Nexstim

Licensing discussions with academic centre end

Lighthouse | 17 January 2020

Share this note

  • Nexstim has announced that the discussions with a leading California academic institution have not led to a wide-ranging collaboration. This had targeted the treatment of hospitalised patients with severe depression, who may have suicidal ideation; which is a different segment to the existing out-patient MDD (major depressive disorder) population that the NBT platform is approved for.
  • The tie-up discussions stopped when the NIH (National Institutes for Health) offered to fully fund the unnamed academic centre’s clinical and software development programmes.
  • Nexstim’s NBT platform remains particularly well suited to this application, as its built-in SmartFocus navigation provides highly accurate mapping. It is this rapid, reliable, and reproducible treatment that underpins the expected improved patient outcomes; with faster treatment times resulting in material cost advantages too.
  • The value of this opportunity has been explored in our recent Outlook note. If this were to materialise, we conservatively estimate the addressable market as being worth $213m. Plugging in these rough assumptions into our model yields an incremental NPV of €25m, with an rNPV of €10m and value per share of €0.19.
  • Management is exploring ways to collaborate with the academic centre in other ways and these discussions are continuing.

Trinity Delta view: Nexstim has achieved a great deal in the past year and is gaining market traction with its NBT platform in MDD. The changed situation with the leading academic centre is disappointing but NBT’s unique properties suggest a meaningful role is still likely. We have not included any contribution from this opportunity in our valuation and would only do so when the visibility is improved.

Our valuation was upgraded in our January Outlook to €31.4m, €0.50/share, up from €19.0m (€0.41/share), to reflect the progress that Nexstim has made. If certain value-inflection points are attained, we expect further increases in our valuation.

Lighthouse

17 January 2020

Price€0.9
Market Cap€5.4m
Primary exchangeHelsinki
SectorHealthcare
Company CodeNXTMH/NXTMS
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 its commercial roll out in the US, Europe and Asia.

Analysts

Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043

Franc Gregori
fgregori@trinitydelta.org
+44 (0) 20 3637 5041

Disclaimer

Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.

ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.

In the preparation of this report TDRL has used publically available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.

Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.

This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.

Copyright 2020 Trinity Delta Research Limited. All rights reserved.