NEXSTIM PLC’S FINANCIAL STATEMENTS RELEASE 2021

Company announcement, Helsinki 28 February 2022 at 9 am (EET)

THE BEST FINANCIAL YEAR IN NEXSTIM’S HISTORY IN TERMS OF NET SALES, OPERATING RESULT, AND RESULT FOR THE PERIOD

The figures in parentheses refer to the previous year’s comparative period, unless otherwise stated.

July–December 2021

• The company’s net sales increased by 37.6%, to EUR 3.4 million (2.5). 
• Net sales growth adjusted for currency exchange rates was 37.7%, which is 0.1 percentage points higher than the reported growth
• System sales were EUR 2.0 million (1.3), with an increase of 64.6%. Recurring revenues were EUR 1.5 million (1.2), with an increase of 12.9%
• The operating result was EUR -0.5 million (-1.5). The operating loss decreased by 63.3%.
• This was the first profit-making review period in the company’s history. The result for the review period was EUR 0.1 million (-3.0).
• Nexstim agreed on a strategic investment in the service company of a Californian clinic (PNC Management, LLC), which provides treatment for patients with depression. The value of the investment is around EUR 0.5 million.

January–December 2021

• The company’s net sales increased by 55.5%, to EUR 6.4 million (4.1). 
• Net sales growth adjusted for currency exchange rates was 56.0%, which is 0.44 percentage points higher than the reported growth
• System sales were EUR 3.7 million (1.7), with an increase of 113.0%. Recurring revenues were EUR 2.7 million (2.4), with an increase of 13.1%
• The operating result was EUR -1.5 million (-3.3). The operating loss decreased by 56.4%.
• The result for the period was EUR -0.8 million (-4.1). The operating loss decreased by 79.8%.
• The net sales of the diagnostics business (NBS) increased by 71.4%, to EUR 3.7 million (2.2).
• The net sales of the therapy business (NBT®) increased by 37.9%, to EUR 2.7 million (2.0). 
• A successful rights issue was carried out during the spring. The issue was oversubscribed, generating EUR 6.6 million in new equity.

Major events after the 2021 financial year

• On 14 February 2022, the company announced that it had signed an agreement on licensing its proprietary technology to Magnus Medical, Inc., a medical technology company in the United States. The total value of the licence agreement is estimated at around EUR 17 million.

Business Overview

Nexstim is a Finnish medical technology company operating in international markets. Its proprietary navigated Transcranial Magnetic Stimulation (nTMS) technology allows for personalised treatment and diagnostics for patients with challenging brain diseases and disorders. Nexstim provides solutions for non-invasive brain stimulation through diagnostic (NBS system) and therapy (NBT® system) applications. ´

Key performance indicators

* The numbers of shares used in the calculation of earnings per share have been adjusted for the share reduction implemented on 17 May 2021, in which the number of shares was divided by 100.
     
     
Future outlook

Based on business forecasts, the company expects its revenue to continue to grow during year 2022, and the operating result for the financial year to be positive.

Mikko Karvinen, CEO of Nexstim:

The second half of 2021 was a period of rapid growth for Nexstim, and we achieved historic development in terms of net sales and the operating result. This was the first profit-making review period in the company’s history. Our business operations have continued to adapt very well to the changes in the operating environment caused by the COVID-19 pandemic, and our total net sales reached EUR 3.4 million (2.5) during the second half of 2021, with a record growth rate of 37.6%. Our exceptionally rapid growth was partly due to the delivery of two prototype systems, EUR 0.9 million in total, in the second half of 2021. System sales in the review period were EUR 2.0 million (1.3), with an increase of 64.6%.

Our full-year net sales in 2021 reached a new record level, at EUR 6.4 million (4.1), with an increase of 55.5%. Total net sales were mainly driven by exceptionally good system sales, at EUR 3.7 million (1.7), with an increase of 113.0%. 

During the second half of 2021, we continued to focus on investments in accelerating our sales growth, as well as on securing the service business of our existing NBS and NBT® customer base and increasing the utilisation rate of our installed base. In February 2022, we announced that we had signed an agreement on licensing technology to Magnus Medical, Inc., a medical technology company in the United States. The technology to be licensed is related to the NBT® system, with certain restrictions, and the related patents, and the use of the licence is restricted to the treatment of neuropsychiatric disorders. Nexstim’s software applications and the modelling of stimulating electrical fields are excluded from the licence. The total value of the licence agreement is estimated at around EUR 17 million. The financial structure of the licence agreement consists of a signing fee of around EUR 3.5 million and, based on Magnus Medical’s projected net sales, technology royalties of around EUR 13 million for the agreed royalty period of up to 5 years, starting from the commercialisation of the technology.

