Accelerated protocols could be a game changer

Outlook | 19 August 2021

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Nexstim’s H121 report highlights its strategic focus is firmly on exploiting the commercial potential of the SmartFocus NBT system in depression, where its unique navigation capabilities are a clear differentiator. The strengthened balance sheet removes near-term uncertainty and allows investment in generating compelling clinical data. Priorities are to maintain the growth momentum of both NBT and NBS, particularly in the key US market, and to undertake trials to position NBT as the system of choice for the emerging accelerated therapy protocols in severe depression. Reflecting the commercial and financial progress achieved in the past year, we raise our valuation to €59.1m (€8.84/share).

Year-end: December 31201920202021E2022E
Revenues (€m)
Adj. PBT (€m)(6.8)(4.2)(3.9)(1.3)
Net Income (€m)(6.8)(4.1)(3.8)(1.3)
EPS (€)(0.25)(0.02)(0.71)(0.19)
Cash* (€m)
EBITDA (€m)(6.0)(3.0)(3.4)(1.1)
Source: Trinity Delta. Note: *Our cash forecast assumes receipt of €4m in additional funding in FY22
  • Building momentum in NBT  Nexstim’s NBT is the only FDA approved transcranial magnetic stimulation (TMS) device with built-in navigation. This provides accurate, reliable, and reproducible treatment, that translates into improved patient outcomes and economics. It is approved for severe depression (US and Europe) and chronic pain (Europe only). Continued clinical acceptance, notably in the US, helped H121 net sales growth of 83.3% to €2.96m (H120: €1.61m), a 50.8% lower operating loss to €0.9m (H120: loss of €1.8m), and a net loss of €0.9m (H120: loss of €1.2m).
  • Accelerated protocols are ideal for NBT High accuracy and reproducibility are the cornerstone for emerging accelerated therapy protocols, factors that are major differentiators for NBT. If promising results seen in early pilot studies in depression are borne out in larger, pivotal trials then a new and distinct TMS market could open up for treatment of hospitalised severe depression patients who may be suicidal. Although not without risks, successful clinical outcomes could transform Nexstim’s medium-term outlook as it seeks to exploit this potential new market.
  • Strategic objectives for 2021 Management aims for the remainder of this year are profitable revenue growth and careful management of operating expenses; reporting of first results for the accelerated protocol pilot studies (and planning for further trials with more patients); development and execution of a deeper profitable partnership business model in key therapy markets; and reaching a MDD patient data registry of over 200 completed treatment sessions.
  • Valuation update to €8.84/share Our DCF-based rNPV model values Nexstim at €59.1m (equivalent to €8.84 per share or €8.13 fully diluted). Execution on strategic priorities could materially increase this. Ahead of further pilot study data, we conservatively assess that the accelerated iTBS protocol severe depression opportunity could add €8.9m (€1.22/share) to our core valuation.


19 August 2021

Market Cap€38.5m
Enterprise Value€36.2m
Shares in issue6.67m
12 month range€1.57-9.63
Free float65.6%
Primary exchangeHelsinki
Other exchangesStockholm
Corporate clientYes

Company description

Nexstim is a targeted neuro-modulation company that has developed a proprietary navigated rTMS platform for use in diagnostics (NBS) and therapeutics (NBT). NBS is used in planning brain surgery while NBT is focused on depression and chronic pain. FDA approval for depression was given in 2017, and the focus is on commercial roll out in the US, Europe and Asia.


Lala Gregorek
+44 (0) 20 3637 5043

Franc Gregori
+44 (0) 20 3637 5041

Investment case

Nexstim is a Finnish medical technology company that spun out of the Helsinki University of Technology in 2000. It is focused on the commercialisation of its proprietary neuro-navigation transcranial magnetic stimulation (nTMS) technology for non-invasive diagnostic and therapeutic applications in severe brain diseases and disorders. The NBS (Navigated Brain Stimulation) system is a diagnostic tool for pre-surgical brain mapping (PSM), while the NBT (Navigated Brain Therapy) system is CE Marked for the treatment of depression (2014) and chronic pain (2016), receiving FDA approval for the former in 2017. The business has concentrated on the significant opportunities in treating depression since 2018, following two failed Phase III trials in stroke (NICHE in 2016; E-FIT in 2018). In 2020, Nexstim embarked on its 2020-24 corporate strategy. The company listed on NASDAQ First North Finland and First North Sweden in 2014 in a €15.3m IPO, subsequently raising c €36.6m in equity, most recently €6.6m in April 2021.


Our Nexstim valuation, based on a risk-adjusted DCF model for the three key revenue streams and employing conservative assumptions, is €59.1m (€8.84 per share, €8.13 fully diluted ), with NBS (Diagnostics) contributing €7.2m, NBT (Therapy) in depression €42.6m, and NBT in chronic pain €7.0m. Several near- and medium-term value inflection points, including continued commercial traction, and new product opportunities, could unlock further value. In particular, successful pilot and subsequent studies for NBT accelerated protocols in depression could materially increase our core valuation, conservatively adding a further €8.9m.


Nexstim’s revenues are on an upward trajectory reflecting growth in the Therapy business as more NBT systems are installed. Recurring revenues have risen, and the sales mix is improving with a greater contribution of high-margin aftersales. Cost control remains a focus, albeit balanced with investment to secure profitable growth from both NBT and NBS. Guidance is for net sales growth and a net loss for FY21. End-June 2021 cash of €6.7m provides sufficient working capital to end-2022, although additional funding may be required depending on the scope of future trials for accelerated TMS protocols.


As with all medtech products, managing regulatory matters, gaining adequate reimbursement, and achieving meaningful market adoption are key factors. Addressing key markets (MDD, the US) requires investment into marketing as well as robust and compelling clinical and health economics outcomes data to support registration(s), attractive pricing, provide competitive differentiation, and drive adoption. The major near-term sensitivity is successful strategic execution, particularly with respect to US commercialisation and development of accelerated therapy protocols, balanced with cost management, and securing funds to deliver in the latter years of its five-year profitable growth strategy. Near-term, pandemic impacts may slow progress of clinical trials and the sales trajectory; longer-term the mounting mental health crisis may increase demand for NBT therapies.

