Shares of NeuroOne Medical Technologies Corp. plunged nearly 45% and hit a record low on Monday after the U.S. Food and Drug Administration rejected the medical-technology company's application seeking expanded approval of its Evo sEEG electrode.
The FDA last year approved the Evo sEEG electrode technology for less-than-24-hours use for the recording, monitoring and stimulation of electrical signals at the subsurface level of the brain, and NeuroOne had asked the agency to approve use of the technology for less than 30 days.
However, NeuroOne disclosed in a filing with the U.S. Securities and Exchange Commission that the FDA denied the application for expanded use, finding that NeuroOne hadn't demonstrated that the electrode for less-than-30-day use is substantially equivalent to its approved use.
NeuroOne said it plans to appeal of the decision to a higher level within the FDA, which places the submission on hold until a decision is made. The Eden Prairie, Minn., company noted that the process could take up to 60 days from date of the appeal before the agency reaches a decision.
NeuroOne had previously said it was ready to fulfill an initial stocking order to Zimmer Biomet Holdings Inc., its distribution partner, which would have qualified the company for a milestone payment from Zimmer under a 2020 development agreement, and that it expected to be commercial ready with the Evo sEEG electrode in the first calendar quarter of 2022, pending FDA clearance.
The company said it now expects it would need more time as works to pursue FDA clearance, and that it is in talks with Zimmer about milestone payments.
Analysts ay Craig-Hallum Capital Group cut their rating on NeuroOne to "hold" from "buy" and slashed their price target to $2 from $6, citing an opaque outlook.
Craig-Hallum said the FDA appeals process likely stretches any approval into 2023, and that NeuroOne's pipeline and its relationship with Zimmer "will be in deep question."
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