Strong growth in both the diagnostics and therapy business

The diagnostics business (NBS) was a significant source of income for Nexstim during the review period, and its net sales increased by 67.2%, to EUR 2.1 million (1.3). Despite the COVID-19 pandemic, we sold and delivered nine new NBS systems during the review period. We also ensured the continuity of the NBS service business despite the difficult customer environment, and did not lose any service contract customers, as neurosurgery procedures at hospitals continued almost unchanged. During 2021, we continued to invest in the growth of the diagnostics business by recruiting new sales team members to our organisation in the United States, for example. One example of our continued investment in the diagnostics business in the United States was the new NBS5+ system, which we introduced in October 2021. The new NBS System 5 configuration (NBS5+) is now also available in the United States, enabling the use of diagnostic and therapeutic applications in the same system. All the FDA 510(k) indications are now available in the same system in the US market, which is important. 

The net sales of the therapy business increased by 7.1% during the second half of 2021, amounting to EUR 1.3 million (1.2). During the review period, we sold three new NBT® systems: one to North America and two to Europe for the treatment of severe depression. At the end of the review period, our global installed base in the therapy business was 51 systems: 21 in North America and 30 in Europe and the rest of the world. These are used for the treatment of depression and chronic neuropathic pain, and include both NBT and NBS systems.

In addition to the deliveries mentioned above, we had an order backlog of EUR 1.0 million at the end of 2021.

Nexstim’s cash and cash equivalents totalled EUR 5.2 million on 31 December 2021. The company’s profitability improved significantly during 2021, and our solvency has also improved accordingly. In addition to this favourable development, a signing fee of around EUR 3.5 million from Magnus Medical in February 2022 has further improved the company’s solvency and cash adequacy. Through profitable growth, we are seeking to minimise any needs for new equity, and the company is not currently  planning new financing rounds.

Growth supported by recurring revenue

We have also seen growth in recurring revenue, driven by high-margin after-sales products consisting of services, support functions, spare parts, and disposables. Recurring revenue represented 42.9% of our total net sales in the second half of the year. Recurring revenue (total net sales in the therapy business, excluding NBT® system sales) covered 63.1% of the net sales of the therapy business in the second half of 2021.
Our strategy focuses on growth and profitability

In line with our strategy until 2024, Nexstim continues to enable personalised and effective therapies and diagnostics for challenging brain diseases and disorders. Updated in 2021, our strategy will rely on strong growth in diagnostics and therapy in the coming years. Growth and profitability development in our diagnostics and therapy business play a key role in our efforts to minimise future equity needs on our journey towards profitability. Our selected therapeutic applications (MDD, severe depression, and chronic pain) represent indications where our unique technology is already delivering recognisable clinical outcomes and customer profitability. 

Strategy implementation is progressing

In terms of operating activities, 2021 was our first full year of executing our renewed strategy. We continued our targeted investments in sales growth in both the diagnostics and therapy businesses. We also focused strongly on service business development, and on increasing the utilisation rate of our installed base. In the diagnostics business, commercial development takes place through our own direct sales (in the United States and Germany), and globally through distribution partnerships. 

We are also seeking to further increase the number of systems installed for the treatment of severe depression, in line with our renewed strategy, mainly in co-operation with our valued partner clinics at this point. Our new partnerships focus on strategic investments in service companies, especially in North America, as well as on new partnership opportunities in the EU and Asia. At the end of 2021, we signed an agreement an strategic co-operation and a minority interest in PNC Management Services, LLC. This is our first step on this important strategic development path. Nexstim makes TMS treatment available for patients with severe depression, and our co-operation with clinics enables us to be close to the patients and collect more accurate information at the patient interface. We are excited about our partnership agreement with Dr Kuluva and his Piedmont Neuroscience Center, because we believe that our co-operation creates excellent conditions for growth and improved profitability in the future. Through our co-operation with Dr Kuluva, Nexstim’s TMS technology can be used to treat a growing number of patients in California. 

At the same time, we are continuing to raise awareness of our NBT® system in the market. We are aiming to achieve this by increasing the number of patients with severe depression being treated using our NBT® system. As the number of patients increases and research data on pilot trials of new accelerated treatment protocols accumulate, we will be able to collect more clinical data to demonstrate the usefulness of our unique system to numerous patients with depression. We use this information to support our marketing efforts, and we believe it will increase the roll-out of new NBT® systems. We are also seeking to continue to benefit from our strong network of leading experts, as well as from the treatment data in the patient register. In February 2022, we published clinical results concerning 311 patients who had completed NBT therapy for severe depression (MDD) at clinics in the United States. Around 50% of the patients achieved clinical remission, and 77% achieved clinical response at the end of the treatment. We will continue to collect this invaluable data during 2022.