Nexstim: navigation is the key to novel protocols

Nexstim’s positive H121 results highlight the continued building of commercial momentum in both NBS (brain mapping) and NBT (therapeutic) applications. The performance reflects effective implementation of the initial stages of the 2020-24 strategic plan. Near-term organic growth will come from increased utilisation of both systems’ installed base; with wider applications (such as motor and language mapping) and better reimbursement codes for NBS, and the generation of supportive data from the growing patient registry evidence in MDD (major depressive disorder) driving adoption with NBT. However, it will be the novel accelerated rTMS therapy protocols that offer the potential for disruptive shifts in depression therapy and NBT’s unrivalled navigation accuracy could be a decisive factor in the study outcomes. April’s oversubscribed €6.4m (net) raise means Nexstim is funded through several expected value inflection points. We value the company at €59.1m or €8.84 per share (€8.13 fully diluted).

2021 will be the first full year of Nexstim’s five-year growth and profitability focused corporate strategy for both its Diagnostics and Therapy businesses. Strong H121 performance, despite COVID-19 headwinds, provides reassurance the plan’s implementation is delivering commercial traction. While we expect the NBT business to be the major revenue growth driver, efforts at optimising the NBS pre-surgical mapping business are bearing fruit. The strength of the clinical evidence is supporting more, and better, reimbursement codes in the key US market, while innovative additional applications (notably motor and language mapping) should result in continued organic revenue growth.

The NBT business is benefitting from the compelling evidence generated through the growing patient registry database for its clinical efficacy, and economic value, in treating MDD (major depressive disorder). It is the accuracy and reproducibility of its proprietary SmartFocus navigation that delivers best-in-class mapping and this could underpin its potential in the emerging accelerated TMS treatment protocols. These more intensive and faster treatment processes rely on consistently accurate navigation. If the results of the early pilot studies are borne out in the planned larger, pivotal trials this could represent a significant commercial opportunity as more depression indications, including inpatient therapy, become addressable. The initial data from the ongoing pilot studies in depression is promising, with the chronic pain data expected before end-2021.

April’s successful €6.4 (net) equity raise has significantly strengthened Nexstim’s balance sheet and provides in a cash runway through to end-2022. This more solid foundation allows the investment for clinical data to support the existing NBS and NBT indications and, importantly, explore the accelerated TMS protocols. If the larger trials confirm the clinical potential of the accelerated protocols, then the TMS landscape will shift materially towards greater targeting accuracy, and Nexstim’s NBT system as its proven navigation becomes a key treatment enabler. Although we have not included this element in our current valuation, we conservatively believe it to be worth an additional €8.9m or €1.22 per share on our core valuation of €59.1m or €8.84 per share.

Nexstim’s TMS technology in a nutshell

Nexstim’s navigated TMS (Transcranial Magnetic Stimulation) technology platform is based on proprietary e-field navigation capabilities which enable highly accurate localisation and visualisation of a targeted area of the brain. Importantly, this can be reproduced in a reliable and dependable manner (across operators and treatment centres) and has several clinical applications.

Two main markets are being addressed through Nexstim’s two related, albeit  distinct, businesses: Diagnostics and Therapeutics (Exhibit 1). The diagnostics division comprises the Navigated Brain Stimulation (NBS) system which is used, and extensively validated, in pre-surgical mapping (PSM) of the brain. Current applications for NBS generate a stable, and rising, revenue stream, although Nexstim is now exploring wider applications (for motor and speech mapping) and new prototype development, which, coupled with gaining US reimbursement codes, would sustain double-digit growth through the next decade.

The Navigated Brain Therapy (NBT) system has been optimised for therapeutic use and is used clinically in indications such as major depression and chronic pain. NBT is expected to be the key near- and medium-term growth driver as the company seeks to leverage compelling patient registry data, embarks on a deeper profitable partnership business model in select therapy markets, and explores  accelerated treatment protocols to expand the addressable patient population and open additional market opportunities.

Two ongoing pilot studies exploring the potential of new accelerated therapy protocols in the hospital setting for severe depression and chronic neuropathic pain could be the first step to entering a new and attractive inpatient market.

Exhibit 1: Unique navigated TMS system for diagnostic and therapeutic applications
Source: Nexstim, Trinity Delta

Nexstim’s inbuilt SmartFocus navigation enables highly accurate mapping of the brain which ensures rapid, reliable, and reproducible treatment. The consistency of personalised treatment differentiates it from its TMS peers and materially improves clinical outcomes in both diagnostic and therapeutic applications. The health economic benefits include improved patient outcomes (higher remissions, lower dropouts) and faster treatment times resulting in material cost advantages.

A sizeable and growing body of real-world evidence is now in place to support use of Nexstim TMS systems which, coupled with strong KOL (key opinion leader) endorsement and the company’s efforts to continue to raise awareness of the benefits of its technology, should increase market penetration and the overall market opportunity.

Nexstim’s 2021-24 strategic plan

Nexstim outlined its five-year strategic plan for 2020-24 in August 2020. At its heart are several objectives to drive revenue growth and improve profitability by generating compelling data-led evidence and demonstrating improved clinical outcomes for patients and material health economic benefits for payors. Despite being early in its execution, and ongoing COVID-19 impacts, the new strategy is already bearing fruit with the company successfully achieving improved net revenue and lower net losses for both FY20 and H121.

Three key achievements to date have been: (1) decreasing the operating loss through a focus on profitable revenue growth and prudent investment and cost management; (2) securing additional funding via an oversubscribed €6.4m (net) equity raise; and (3) initiation of new pilot studies with accelerated treatment protocols in severe depression and chronic pain. Progress has also been made with building the NBT patient data registry in depression and with discussions to establish a deeper partnership model in key therapy markets.

Nexstim has mapped out a strategy to better exploit existing and potential commercial opportunities for diagnostic or therapeutic application of its nTMS technology to brain diseases/disorders, with both current and new customers. Leveraging the existing installed base (c 190 NBS systems, 33 NBT systems) through increased utilisation should drive near-term organic growth, capturing a rising high margin recurring revenue stream. Additionally, this should also expand the patient registry for NBT in major depressive disorder (MDD). Nexstim is targeting >200 completed NBT treatment sessions in 2021, which would provide further evidence of NBT’s competitive advantage with respect to improved clinical and health economics outcomes.

