Mapping out the 2020-24 corporate strategy

Update | 18 August 2020

Share this note

Nexstim delivered a record interim performance in H120 (revenues, operating result, and net loss) despite market turbulence caused by the COVID-19 pandemic. The business model has remained resilient with a solid NBS (Diagnostic) installed base and flexible pricing models, coupled with careful cost control. The 2020-24 corporate strategy update provides a road map to better exploit commercial opportunities with existing and new customers, where Nexstim’s navigated TMS (transcranial magnetic stimulation) technology can improve clinical and health economics outcomes. NBT (Therapy) represents growth opportunities. Pilot studies exploring the potential of new accelerated therapy protocols in severe depression and chronic neuropathic pain could be the first step to entering a new and attractive inpatient market. We continue to value Nexstim at €32.2m (€0.07/share).

Year-end: December 31201820192020E2021E
Sales (€m)
Adj. PBT (€m)(6.2)(6.8)(3.8)(3.3)
Net Income (€m)(6.2)(6.8)(3.7)(4.0)
EPS (€)(1.93)(0.25)(0.01)(0.01)
Cash* (€m)
EBITDA (€m)(5.9)(6.0)(3.8)(3.3)
Source: Trinity Delta. Note: *Our cash forecast assumes additional raises of €5m in FY20 and €5m in FY21
  • Clear objectives for 2020   General corporate goals include narrowing the operating loss (via revenue growth and cost discipline) and securing additional funding (from capital markets and/or partnerships). For NBT, a key aim is starting two pilot studies using accelerated therapy. Growing the patient registry to >100 treatment sessions (vs 55 as presented in April) would strengthen the evidence base in depression, while a new deeper partnership business model could boost profitability. For NBS, the search for strategic partner(s) and the pursuit of NBS pre-surgical mapping reimbursement in the US also have the potential to drive future revenue growth.
  • Long term 2020-24 vision Nexstim’s overarching aim is improved profitability through leveraging the existing installed base (c 170 NBS systems, 28 NBT systems for major depressive disorder and chronic pain) and through new client acquisition (including with strategic partners). Technological development could unlock further revenue growth. In NBS, motor and speech mapping could be applied to wider pre-procedure planning (tumours, epilepsy, radiotherapy). In NBT, accelerated protocol validation could open a new severe depression inpatient market.
  • A record H120    Despite COVID-19, revenues grew 33% to €1.6m, largely from NBS (€895k). All NBT revenues were recurring. Cost savings decreased the operating loss. FY20 guidance is for a lower operating loss vs FY19. The €2.2m raise boosted end-June cash to €4.8m (including the Kreos loan), providing a runway into Q121.
  • Valuation maintained at €0.07/share  We value Nexstim using an rNPV model and continue to ascribe a €32.2m valuation, equivalent to €0.07 per share. COVID-19 uncertainties are likely to weigh on H220, but there is room for valuation upside as Nexstim’s strategy is implemented and commercial execution visibility rises.


18 August 2020

Market Cap€9.58m
Enterprise Value€10.0m
Shares in issue439.6m
12 month range€0.01-0.19
Free float55%
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

Nexstim: mapping out the future

Nexstim has provided further detail on its strategic plan for 2020-24 and outlined its objectives for 2020. The company intends to better exploit existing and potential commercial opportunities for the application of its navigated TMS (transcranial magnetic stimulation) technology in diagnosis or therapy of brain diseases/disorders, with both current and new customers. Nexstim has mapped out a strategy to accelerate revenue growth through demonstrating its potential competitive advantages with data-led evidence of improved clinical outcomes for patients and health economic outcomes for payors. The NBS (Diagnostic) pre-surgical brain mapping business provides a stable, and rising, revenue stream, while the NBT (Therapy) business is expected to be the key growth driver in future. We maintain our €32.2m valuation (equivalent to €0.07/share).

Nexstim’s 2020-24 corporate strategy update builds on the plans presented earlier this year (May 2020 Update) when management announced the intention to support organic expansion of its existing NBS and NBT businesses, in addition to investing in carving out a promising, and sizeable, niche for NBT in depression. The latter initiative includes running pilot studies to explore potentially highly lucrative new inpatient opportunities for use of NBT with accelerated therapy protocols in severe depression (and in chronic neuropathic pain). The August strategy update refines the steps that Nexstim intends to take on its path to improved profitability and the applications on which it will focus. 2020 objectives are presented in Exhibit 1: these form the first phase of the longer-term strategy.

Exhibit 1: 2020 strategic objectives
Source: Nexstim, Trinity Delta

Nexstim’s highly accurate, reliable, and reproducible TMS technology platform is based on its e-field navigation capabilities. Clinical evidence to date has shown that this more personalised approach, when applied as a diagnostic or therapy option for brain diseases, leads to improved patient outcomes. This provides clear differentiation from the competition, which coupled with KOL support, has the potential to increase the overall market opportunity. Nexstim plans to leverage the use of its TMS platform into broader indications and treatment settings. Our January 2020 Outlook provides further detail on the background to Nexstim’s technology, the competitive landscape, and market opportunities. We summarise the main areas highlighted in the corporate update below.

