagnosing and treating Epilepsy is a big business. The global drug market is over $4 billion and little innovation had occurred until recently.

• Epilepsy is a key target for the first wave of new drugs based on cannabis derivatives, and GW Pharma (GWPH) is the first major benefactor. GW's drug called Epidiolex was just approved to treat epilepsy patients, and investors have benefitted greatly. The stock is up 700% since 2013.

• NeuroOne Medical Technologies (NMTC) is a relatively unknown stock that could also benefit from multiple upcoming FDA decisions related to Epilepsy. NMTC has a very credible diagnostic and potential treatment for epilepsy that is already being used in patients in some of the most prestigious academic hospitals in the US. One of these, The Mayo Clinic, owns 10% of the company.

• NMTC will file their first FDA application later this year, according to company documents, and the stock has mostly gone undiscovered since going public in 2017. That could change quickly as investors realize the market potential for NMTC's proprietary technology. Healthcare stocks with the right awareness like to make big moves ahead of FDA decisions and NMTC could be well positioned for a move north.

NEW YORK, NY / ACCESSWIRE / August 21, 2018 / GW Pharmaceuticals (GWPH) has taken CBD oil mainstream with the approval of its Epidiolex for certain epilepsies, and you can see just how promising investors think this new drug is: GWPH shares have risen 700% since 2013. A dedicated ETF launched last year specifically to track this new sector, called the Horizons Marijuana Life Sciences Index ETF (HMLSF). More mainstream companies like Kush Bottles, Inc. (KSHB) and Aurora Cannabis Inc. (ACBFF) have boomed too as marijuana has gone from taboo to widely accepted by the medical community, and for use recreationally in some regions.

One small, unidentified company developing a new medical tech for a variety of neurological applications, first of all epilepsy, could be poised for a similar dynamic in the coming months or years. NeuroOne Medical Technologies (NMTC) is a small-cap company developing a proprietary, cost-effective new technology for a variety of neurological disorders. Their thin-membrane electrodes came out of the prestigious Mayo Institute, which is also a 10% owner of this newly public company. All told, the technology could address multi-billion-dollar markets, and they're shooting for their first submission to the U.S. FDA - a major event for any health care company - by the end of this year. That should begin to spark investor interest, as successful medical technology companies can be worth hundreds of millions in market value. NMTC may be an attractive high-risk high-reward trade on this investment undercurrent.

Pharmaceutical Companies Know Neurology's Untapped Potential

While new treatments for diseases like cancer have flourished in the last ten years, neurological disorders haven't seen the same kind of development. Most notably, Alzheimer's has been a repeat scene of disappointment, with one failure after another over the years even though almost every large pharmaceutical company and major research institute has thrown money and talent at the disease.

Epilepsy has been a standout, with six new drugs approved in the last 5 years or so - GW Pharma's (GRPW) Epidiolex is only the most recent, which is a big win for the parent company. Epilepsy is one of the more common neurological conditions globally. About 1% of people globally suffer from the disorder, according to some estimates, and there are about 3 million epilepsy patients in the U.S.; only two-thirds will respond to drugs like this. We're talking about BILLIONS in sales potential for these drugs. In fact, Grand View Research believe this should be a $5.5 billion market by 2024.

When Medications Fail, Epilepsy Patients Have Few Options

Anti-seizure medications can successfully treat about two-thirds of all people with epilepsy. In the remaining third who continue to have seizures, doctors start to consider a surgical option.

For what? To try to identify where in the brain a seizure is starting, and possibly to surgically remove that portion of the brain. According to Cochrane reviews, this is successful in about 65% of patients, eliminating or reducing their seizure frequency. It sounds like a no-brainer, but the problem lies in successfully locating the "epileptogenic zone" to be removed.

You see, identifying this part of the brain requires a long, painful and very invasive diagnostic process. Patients first go through an electroencephalogram (EEG), which monitors brain activity to look for parts of the brain where a seizure starts. For some patients, this can be done with electrodes placed on the scalp, but many patients need an "intracranial" EEG where the electrodes are placed right on the brain during an open skull surgery. The electrodes are left in place for days or weeks at a time while doctors monitor brain activity during seizures and not. Finally, the process requires a second surgery for the actual resection or ablation of the epileptogenic tissue.

Bottom line? This is a long process, with patient staying in the hospital with EEG wires sometimes protruding from their skull! It can be painful, and it leaves the patient susceptible to infection, and other secondary illnesses. Most patients don't want to even start.

NeuroOne's Approach Could Solve This And Increase Number of Uses...And Market Opportunity

Enter NeuroOne Medical Technologies (NMTC) and their proprietary electrode technology.

This technology emerged from labs at The Mayo Clinic, one of the most respected health institutes in the world; and the medical center is actually a 10% owner of NMTC stock! The company counts among its co-development partners the Cleveland Clinic, Emory University, and the Wisconsin Alumni Research Foundation (WARF) at UW-Madison.

NeuroOne is pioneering a few new approaches to electrode technology, first with a "cortical" electrode for use during intracranial EEGs. According to company documents, this tech comes with a higher recording resolution of brain activity compared to older approaches and lower risk of inflammation. It may be able to be used without a full open skull procedure, as the company is pursuing a minimally invasive technique.

The company intends to file their first U.S. FDA approval application, called a 510(k) by the end of 2018, which could result an approval decision from the FDA by early 2019. That's a major potential catalyst for any healthcare company, and it would put NMTC on track for their first sales shortly thereafter with this gatekeeper passed.

In development as well are a host of other devices that they will file for approval in the following months/years using similar technology: a "depth electrode" that can be placed deeper in the brain tissue, and a combination diagnostic/ablation depth electrode to rapidly allow neurosurgeons to destroy the affected tissue as soon as it's been identified...in other words, going from two surgeries to one, possibly, and cutting down considerably on the amount of time it takes to diagnose.

An FDA Approval Possibly On the Horizon, What's This Technology Worth?

NueroOne's value proposition is not only to usurp old, clunky technology, but to also expand the current market for intracranial EEGs. According to company estimates, this is about a $112 million market today based on just 16,000 cases each year. Based on an improved product, this number could expand drastically. Mayo Clinic physician data suggest this could be as many as 720,000 cases annually in the U.S. For NMTC, even 5,000 cases at $8,000 each would mean $40 million in revenue, substantial for a company of this size. According to NYU Stern's, publicly traded Healthcare Product companies, like NMTC, have an average price-to-sales multiple of 4.35. On $40 million in sales, that could mean a market capitalization of $174 million, or over 5X of upside with the right execution.

NeuroOne is a high-risk holding as a micro-cap, and investors should understand the risks here. The company could fail to penetrate this market, even with a superior product, or they could fail to finance the business successfully. In either case, the equity could be worthless without proper execution.

In the next 6-12 months, NeuroOne plans to submit their first FDA filing for their cortical electrode, setting up a big potential event for a few months later, when the FDA will make a clearance decision on the device. For public healthcare companies, this is always a major event, and with one or two more devices hot on the heels, NMTC could be a undiscovered gem for 2018 and 2019.

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