Technological development and new client acquisition (including with strategic partners) could unlock further revenue growth as Nexstim leverages use of its TMS platform into broader indications and treatment settings. A key aspect of this is the opportunity afforded by novel accelerated rTMS (repetitive TMS) therapy protocols in development for severe depression and chronic neuropathic pain. The NBT platform is well positioned to drive a disruptive shift in depression treatment (and its delivery) using accelerated treatment protocols, where greater accuracy is critical and Nexstim can ensure precise, reliable, and reproducible navigation.

Nexstim is running two pilot studies evaluating such protocols in the hospital inpatient setting for severe depression and chronic neuropathic pain, which should, if promising, guide design of larger double-blind multi-centre trials. Initial data in severe depression is encouraging; pain data is expected later this year. Clinical validation of accelerated protocols in these indications has the potential to open significant new market opportunities for the NBT platform.

NBS (diagnostics): an important financial contributor

NBS (Navigated Brain Stimulation) provides Nexstim with a dependable, high-margin revenue stream through its global installed base of c 190 systems at leading university and research hospitals. The NBS system, launched in 2003, is the only nTMS system that is FDA cleared and CE marked for the pre-surgical mapping (PSM) of the speech and motor cortices of the brain.

The value of NBS in PSM of the brain is acknowledged, with its greater mapping precision allowing surgeons to be more aggressive in tumour resection, thus improving treatment outcomes. For example, the NBS system has demonstrated a 46% increase in progression free survival in patients with low grade gliomas vs only using the current gold standard.

Initially, marketing efforts were primarily targeted at universities and teaching hospitals with a strong KOL presence in neurosurgery and radiology. Nexstim has had considerable success with installing NBS systems at numerous world-renowned cancer centres (eg Mayo Clinic, Karolinska, MD Anderson, Charité, Great Ormond Street Hospital, and UCSF). So far in 2021 Nexstim has received several further NBS orders from university hospitals in the US (California, South Carolina) and Germany.

NBS system pricing is c €200k-300k (dependent on functionality and support equipment), which makes it a capital purchase for most buyers and a longer sales cycle than is typical with NBT. Nevertheless, the NBS division is high margin, despite the relatively small volume of consumables used in the diagnostic setting (limited to replacement coils and, somewhat more frequently, trackers).

NBS: organic growth and new applications

Nexstim’s strategy for growing the profitability of the NBS business is two-fold. Organic growth could be achieved through establishing new US reimbursement codes for PSM, leveraging the existing installed base, and securing new sales direct (particularly in the US and Germany) as well as potentially via long-term strategic distributor partnerships to expand the current commercial reach.

In addition, there is scope to further develop the NBS technology. Motor and language mapping could be applied to wider applications, with supportive research published in Cancers (January 2021), and pre-procedure planning ahead of other neurosurgical procedures. In August 2020, Varian was acquired by Siemens Healthineers for $16.4bn, endorsing the role that data analysis is increasingly playing in decision making in the surgical environment. Nexstim has identified pre-procedural planning for difficult brain tumour and epilepsy patients, and planning for patients undergoing radiotherapy for brain tumours, as key areas for development.

Nexstim has taken its first step in expanding the utility of the NBS system by securing a prototype research project, worth €0.9m, with an anonymous US-based research foundation to develop further novel applications for stimulating and diagnosing the brain. The deal includes the development and delivery of two prototype SmartFocus nTMS systems, which will be sited in two unnamed institutions, who will conduct the research, with Nexstim also providing technical support as required. Delivery of these systems, and revenue recognition, is expected to occur in H221.

Our current DCF-based valuation of the NBS PSM business is €7.2m (€1.07 per share), which does not yet include possible incremental applications until these have been validated and there is greater commercial visibility.

NBT (therapy): attractive and broader opportunities

Therapeutic use of TMS is a substantially larger market opportunity than PSM. Nexstim’s navigated TMS platform, known as the ‘SmartFocus’ Navigated Brain Therapy (NBT) system, has been optimised for therapeutic applications. The SmartFocus technology precisely maps the motor cortex, using proprietary e-field modelling to account for distortion caused by bone and brain tissue, accurately visualising the exact location, orientation, and magnitude of stimulation.

In Europe, the NBT platform is CE marked for major depressive disorder (MDD) and chronic pain. In the US, it was FDA approved for the treatment of MDD in December 2017, with US launch following in May 2018. The NBT system is widely reimbursed in the US. It is also the only FDA approved device with inbuilt navigation ensuring accurate, reliable, and reproducible personalised treatment.

NBT: registry data to help leverage installed base

Within three years Nexstim has established an installed base of 18 NBT systems in the US. The global installed base is currently 33 NBT systems across three continents focussed on primary care (outpatient) centres in clinics and hospitals. The COVID-19 pandemic has slowed the NBT growth trajectory as movement restrictions have limited the number of treatments carried out and commercial activities were impacted by associated cost saving programmes. However, Nexstim remains well positioned to grow recurring revenues through the installed base and from placing new systems with new and existing TMS providers.

Central to plans to drive better utilisation and expand the existing NBT base is the leverage of clinical evidence demonstrating that NBT use in MDD can improve both patient outcomes and patient retention. Patient registry data is an important facet of this, with Nexstim targeting over 200 completed NBT therapy sessions for MDD in 2021. The latest US registry data, reported in June 2021, from the first 187 MDD patients to complete NBT treatment showed 50.3% clinical remission and 77.0% clinical response was achieved at the end of the outpatient treatment course. This compares favourably with a historic rTMS meta-analysis in MDD (remission rates of 26.5-28.7% and response rates of 41.5-56.4%) as well as registry data compiled by Neuronetics in >3,800 MDD patients following treatment with its Neurostar System (the first FDA approved rTMS system) which showed remission of 29.7-36.2% and a 67.2-70.4% response rate.

The commercial strategy for NBT centres around focused investment in sales growth and developing Nexstim’s service business. The company sells direct in focus markets (including the US), via key account managers supported by application specialists, and is developing a mixed distribution model in other geographies such as Europe and Asia. A targeted customer strategy in regions where TMS is already established and where there are high-volume psychiatric practices has helped Nexstim gain traction in MDD and grow revenues by reinforcing strong KOL networks, generating data to feed into patient registries, raising market awareness of its NBT system and conveying its benefits over alternative TMS systems. A key driver of uptake, and a potential shift from existing treatment practices to increased adoption, is growing understanding of the NBT value proposition especially in terms of improved patient outcomes and economic benefits to clinicians.

