Business news update from Nexstim

Translation: Original published in Finnish on 10/31/2024 at 7:00 am EET.

Nexstim issued a press release on business highlights for January-September. The company said it has invested in profitable growth, development of its NBS 6 diagnostics product and expansion of its network of clinics. In terms of the systems business, there were 15 systems already delivered or awaiting delivery at the end of September. Deliveries match our expectations, and we see no need to update our forecasts at this time. The company also said that it is working on a strategy update, the results of which will be announced at the latest in connection with the financial statements.

System sales progressing as expected

Nexstim reported that it delivered 11 systems in the January-September period, five of which were new NBS 6 systems. In addition, there were 4 systems pending delivery. With the 2 deals announced in October, this brings the total number of system deals this year to 17. In the comparison period, there were 15 known system sales at the end of October, so the number of systems sold is slightly ahead of the comparison period. For Nexstim, Q4 is the best time of the year for sales as hospitals make their purchasing decisions. There is no external visibility on the sales pipeline, so an indication of sales will be provided in the year-end announcements and final figures will be presented in the financial statements at the latest. We expect a typically busy end of the year.

Over the longer term, Nexstim's system sales have been relatively stable at just over 20 units sold per year.

Historical sales have incrementally increased the system base capable of therapy applications, and at the end of Q3'24 the system base stood at 93 units (Q3’23: 70 units). Of these, 33 were in the US and 60 outside the US – primarily in Europe. The system base provides Nexstim with recurring revenue through, for example, system rental and maintenance contracts, user licenses and sales of consumables. The company says it has sold more than 230 diagnostics systems. Sales of these products began at the end of the first decade of the 2000s. In the Diagnostics Business, recurring revenue plays a smaller role, so the size of the system base is a less important variable than in the Therapy Business.

In the systems business, the company said it plans a commercial release of the NBS 6 diagnostics system during 2025. NBS 6 has already received US and European regulatory approvals for therapeutic use. Authorizations for diagnostic use have been expected to be received this year. No further information was provided on the status of authorizations, but in general CE marking processes have been prolonged by the implementation of the Medical Device Regulation (MDR). We expect sales of the NBS 6 to be boosted when the device is approved for use in both therapeutic and diagnostic applications.

Strategy update coming early next year

Nexstim's current strategy runs until the end of this year. The company said that the process of updating its strategy is currently underway. The strategy will be announced in more detail at the latest in connection with the financial statements. According to the press release, profitable growth in therapy and diagnostics is likely to remain at the core of Nexstim's operations as the company approaches its goal of continuous profitability.

Collaboration with Sinaptica to shape development in the coming months

Early this summer, Nexstim announced a letter of intent with Sinaptica Therapeutics for the treatment of Alzheimer's disease. If the collaboration materializes, Nexstim will develop, manufacture and deliver the system for Sinaptica's Phase III clinical trial, which is expected to start next year. The initial phase of the contract would be worth 6 MEUR for Nexstim, which we have included in our forecast with a 2/3 probability. In the long term, there is further potential for Nexstim in a possible commercialization after Phase III. According to our knowledge, Sinaptica will soon publish the results of the Phase 2 study after 12 months of patient follow-up. Next up is Sinaptica's financing round for the next trial, after which we will see the possibility of a permanent collaboration agreement. Our forecasts and share price may change significantly as a result of the final outcome of the agreement.