Mayo’s Collaboration with Startup NeuroOne Includes an 11 Percent Stake
Mayo Clinic has taken an 11 percent ownership stake in the parent firm of Eden Prairie-based medtech startup NeuroOne Inc. as they collaborate on developing a new implantable system to treat epilepsy, Parkinson’s disease and other brain disorders, according to newly filed financial documents.
NeuroOne was founded in October to commercialize research developed at the University of Wisconsin and being advanced by Mayo. It revolves around a new kind of “thin film” electrode technology which, when implanted into the brain, is capable of quickly detecting irregular brain activity down to a single neuron, thus pinpointing the source of seizures and tremors.
The young company made news in March when it was announced that FundRx Inc., an early-stage health care venture capital firm, had participated in a $1.2 million seed financing round.
Then, in late July, a series of financial transactions resulted in the privately held startup being acquired by an entity known as NeuroOne Medical Technologies Corp. The latter was created this year when NeuroOne’s founders reorganized an existing publicly traded shell company, Original Source Entertainment Inc. (OTC: OSOK), into a parent firm for their medtech enterprise and renamed it to reflect the new focus.
NeuroOne’s beneficial owners thus had their shares converted to publicly traded OSOK stock, and the resulting U.S. Securities Exchange filings revealed the details of the company’s relationship with Mayo: It includes an extensive research collaboration and an 11-percent ownership stake in the reconfigured parent entity.
According to the filings, NeuroOne’s product combines the detection and “deep brain stimulation” treatment of irregular brain activity that leads to epileptic seizures and tremors associated with Parkinson’s disease.
Under its early-stage, prototype system, advanced electrodes using a novel “thin film” technology developed at the University of Wisconsin are placed in the brain using minimally invasive techniques. The electrodes are so sensitive that they detect the sources of even tiny levels of irregular brain activity.
The system combines those detection capabilities with treatment options that include deep brain stimulation (DBS) and ablation procedures – all carried out using the same implanted depth electrodes. The treatments target specific areas of the brain to counter Parkinson’s, essential tremor, dystonia and chronic pain. Alzheimer’s is another indication for which DBS is being evaluated.
The company says its market opportunity lies in the fact that its thin film technology has a smaller footprint with many more electrodes than current options; it can be implanted utilizing a “dime-sized” hole in the skull versus a full craniotomy; and it is sensitive enough to detect single neuron brain activity, allowing for more rapid detection of irregular activity versus an average of 2 ½ weeks with the currently available technology.
NeuroOne says the system is so sensitive that Mayo doctors in early, pre-clinical evaluations have even been able to document pre-seizure activity (micro-seizures), thus detecting seizures before they occur.
The SEC filings indicated Mayo’s role in the effort is to refine and further develop the UW-licensed technology, reflected in a formal collaboration agreement. Under its terms, NeuroOne agreed that in consideration for Mayo’s research efforts, it would make a cash payment to the clinic of approximately $92,000 by Sept. 30.
Also, prior to the closing of the acquisition, NeuroOne Inc. issued Mayo 50,556 shares, which have now been converted into 859,976 shares in the publicly traded parent company, comprising an 11 percent ownership stake.
Finally, Mayo will be paid a royalty equal to a single-digit percentage of NeuroOne’s product sales.
The company is led by president and CEO David Rosa, who previously held the same roles at Sunshine Heart Inc., now known as CHF Solutions (Nasdaq: CHFS), a publicly held, early-stage medical device company. Before that, he served as CEO of Milksmart Inc., a company that specializes in medical devices for animals, and for four years was the vice president of global marketing for cardiac surgery and cardiology at St. Jude Medical.