Our core NBT valuation in treating MDD is €42.6m (€6.38 per share), based on achievement of peak sales of €22.4m in 2028, which should be attainable through the combination of targeted sales in direct markets and motivated distributors in the other territories. For the NBT chronic pain indication, we forecast peak sales of €25.8m by 2033 and a success probability of only 25% (reflecting the early nature of the clinical studies) resulting in a valuation of €7.0m (€1.05 per share).

NBT: accelerated protocols could be pivotal

Nexstim is also seeking to enter a new market segment: accelerated therapy protocols to treat severe depression which will target psychiatric hospitals and those with inpatient psychiatric departments. These patients are distinct from the MDD patients currently treated primarily in outpatient clinics.

NBT’s highly precise navigation means it is well suited for use in intensive treatment protocols such as the three-minute iTBS (intermittent theta-burst stimulation). Stanford University’s SAINT protocol has been used to explore this concept, delivering 86.4% clinical remission in severe depression. Nexstim has embarked on two investigator-sponsored pilot studies at university hospitals exploring novel accelerated rTMS therapy protocols in severe depression (Kuopio University Hospital) and chronic neuropathic pain (Helsinki University Hospital). The data from these studies should determine whether NBT can deliver improved clinical efficacy in such challenging, highly treatment refractory patient groups, as well as guiding next steps for further development, clarifying cost and timelines. Successful outcomes in clinical studies exploring accelerated treatment protocols in severe depression and chronic pain could materially shift the rTMS world towards greater targeting accuracy.

We conservatively assess that the iTBS protocol MDD opportunity could add an incremental €8.9m (€1.22 per share) to our core valuation, based solely on the placing and use of NBT systems for primary treatment in hospitals (ie not factoring in potential revenues from outpatient maintenance therapy) patients in the outpatient setting) and assuming reimbursement in line with conventional TMS therapy.

Therapeutic opportunities in depression and pain

Several important clinical and commercial considerations underpin Nexstim’s focus on depression, in particular on Major Depressive Disorder (MDD). Depression remains one of the most widespread and debilitating forms of mental illness despite major pharmacological advances, with the WHO estimating that more than 260m people worldwide are affected. It is characterised by a variety of symptoms (behavioural, affective, cognitive, and somatic) and a high risk of relapse and/or recurrence, representing significant health system and economic burdens.

First-line therapy is antidepressant medication, typically SSRIs (selective serotonin reuptake inhibitors), prescribed by a primary care physician, with or without psychotherapy. However, antidepressant drugs have limitations associated with both their efficacy and side effect profiles. Data from the Sequenced Treatment Alternatives to Relieve Depression (STAR*D) study showed that likelihood of remission drops with each new medication attempt (from 28% remission from first-line therapy to c7% with three prior treatment failures), while discontinuation rates due to side effects increase with each new treatment attempt. Referral to a psychiatrist occurs after treatment failure(s) and it is estimated that 15-40% of all MDD patients are treatment resistant (ie refractory to any pharmacological therapy), with periods of remission and relapse common over a lifetime. Consequently, there is a need for alternative treatment modalities along the continuum of patient care (Exhibit 2).

Exhibit 2: MDD patient continuum of care
Source: Trinity Delta, Neuronetics  Note: * ECT (electroconvulsive therapy) may be used earlier in the patient continuum of care in patients experiencing catatonia, acute suicidal behaviours, or psychotic symptoms; ** TMS may be used at any point along the continuum of care following one or more failed treatment attempts

The addressable market for treatment resistant depression is around 6m patients (Exhibit 3) but is growing rapidly. It is acknowledged as a leading cause of disability, with high levels of morbidity and mortality, and this is reflected in the various therapeutic strategies used, including pharmacological augmentation (monoamine oxidase inhibitor, MAOI, therapy) or invasive brain stimulation techniques (such as Vagus Nerve Stimulation or VNS, and Electroconvulsive Therapy, ECT). However, since first FDA approval of rTMS in 2008 (Neuronetics’ Neurostar focal iron core coil TMS platform), TMS is increasingly gaining traction (and is reimbursed) as a second-line therapy in Europe and the US.

Exhibit 3: Nexstim business opportunity in major depressive disorder
Source: Nexstim    Note: 2 = PMSI Consulting analysis, expert interviews and estimates

Use of rTMS in depression therapy

Treatment with rTMS usually comprises daily out-patient sessions lasting about 30 minutes, typically for two to six weeks. The treatment process first involves localisation of the left dorsolateral prefrontal cortex (DLPFC), and then delivery of a magnetic pulse. Use of rTMS enables stimulation of the left DLPFC of the brain without the seizures or risks associated with ECT, nor the potential side effects/risks of pharmacological augmentation. The DLPFC is primarily associated with cognitive or executive functions, such as the maintenance and manipulation of working memory, intention formation, goal-directed action, abstract reasoning, attentional control, and emotion. The reappraisal and suppression of negative affect is believed to be a protective mechanism against depression, in other words depression is associated with abnormally low levels of left DLPFC activity.

rTMS has been validated extensively and is shown to be highly accurate and clinically effective in mapping the cortical motor areas in the real world as well as the more rigorous clinical setting. Remission rates are 30-40% and the effect duration is comparable with other interventions and medications. Importantly, rTMS is a simple and straightforward outpatient treatment so can be used in an office setting, without any need for anaesthesia or fear of serious adverse effects.

The safety benefits and relative efficacy of TMS, coupled to the simplicity of application, have helped rTMS become an accepted treatment modality for MDD; however, there are also limitations. These primarily concern variability in targeting and stimulating the DLPFC both between patients and within individual patient treatment sessions. Most TMS approaches typically depend on a simplistic anatomical approach – the ‘5cm rule’ – which fails to take into consideration the wide inter-individual variations in brain morphology, which case studies have shown can be quite significant. Within individual patient treatment regimes, consistently achieving accurate positioning over repeated imaging procedures has also been problematic. This is also associated with practical limitations such as low precision, high labour intensity, and often also a need for higher levels of operator skill, all of which can translate to poor target localisation.

