Nexstim

Voluntary loan repayments remove Kreos uncertainty

Lighthouse | 17 September 2019

Share this note

  • Nexstim and Kreos Capital have agreed on a new loan payment schedule, in which Nexstim will make two voluntary capital repayments of €0.6m (the first in September and the second in November 2019). The other terms of the loan are unchanged; the outstanding loan will mature in December 2021 and carries an interest rate of 10.75% per annum.
  • At the end of June 2019, the outstanding Kreos loan balance was €3.5m. Following the two voluntary repayments and scheduled monthly repayments, the principal outstanding will be reduced to below €2.0m at year-end and there will be lower monthly capital and interest payments until the end of 2021.
  • Following the voluntary repayments, Nexstim estimates that it has sufficient working capital to operate into Q120 with conservative revenue and expense estimates, assuming the terms of the Kreos loan are not breached.
  • Nexstim could raise c €2m in October/November from exercise of warrants issued with the April capital raise, and the company continues to explore other options to strengthen its balance sheet.

Trinity Delta view: The agreement with Kreos to repay part of the loan ahead of schedule removes much of the concern that Kreos might call in its loan early, and means Nexstim is now in a better position to raise the capital it needs to realise the potential of NBT in major depressive disorder (MDD).

The company made good progress during H119 with the launch of NBT in MDD (see update note dated 20 August 2019), and this momentum has been carried into H219. At the end of August, Nexstim announced that it had placed a NBT system with Achieve TMS, the second largest provider of transcranial magnetic stimulation (TMS) therapy in the US with 24 clinics.


We value Nexstim at €19.0m or €0.41/share diluted (in the money options or warrants only).

Lighthouse

17 September 2019

Price€0.16
Market Cap€5.7m
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

Mick Cooper PhD
mcooper@trinitydelta.org
+44 (0) 20 3637 5042

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

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 2019 Trinity Delta Research Limited. All rights reserved.