NBS: diagnosing more patients

NBS (navigated brain stimulation) provides Nexstim with a dependable, high-margin revenue stream through its global installed base of c 170 systems at leading university and research hospitals. Revenues are derived from capital sales of instruments and recurring revenues from consumables. Nexstim’s strategy for growing the profitability of the NBS business includes establishing new US reimbursement codes for pre-surgical mapping, leveraging the existing installed base, and securing new sales direct as well as potentially via a long-term strategic partnership to expand the current commercial reach.

The value of NBS in pre-surgical mapping (PSM) of the brain ahead of, typically, tumour removal is acknowledged and results in impressive survival benefits as surgeons can be more aggressive in their tumour resections. However, there is scope to further develop the technology to map the speech and motor cortices of the brain ahead of other procedures. The recent  $16.4bn acquisition of Varian by Siemens Healthineers endorses the role that data analysis is increasingly playing in decision making in the surgical environment. Nexstim has identified preprocedural planning for difficult brain tumour and epilepsy patients, and planning for patients undergoing radiotherapy for brain tumours, as key areas for development.

NBT: broader accelerated therapy potential

Therapeutic use of TMS is a substantially larger market opportunity than PSM. Nexstim’s NBT (navigated brain therapy) is addressing major depressive disorder (MDD) and chronic pain (the latter in Europe only). The current installed based is 28 NBT systems globally; hence there is potential to optimise and grow recurring revenues through the installed base and from placing new systems with new and existing TMS providers. COVID-19 slowed plans for the latter as restrictions on movement limited the number of treatments carried out, while the cost saving programme impacted NBT commercial activities. Nevertheless, there remain multiple growth levers which are applicable now and for the future.

Clinical evidence of improved patient outcomes – and patient retention – should help drive better utilisation of the existing NBT base and expand it. Patient registry data is an important facet of this. Data reported in April 2020 from the first 55 MDD patients to complete NBT treatment, showed 40% clinical remission and 71% clinical response at the end of the treatment course. This compares with 26.5-28.7% clinical remission and 41.5-56.4% clinical response from an rTMS meta-analysis in MDD. Registry data from 100 patients is keenly anticipated.

The NBT platform will be leveraged around selected therapeutic indications (depression and chronic pain) at US and European TMS providers. Nexstim also plans to launch a new severe depression business based on accelerated therapy protocols targeting psychiatric hospitals and those with inpatient psychiatric departments. This will be supported by new investigator-sponsored pilot studies at university hospitals. NBT’s highly accurate navigation means it is well-suited for use in intensive treatment protocols such as the three-minute Thetaburst, and this concept has been explored by Stanford with its SAINT protocol which delivered 86.4% clinical remission in severe depression. Nexstim’s pilot studies, due to start imminently, should determine whether NBT can also deliver improved clinical efficacy in these challenging, highly treatment refractory patient groups.


H120 marked a record interim performance with net sales of €1.6m (+33% on H119m: €1.2m), operating loss of €1.8m (H119: loss of €3.4m), and net loss of €1.2m (H119: loss of €3.7m).

NBS sales increased an impressive 47% to €895k, with NBT revenues growing 18% to €720k. COVID-19 undoubtedly dampened the NBT commercial trajectory; however, the focus was on leveraging the current installed base to generate recurring revenues (ie excluding NBT capital system sales). As such H120 NBT sales were comprised solely of recurring revenues. On a rolling 12-month basis, Nexstim has achieved an average therapy revenue per NBT system of €70k, a lower figure than the €85k reported at FY19. NBS was impacted less as hospital neurosurgeries were largely unaffected. During the period, four new NBS systems (three in the US and one in Sweden) and five new NBT systems were installed. The global installed base is now c 170 NBS systems installed at research universities and hospitals, and 28 NBT systems (split equally between the US and RoW).

Cost saving measures implemented in response to the COVID-19 pandemic decreased operating costs, with operating cash flows showing a €1.6m outflow in H120 vs €3.7m in H119. Nexstim previously indicated that €0.8m in cost savings would be achieved in April-June 2020, with targeted annual savings of up to €3m. Given the uncertainty still posed by the pandemic, financial guidance is limited to stating that FY20 is expected to deliver a lower full year operating loss vs FY19.

The €2.2m raised in the rights issue (June 2020 Update), coupled with the cancellation of €0.9m of Business Finland loans, boosted Nexstim’s end-June cash position to €4.8m (including the outstanding Kreos loan of €1.45m) vs €4.3m at end-FY19. This represents a cash runway into Q121, based on our revenue and expense estimates as summarised in Exhibit 2.

Management have outlined their strategic priorities for 2020 and beyond. In our view, execution on the 2020-24 corporate strategy will require additional funds. Our forecasts suggest that a further €10m would be required over the next 18 months to achieve near- and mid-term goals for NBT in depression, repay the Kreos loan (due December 2021) and to secure the company’s financial future. We note that Nexstim is evaluating various funding options, including non-dilutive funding from strategic partnership(s) and has engaged an international life sciences investment bank to assist in this process.

Exhibit 2: Summary of financials
Source: Company, Trinity Delta Note: The accounts are produced according to Finnish GAAP. The €5m of short-term debt in each of FY20 and FY21 is indicative of our view of the company’s funding requirement. Our 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 30:1 share consolidation in December 2018.


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 publicly 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 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.