Such variations in targeting underline the need for accurate navigation as part of each patient’s treatment protocol, which could materially improve treatment outcomes. This is where Nexstim’s NBT technology has a clear competitive edge over other TMS devices as it can target the DLPFC 100% of the time vs 30% with other TMS approaches. The SmartFocus technology is able to precisely map the motor cortex, using proprietary e-field modelling to account for distortion caused by bone and brain tissue, and accurately visualising the exact location, orientation, and magnitude of the stimulation. The treatment process (Exhibit 4) first involves target localisation (hence Nexstim’s record in PSM is highly relevant), followed by delivery of a precise and consistent magnetic pulse. Accurate navigation and the reproducibility of the process with Nexstim’s NBT device should improve outcomes, and early indications are that the benefits of accurate navigation are readily understood by clinicians.

Exhibit 4: Nexstim SmartFocus TMS workflow
Source: Nexstim

The competitive rTMS landscape

The competitive landscape for non-invasive rTMS remains the domain of smaller, and more specialised, players (Exhibit 5), unlike the invasive neuromodulation market which is dominated by large medical device companies. The FDA first authorised TMS for depression in 2008, approving Neuronetics’ Neurostar focal iron core coil platform as a de novo device with a standard 37.5-minute treatment protocol. Neurostar was the predicate device for 510(k) approvals of successive TMS systems in 2013 (BrainsWay’s H-Coil), 2015 (Magstim’s Horizon, MagVenture’s MagVita), 2017 (Nexstim’s SmartFocus NBT), and 2018 (Mag&More’s Apollo TMS).

The first two rTMS systems to be FDA approved for MDD have maintained market leading penetration, in part assisted by funding and technology setbacks experienced by some of the smaller TMS companies. Neuronetics (NASDAQ: STIM) has a 35-40% market share, with over 900 active sites and having completed over 4m treatment sessions in over 110k MDD patients. Second placed BrainsWay (TASE and NASDAQ: BWAY) has an installed base of >680 systems and indicates that it has treated >100k patients with over 2.5m individual TMS sessions but does not break this down between its three approved indications: MDD, obsessive compulsive disorder, and smoking addiction.

Subsequent FDA approval of shorter therapy protocols for rTMS has provided an opportunity for some of the smaller players to regain a technological edge. These protocols include the 19-minute Dash (involving shorter periods between pulse sequences, thus compressing overall treatment time) and the three-minute iTBS (intermittent ThetaBurst stimulation, a patterned form of rTMS requiring less time and lower intensity to administer, first approved in 2018). The SmartFocus NBT system secured FDA approvals for both shorter protocols in 2019.

Exhibit 5: Competitive landscape for TMS in MDD
Source: Trinity Delta, Company websites    Note: iTBS = intermittent ThetaBurst stimulation; OCD = obsessive compulsive disorder; market cap as of close of business 16 August 2021

Typically, rTMS consists of 20-30 sessions of 37.5-minute duration, five days a week for five/six weeks whereas with iTBS each session is around three minutes. Clinically iTBS has been shown to be comparable to rTMS, but with clear patient benefit and, importantly, cost and productivity advantages for the clinic.

Interestingly, both Neuronetics and BrainsWay have lagged other TMS companies in getting iTBS protocol approvals from the FDA (granted in November 2020 and April 2021 respectively). We also note that NeuroStar is a non-navigated system, instead it employs patented ‘contact sensing’ to alert the physician that the stimulating coil has lost contact, while BrainsWay’s H-shaped coil stimulates more broadly and thus is incompatible with navigation.

Game changing potential of accelerated protocols

The ability to deliver iTBS is integral to accelerated rTMS protocols that are under evaluation by several academic groups, most notably Stanford University. Accelerated TMS involves the delivery of multiple TMS sessions per day and a shorter overall total treatment duration of five days. Stanford University has pioneered a programme known as SAINT or Stanford Accelerated Intelligent Neuromodulation Therapy. SAINT aims to improve response rates within a simpler and easier to deliver protocol through a three-step approach: treating patients with multiple sessions per day at optimally spaced intervals; applying a higher overall pulse dose of stimulation; and, most importantly, precision targeting of the left DLPFC to subgenual anterior cingulate cortex (sgACC) circuit.

Impressive results were reported in the American Journal of Psychiatry (April 2020) from an initial open-label 22 patient study where SAINT achieved an 86.4% remission rate. These preliminary findings need corroboration by a double-blind placebo (sham treatment) trial, where a positive outcome would support the use of TMS in a broader range of depression indications (including more severe and treatment resistant depression), including addressing the inpatient market.

Supporting investigator sponsored NBT pilot studies

The accuracy of Nexstim’s SmartFocus navigation could provide the precision and reproducibility required for clinical success of the novel accelerated rTMS therapy protocols currently being evaluated in development for severe depression, as well as their future application to other hard to treat indications such as chronic pain. Success would open sizeable new treatment opportunities for the NBT platform.

Nexstim is currently supporting two separate investigator-led pilot studies at Finnish university hospitals which are exploring accelerated iTBS protocols in severe depression and chronic neuropathic pain, respectively. Both studies began in Q420, and due to delays resulting from COVID-19 restrictions, the chronic neuropathic pain trial will render data in later in 2021. Encouraging results would prompt further evaluation and guide the format of a future double-blind, sham-controlled, multi-centre trial. In parallel, Nexstim has been granted a €0.4m R&D loan from Business Finland, to develop and optimise the SmartFocus nTMS system for use in accelerated iTBS protocols. These efforts should complete during H221 and will likely be ready for use in the potential multi-centre trial.

Depression: pilot study sees promising results

The pilot study in severe depression at Kuopio University Hospital uses the SmartFocus nTMS system with an accelerated iTBS protocol to compare the responses of ten patients on a regimen of multiple daily sessions over five days against those seen in ten patients undertaking conventional TMS. Encouraging initial data were reported in March 2021, at which point seven of the ten patients treated with the accelerated iTBS protocol had completed at least five weeks of the planned 12-week follow up. The complete study results are expected to be presented at a future scientific meeting.

To ensure patient safety, patients had a shortened treatment session; no study discontinuations or serious adverse events issues had occurred. All ten patients showed improvement of symptoms on the clinician administered Hamilton Depression Rating Scale (HAMD-17) outcome measure at the end of treatment (mean decrease in score from baseline 37%, p<0.001). 10% had achieved clinical remission, and 30% a clinical response (defined as >50% improvement on baseline HAMD-17). Of the seven patients having completed five-week follow up, 29% were in remission and 43% had shown a clinical response. At the start of treatment eight patients reported history of suicidal ideation, with this reported by only one at the end of treatment.

