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electroCore, Inc. (ECOR) is a commercial stage bioelectronic medicine company pioneering the concept of stimulating the vagus nerve to improve patient outcomes in the treatment of multiple neurological conditions including pain and chronic conditions. The Company’s first marketed product, gammaCore nVNS or non-invasive Vagus Nerve Stimulation (‘VNS) is a reusable medical neuromodulation device for bioelectronic therapy – using electricity without the need of drugs, especially when ingestion, injection or embrocation is not an option. The Company has an extensive intellectual property (‘IP) portfolio of over 200 patents and patent applications worldwide, covering critical areas of its technology, including proprietary signal, treatment methods, non-invasive delivery means, and central mechanisms of action (‘MoA). The Company intends to maintain patent protection with continued developments in its IP with no obligations to third parties.
Briefly going back in time, the Company was founded in 2005 by JP Errico along with Thomas J. Errico, MD, former president of the North American Spine Society (‘NASS), Charles Theofilos, MD, and Peter Staats, MD, former president of the North American Neuromodulation Society (‘NANS), on the premise that neuromodulation could offer potentially safer and more effective treatments across a variety of neurological conditions. The first proof of concept was presented in 2006 and in 2008, the first human studies tested VNS in the emergency room (‘ER) to treat asthma. The Company achieved a technical breakthrough in 2010 with the ability to administer nVNS by delivering a proprietary signal through the skin either the right or the left branches of the vagus nerve in the neck. Passing through the neck and thorax, vagus is the longest cranial nerve with the widest distribution in the body, containing motor and sensory fibers and enabling communication between the brain and the visceral organs of the body. Many important autonomic functions like neurotransmitter levels in the brain and inflammation levels and metabolism in the body are affected by stimulating the vagus nerve.
(Image source: company website)
gammaCore Sapphire is the first FDA-cleared nVNS. It is an easy-to-use, hand-held, highly targeted, multiple-use-per-day device that enables patients to self-administer discrete doses of therapy, alongside existing treatments without drug-like side effects.
The Company is advancing a pipeline drawing on a significant amount of pre-clinical and clinical data generated over the past several decades of research in VNS technologies, and its expertise in nVNS therapy.
(Image source: company website)
gammaCore received CE mark in Europe for primary headache in 2011. Following two pivotal studies initiated in 2015, the U.S. Food and Drug Administration (‘FDA) cleared gammaCore nVNS in April 2017, for the acute treatment of pain associated with episodic cluster headache, the most common type of trigeminal autonomic cephalalgias (‘TAC). Subsequently, the device was FDA cleared in January 2018 for the acute treatment of pain associated with migraine headache, in November 2018 for the adjunctive use for the preventive treatment of cluster headache, and for the preventive treatment of migraine headache in March 2020 for adult patients, and in February 2021 for adolescents 12 to 17 years of age.
In July 2020, emergency use authorization (‘EUA) was granted to gammaCore “Sapphire CV” (nVNS) for treating patients with known or suspected COVID-19 who experience exacerbation of asthma-related dyspnea and reduced airflow. Pivotal trials are in progress for the treatment of gastroparesis and post-operative ileus, while preclinical studies are ongoing for symptomatic improvement in reactive airway disease, and systemic Inflammation. The Company received on 9/14/2021, FDA Section 510((K)) clearance for its label expansion of gammaCore nVNS to include the treatment of debilitating and difficult to treat rare forms of TAC – Paroxysmal Hemicrania (‘PH) and Hemicrania Continua (‘HC) in adults.
gammaCore has received CE marks for EU/EFTA/EEA and UK for the following conditions:
treatment or prevention of symptoms of reactive airway disease (‘RAD), including asthma, bronchoconstriction, exercise-induced bronchospasm (‘EIB), and chronic obstructive pulmonary disease (‘COPD);
acute and/or prophylactic treatment of primary headache (migraine, cluster headache, and HC) and medication overuse headache (‘MOH) in adults;
adjunctive therapy for adults to reduce the symptoms of certain anxiety and depression conditions including panic disorder, posttraumatic stress disorder (‘PTSD), obsessive-compulsive disorder (‘OCD), and major depressive disorder (‘MDD);
adjunctive therapy in the prevention of partial onset and generalized seizures associated with epilepsy in adults;
adjunctive therapy for adults to reduce the symptoms of gastrointestinal (‘GI) motility disorders and irritable bowel syndrome (‘IBS), including nausea, vomiting, bloating/distention, early satiety, and abdominal pain.
electroCore is currently collaborating with investigators in the U.S. on two randomized, sham-controlled clinical trials to further confirm the efficacy of nVNS as a treatment for PTSD. On the IP front, the United States Patent and Trademark Office (‘USPTO) recently issued patent to the Company, relating to “methods for treating the acute symptoms of stroke or transient ischemic attack (‘TIA), a temporary period of symptoms similar to those of a stroke, according to a treatment paradigm based on the application of a transcutaneous, non-invasive electrical impulse or stimulation.”
electroCore has a market capitalization of approximately $42 million on 70.7 million shares outstanding, at last close price of $0.56 on 1/5/2021. The stock has moved down gradually and is at a 52-week low from a high of $3.63 about a year ago. The Company’s initial public offering (‘IPO) in June 2018 had raised net proceeds of approximately $72.5 million at a price per share of $15. On 12/20/2021, the Company received “Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard” from Nasdaq, and has a grace period of 180 calendar days to regain compliance with the rule. The Company may initiate a reverse stock split to cure the deficiency if the stock is not able to maintain a closing bid price of $1+ for at least 10 consecutive days in the grace period.
The Company announced 3Q-2021 financial results on 11/4/2021. Revenue for the nine months ended 9/30/2021 was approximately $3.96 million, while operating expenses were approximately $17.44 million. Net loss per share of common stock – basic and diluted was $0.22. The Company received net proceeds of approximately $18.8 million through a public offering of 20.7 million shares of its common stock in 3Q-2021. Cash, cash equivalents and marketable securities as of 9/30/2021 were $39 million, and is anticipated to provide a cash runway of at least 12 months.
The Company had started commercial distribution in 2H-2017. Revenue has been growing steadily since, registering $0.81M, $0.99M, $2.39M, and $3.5M in 2017, 2018, 2019 and 2020 respectively. Revenue estimate for 2021 is $5.53M, while for 2022 is $9.67M. EPS has improved from $(1.54) in 2019 to $(0.60) in 2020, and is estimated to be $(0.29) in 2021, and $(0.23) in 2022. The Company has been receiving orders from its expanded distribution partners.
There is a risk of reverse stock split if the stock price does not comply with the Nasdaq listing rule in the 180 days grace period.
The Company is an “emerging growth company” but has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(A) of the Exchange Act. As a “smaller reporting company” and “non-accelerated filer” it is subject to reduced public reporting and compliance requirements.
As of 9/30/2021, the Company had an accumulated deficit of over $119 million.
There is a high concentration of revenue sources. During the nine months ended 9/30/2021, 60.7% revenue came from the U.S. Department of Veterans Affairs and Department of Defense, and 25.6% revenue came from the U.K. National Health Service.
electroCore has a pioneering product with patent coverage extending through 2033. Five Wall Street analysts are bullish on average with an average price target of $3.15. On the other hand, there is risk of reverse stock split, and revenue concentration. The Company has a presentation scheduled at the H.C. Wainwright BIOCONNECT Virtual Conference between January 10 – 13, 2022, which should provide some updates regarding their near-term and long-term milestones.
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