Having established the value of Nexstim’s accelerated iTBS protocol in severe depression, the next step is to further develop and intensify the protocol for subsequent trials with an increased number of patients. Ultimately, to support an FDA filing, we expect future studies to include a double-blind, sham controlled study carried out across multiple centres in the US and Europe, with at least 100 patients in the active arm. It is likely that further funds to support such a study would be beneficial.

Severe depression: opening a new inpatient opportunity

At present no TMS device has received FDA approval for patients with ‘suicide plan or recent suicide attempt’. As highlighted earlier, TMS in the outpatient setting has a long treatment duration, typically for five days per week over six weeks, which means it is unsuitable for suicidal MDD patients who have been hospitalised. In the US c 650 psychiatric hospitals, or hospitals with inpatient psychiatric units, treat an estimated 160k such inpatients annually. Hospital inpatients with severe MDD and possibly suicidal ideation are often refractory to one or more pharmacologic therapies and are often candidates for ECT (electroconvulsive therapy), or ketamine, both of which have major drawbacks.

ECT is a highly effective treatment of last resort for treatment resistant MDD but is associated with notable cognitive side effects and remains the most stigmatized treatment available in psychiatry. Despite this, c 100,000 patients receive ECT annually in the US alone. Treatment consists of six to twelve sessions at a rate of two to three per week, requires a general anaesthetic and the patient cannot work or drive. Direct costs for ECT range between $10k to $20k per treatment.

FDA approval of an intranasal formulation, esketamine (Spravato, Janssen), in March 2019 brought use of ketamine for treatment-resistant depression more into the mainstream, even though IV ketamine has been used off-label for many years. Unlike other antidepressant drugs, it does not have a delayed onset of action; a single dose can produce rapid and robust effects on reducing symptoms, including suicidal ideation, but dissociative symptoms are a major side-effect.

For rTMS to become applicable to the hospital setting, a shorter more intensive accelerated treatment protocol is needed, and such a high intensity TMS protocol would likely require superior precision. The ability of the SmartFocus NBT system to accurately and reproducibly stimulate the DLPFC, is both a key differentiator over other TMS systems approved for use in treatment resistant MDD and could be a significant competitive barrier should the NBT system be approved for the treatment of severe MDD in hospitals.

Chronic neuropathic pain: pilot study ongoing

The pilot study in chronic neuropathic pain (CNP) is ongoing at Helsinki University Hospital using an accelerated iTBS protocol in five to ten CNP patients who have not benefitted from the standard 10Hz rTMS treatment targeted to the motor cortex as typically employed at that centre. Nexstim’s latest progress update confirmed that several patients have completed treatment, but due to pandemic-related delays, treatment is expected to continue during Q321, with top line results released shortly after completion in late-2021.

Nexstim has previously shown encouraging results in CNP from an exploratory 39-patient randomised, single-blind (patient), cross-over Phase II study at The Walton Centre, Neuroscience Research Centre, Liverpool. One week post-treatment, 56% of patients in the NBT arm reported a 15% or greater reduction in pain (as measured by a standardised pain diary) vs 11% in the sham arm (p<0.01); at three weeks the results were 44% in the NBT arm and 4% in the sham arm (p<0.05). However, due to previous resource constraints, further studies were not carried out as Nexstim had prioritised the development and commercialisation of the NBT system in MDD.

Chronic pain is a major TMS opportunity

CNP (Chronic Neuropathic Pain) is the largest application segment in the neuromodulation market, and hence has the greatest commercial potential for rTMS, with around 10m addressable patients in the US and Europe. The lack of effective pain relief for a large proportion of patients, coupled with the growing awareness of the issue of opioid misuse and addiction, means new therapeutic modalities are sought. Exhibit 6 summarises the potential addressable market for Nexstim’s NBT approach. The NBT system is CE Marked for CNP, and multiple Finnish university hospitals are already using NBT to treat depression and pain. However, the FDA is yet to approve any rTMS device for this indication as, while around a dozen supportive clinical trials involving c 350 patients have been published in the past decade, no manufacturer has yet undertaken large, multi-centre, randomised clinical trials.

Exhibit 6: Nexstim business opportunity in chronic neuropathic pain
Source: Nexstim     Note: 2 = PMSI Consulting analysis, expert interviews and estimates

Nevertheless, there is a consensus that rTMS is a valuable, effective, safe, and, because of its non-invasive nature, particularly attractive as a long-term treatment option in CNP. However, more widespread therapeutic use is limited by the relative infancy of the body of clinical evidence and the heterogeneity of neuropathic and chronic pain. As a consequence, there are differing views on fundamental topics, such as what should the primarily target be within the brain (cortical reorganisation is a key factor) as well as the stimulation parameters (number of pulses and frequency).

Economic benefits mirror the clinical outcomes

In MDD, cost effectiveness studies have already shown that introduction of rTMS therapy after a single failed antidepressant treatment attempt produces greater cost savings and better outcomes than the current practice of continued successive medication attempts. Consequently, rTMS is widely reimbursed in the US for MDD, with 100% Medicare coverage and coverage by >95 major US commercial payors. Current Procedural Terminology (CPT) codes are available for therapeutic rTMS treatments, supporting reimbursement of $200-500/session.

Nexstim’s flexible pricing models for NBT, including pay-per-use leasing, monthly unlimited use leasing, or capital sale (with additional fees from head tracker sales and servicing), has resulted in a more rapid sales cycle for NBT in MDD than with NBS. The demonstrable improvement in patient outcomes is a vital element in the NBT value proposition, but the economic benefits to individual service providers should not be over-looked (Exhibit 7).

Exhibit 7: Economic benefit to TMS/Psychiatric Centre (pay-per-use lease)
Source: Nexstim  Note: * includes estimated cost of facilities and technician for 45 minutes per treatment, MD costs (3x per patient, 45mins biweekly) and MRI cost of $500/patient divided by amount of treatment. 40% overhead applied

Utilisation rate is the main revenue driver for each installed system and, clinical practice trends are particularly favourable. The shift to shorter treatment times with the Dash or iTBS protocols enables more patients to be treated during the same time period, further increasing the profitability for the outpatient TMS treatment centre. A compelling economic case would contribute to an increasing rate of NBT adoption, potentially encouraging initiation of rTMS treatment earlier in their adult MDD treatment protocols and switching from other non-navigated TMS systems.

A similarly beneficial health economics argument may hold with TMS therapy in hospitals, where, according to Nexstim, diagnosis-related group (DRG) reimbursement is 17 hospital days inpatients with severe MDD and possibly suicidal ideation. Any therapeutic modality with a shorter treatment period than this (as would be the case with accelerated iTBS protocols) would provide a financial incentive to hospitals for adoption, as well as economic and patient benefits by enabling more patients to be treated in specific timeframe.

Interestingly, the economics of NBT therapy are suitably attractive, especially in the US, that Nexstim is exploring ways to establish partnerships or joint-ventures with TMS treatment centres. The likely format has yet to detailed, but we expect Nexstim would forego leasing income in exchange for a profit share.


In common with most innovative healthcare companies, Nexstim’s three main sensitivities relate to clinical and regulatory aspects, commercial execution, and sufficient financial resources to accomplish these. More specifically, the key near- and medium-term sensitivities include execution of the 2020-24 strategy and the rate of development, regulatory and sales progress.

Nexstim aims for profitable growth in its NBT and NBS businesses. Addressing the key US market requires sizeable investment, notably in robust and compelling clinical data to support registrations and to differentiate its proprietary nTMS platform from alternatives. Quality clinical outcomes and health economic data will underpin competitive differentiation, support attractive reimbursement, and help drive market adoption. The challenge is ensuring adequate investment in generating this data and in the infrastructure (either direct or via partnerships) to sustain commercial momentum in competitive markets whilst balancing this with strict cost management. Nexstim has sufficient funds to end-2022; additional funding is likely to be needed to deliver in the latter years of its five-year strategy.

The focus on depression shifts sensitivities to successful clinical and commercial execution, specifically in the US. Development of new accelerated iTBS protocols is not without risk; the novelty of this approach raises uncertainties about the speed of clinical acceptance and breadth of institutional adoption (assuming positive data from randomised studies), which in turn will determine sales performance. In the short-term ongoing pandemic impacts may affect the time taken to recruit and complete clinical studies (or grow the patient registry) as well as the revenue growth trajectory as movement restrictions have to date reduced the number of patients actively seeking or being treated. Longer-term, the COVID-19 pandemic may swell the MDD market opportunity as the effect of successive lockdowns, with economic disruption and upheavals in personal and family relationships, has seeded a widespread and mounting mental health crisis.

We continue to believe that changing existing diagnostic and treatment practices to enable adoption of Nexstim’s products is dependent on effective and motivated distribution partnerships coupled with compelling clinical outcome data. Europe has similar issues of acceptance and reimbursement, but these are more complex due to the underlying fragmentation caused by differing national practices.

Litigation is an ever-present threat, and its impact is reduced by solid intellectual property (IP) and other barriers to entry. At end-March 2021, Nexstim confirmed it held 132 granted and 3 pending patents in 14 patent families. It also holds rights to the proprietary software for NBT and NBS; core algorithms are not patented to avoid publicity and loss of trade secrets. Nexstim is also creating competitive hurdles: eg by seeking patent protection on different parts of their platform and making it more difficult for potential competitors to create competing products.

Other risks include FX rate fluctuations, notably USD/EUR as Nexstim’s cost base is mainly Euro denominated but the bulk of sales are increasingly US-derived. Additionally, all players in these healthcare markets are likely to face continued pricing pressures as cost-containment measures remain a primary factor. We believe these factors can be mitigated by positive and meaningful clinical data supporting the cost effectiveness and value of new, premium priced applications.


We value Nexstim using a risk-adjusted DCF model, forecasting NPVs for three revenue streams: NBT (Navigated Brain Therapy) in depression (global), NBT in chronic pain (EU only), and NBS (diagnostic presurgical mapping). Risk adjustments range from a success probability of 100% for pre-surgical mapping to 25% for pain, reflecting its earlier stage. We employ conservative assumptions regarding patient populations, market sizes and growth rates, net pricing, adoption curves, and peak market penetration. We currently only value Nexstim’s visible assets with possible incremental clinical indications and off-label usage excluded. While we continue to consider development, execution, and commercialisation risks, we recognise the significant progress Nexstim has made in strengthening its balance sheet and so remove our explicit financial risk adjustment.

Our core valuation for Nexstim is €59.1m, equivalent to €8.84 per share (€8.13 fully diluted) vs €49.4m or €7.44 per share (€6.84 fully diluted) previously. Exhibit 8 details the various components of our valuation.

Exhibit 8: DCF-based core valuation of Nexstim
Source: Trinity Delta; Note: Peak sales achieved after nine years in the US and 10 years in Europe.

We apply a 12.5% discount rate to reflect Nexstim’s position as a small company operating in a competitive market; using a less conservative discount rate of 10% results in an increased valuation of €66.9m or €10.00/share (€9.19 fully diluted).

The largest component of Nexstim’s valuation is MDD, representing 72% of total company value. The considers the existing outpatient business. Potential upside could come from more rapid execution of the US commercial strategy, and better rates of clinical adoption and sales progress for MDD in any sizeable geography; however, with positive pilot study data, the NBT market opportunity could be significantly broadened by use of accelerated iTBS protocols in hospitals.

Our indicative valuation for the accelerated iTBS opportunity for treating severe depression in the inpatient setting assumes that Nexstim ultimately captures 20% of this hospital market (equivalent to peak sales of €46m) following potential launch of the new protocol in 2024 and generating €100k per NBT system/year. Based on conservative assumptions, our indicative rNPV valuation of the potential US inpatient NBT opportunity in severe MDD adds an incremental €8.9m or €1.22 per share to our core valuation.

Exhibit 9 details our assumptions, with a valuation summary shown in Exhibit 10. Importantly, our assumptions are based solely on the placing and use of NBT systems for primary treatment in hospitals (ie not capturing any additional revenue that may be generated by maintenance therapy of these same patients in the outpatient setting) and conservatively assumes that reimbursement in line with conventional TMS therapy. Clearly, higher reimbursement would generate higher revenue per system; alternatively, a greater number of sessions per patient could result in the placement of more NBT systems.

Exhibit 9: Key assumptions in valuation model
Source: Trinity Delta, Nexstim  Note: in the outpatient setting, patients currently receive TMS once a day (five sessions per week) for 4-6 weeks
Exhibit 10: Valuation summary of US inpatient accelerated iTBS opportunity
Source: Trinity Delta  Note: cost of capital of 12.5%; USD/EUR exchange rate of 0.8


Nexstim delivered its strongest interim financial performance for the H121 period despite continued COVID-19 impacts, with net sales growth of 83.3% to €2.96m (H120: €1.61m), a 50.8% decrease in the operating loss to €0.9m (H120: loss of €1.8m), and a net loss of €0.9m (H120: loss of €1.2m).

Exhibit 11: Evolution in net revenue and operating loss
Source: Trinity Delta, Nexstim

Total net sales are made up of both TMS system sales and recurring revenues from aftersales (services, support, spare parts, consumable trackers). System sales (both NBS and NBT Systems) represented €1.59m of total net sales (+186.6% on H120: €0.55m), with recurring revenue contributing €1.37m (+29.3% on H120: €1.06m). The global installed base is now c 190 NBS systems installed at research universities and hospitals, and 33 NBT systems (18 in North America and 15 in Europe/RoW). Nexstim is seeking to leverage this growing installed base to further increase recurring revenue (currently 46% of total net sales) by focussing on securing service business and increasing the utilisation of installed systems.

Net sales are broken down by business division as follows:

  • Therapy (NBT) sales stood at €1.2m (+67.3% on H120: €0.7m), with five new NBT systems installed (four in the US and one in Europe). During H120, there were no capital system sales due to COVID-19. For H121, NBT system sales generated revenue of €264k, with recurring revenues of €938k (H120: €720k). The NBT commercial trajectory has been more affected by COVID-19 due to movement restrictions and local lockdowns reducing patient access to treatment. On a rolling 12-month basis, Nexstim achieved an average of €77k in Therapy revenue per NBT system vs €70k at end-2020.
  • Diagnostic (NBS) revenues were €1.75m (+96.1% on H120: €0.9m). Seven new NBS systems were sold and delivered during H121, with the NBS business less impacted by COVID-19 as hospital neurosurgeries were largely unaffected. NBS system sales generated €1.32m in sales (H120: €0.6m) with recurring revenue of €0.4m (H120: €0.3m).

Total expenses in H121 rose to €2.0m (H120: €1.6m), with cash outflows from operating activities of €1.9m (H120: outflow of €1.6m), largely due to significant one-off COVID-19 related austerity measures and organisational restructuring during Q220. Nexstim has maintained a balance between investing to accelerate profitable sales growth with careful cost control. FY21 guidance is for continued growth in net sales and a net loss for the financial year.

We broadly maintain our financial forecasts and continue to recognise that COVID-19 impacts may continue to influence revenue growth trajectories although these have been somewhat mitigated by the success of digital marketing and sales initiatives. In addition to pandemic impacts, the outcome of the pilot studies may influence the timing and quantum of future investment in further trials with larger patient numbers and we will adjust our P&L estimates when more information on potential new studies becomes available.

Nexstim’s cash balance of €6.7m at end-June 2021 (end-FY20: €3.45m), including the outstanding Kreos loan of €0.51m (due December 2021), represents a cash runway to end-2022. The oversubscribed rights issue in spring 2021 raised €6.6m in new equity, covering near-term working capital requirements and providing sufficient funds to finance Nexstim’s growth strategy, particularly with respect to exploring accelerated iTBS treatment protocols with the NBT platform to treat major depression. Other uses of funds include investment in growing NBT and NBS system sales, repayment of the Kreos loan, and general R&D. Our forecasts suggest that Nexstim may have an additional requirement of around €4m in FY22 depending on the level of sales performance and the size and scope of randomised studies for accelerated protocols in severe depression and/or neuropathic pain.

Exhibit 12: Summary of financials
Source: Company, Trinity Delta Note: The accounts are produced according to Finnish GAAP. The short-term debt in FY22e is indicative of our view of the company’s funding requirement. Sales forecasts do not include any contribution from indications yet to be approved. Historic EPS, DPS and Average no. of shares have been adjusted to reflect the 100:1 share consolidation in May 2021.

Company information

Contact details

Nexstim Plc
Elimäenkatu 9 B,
00510 Helsinki,

Tel: +358 9 2727 1710
Fax: +358 9 2727 1717

Top ten shareholdings

% holding
Nordea Bank ABP*16.29
Kaikarhenni Oy15.29
Haapaniemi Ossi8.81
Joensuun Kauppa Ja Kone Oy3.44
Kalksten Properties Koy1.71
Syrjänen Eva Annika Elisabeth1.66
Wetrock Capital & Consulting Oy1.52
Niukkanen Pentti Juhani1.12
Clearstream Banking SA*1.04
Kakkonen Kari Heikki Ilmari0.82
Top ten investors 51.70
Other shareholders48.30
Total shareholders100.00
Source: Nexstim    Note: * includes also nominee registered shareholders

Key personnel

Leena NiemistöNon-Executive ChairChair since November 2019. Extensive experience in healthcare and corporate management, and as a clinician for more than 20 years in physical and rehabiliation medicine. Prior roles include CEO of Dextra, a private healthcare company, and deputy CEO of social and healthcare company Pihlajalinna. Currently on the boards of four other publicly listed companies in Finland, and an active investor in health-tech growth companies: her investment company is Nexstim’s largest shareholder. She holds MD and PhD degrees from University of Helsinki.
Mikko KarvinenCEOCEO since February 2020 and formerly CFO (August 2014-February 2020). Previously CFO and deputy CEO of Innofactor (2012-14), CFO and deputy CEO of Tectia (later known as SSH Communications Security, 2009-12), and CFO of Automaster (2008-9). Prior to Automaster, he was at Vaisala as a controller (2006-8), as treasury manager (2005-6), and as financial analyst (2001-3). He holds a MSc with a major in Management Accounting from Helsinki School of Economics, and an Executive MBA from Aalto University, Helsinki.
Joonas JuokslahtiCFOCFO since February 2020, having joined Nexstim in May 2014 as Business Controller later becoming Finance Manager. He holds a MSc with a major in Accounting and Finance from Turku School of Economics.


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