Creating future growth paths

In 2020, accelerated treatment protocols became the focus of Nexstim’s strategic development. We are delighted that we were able to take a significant step in our technological co-operation with Magnus Medical. Our licence agreement offers unique opportunities for the operations of both Nexstim and Magnus Medical. In addition to providing financial benefits, we see that the licence agreement drives significant progress in the extensive use of our technology, and it also creates opportunities for us to target our resources at other areas of business during the royalty period. In accordance with its strategy, Nexstim will continue the commercialisation of its products in the United States, with an emphasis on expanding the network of partner clinics and the diagnostics business. The licence agreement does not affect the company’s existing customer relationships, and we are expecting to continue to generate recurring revenue in the therapy business in the United States. Outside the United States, Nexstim will continue to focus on actively growing its therapy business, in addition to the diagnostics business. In the licensing business, the company sees excellent future prospects for the commercial use of its proprietary technology and patents.

We are confident we can increase our market share by further emphasising the unique capabilities of the NBT® system. This can be accomplished by clearly differentiating our system from the TMS systems currently on the market that do not have navigation capabilities.

During autumn 2020, we launched two clinical pilot studies in Finland to better understand the ability of Nexstim’s NBT® system to treat patients by using accelerated treatment protocols. In March 2021, we published encouraging preliminary results from a pilot study on the treatment of ten patients with severe depression at Kuopio University Hospital. All the patients completed the study, and no serious adverse effects occurred. The treatment alleviated the symptoms for all ten patients in accordance with the Hamilton Depression Rating Scale (HAMD-17). Their scores had decreased by 37% on average (p < 0.001) from the start level. We continued the pilot study on the treatment of severe depression at Kuopio University Hospital during the second half of 2021, in an effort to complete the treatment of a further 20 patients in mid-2022. In December 2021, we received preliminary results from a pilot study on the treatment of therapy-resistant chronic neuropathic pain at Helsinki University Hospital. None of the patients experienced severe adverse effects or clinically significant pain relief. Although more effective pain relief than with conventional rTMS treatment was not detected in this small group of therapy-resistant patients, we are pleased that Helsinki University Hospital has used Nexstim’s NBT® system for a long time, and has achieved clinically significant pain relief in around 50% of patients. We are continuing to develop new ways to help this group of patients in the future.

Creating shareholder value

I would like to thank Nexstim’s customers, employees, partners, and investors for helping us make 2021 a record-breaking year. Although the COVID-19 pandemic continues, we are feeling confident about 2022. Nexstim is determined to continue its work to enable personalised and effective therapies and diagnostics for challenging brain diseases and disorders. We strongly believe that our work supports the growth of shareholder value over the long term, in the form of stronger competitive advantages, rapid growth, and better financial performance. While being optimistic about the future again, we are continuing to closely monitor the development of the COVID-19 pandemic in our business operations.

Nexstim’s business areas

Diagnostics business (NBS)

• Nexstim’s NBS system is the only CE-marked and FDA-cleared non-invasive solution for pre-surgical mapping of the motor cortex in brain cancer. Clinical data has been generated demonstrating the value of Nexstim’s unique navigation system for pre-surgical mapping with regard to patient outcomes.
• The NBS system allows surgeons to be better prepared and more aggressive with tumour resection, due to their confidence in the location of the motor and speech cortex because of pre-surgical mapping. The non-invasive device has demonstrated a 46% increase in progression-free survival in low grade gliomas versus the current gold standard.
• NBS systems have been sold to around 200 research universities and leading hospitals across the world.

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Therapy business (NBT®)

• Nexstim’s NBT® platform is based on its unique navigated Transcranial Magnetic Stimulation (nTMS) technology, which allows for personalised, accurate, reproducible, and non-invasive brain stimulation. 
• In May 2018, Nexstim launched its Navigated Brain Therapy (NBT®) system in the United States for the treatment of MDD, following FDA clearance in November 2017.
• More than 300 million people worldwide are suffering from severe depression (MDD), with 20–40% of patients not responding to current treatment options. As a result, the treatment of MDD is the key focus for Nexstim’s sales and marketing activities for its NBT® system.
• The NBT® system is CE marked for the treatment of depression and chronic pain.
• We are planning to continue medical pilot studies during 2022 on accelerated treatment protocols related to severe depression.
• We have an active commercial installed base of 51 NBT® systems across three continents.

Publication of financial information

The annual report for the financial year that ended on 31 December 2021 will be published on 8 March (estimate).

Results briefing on 28 February 2022

The company will hold two webinars for the media, analysts, and investors on Monday 28 February 2022. Mikko Karvinen, CEO, and Joonas Juokslahti, CFO, will present the company’s financial and operational results, and will answer questions. 

The first webinar will be held in Finnish at 11 am (EET). The second webinar will be held in English at 3 pm (EET).

Webinar details:

To attend the webinars, please register via the links below. Registered participants will receive more information via email. 

Finnish-language webinar on 28 February 2022 at 11 am (EET) Sign up here >>>
English-language webinar on 28 February 2022 at 3 pm (EET) Sign up here >>>

Further information is available on the website www.nexstim.com or by contacting:

Mikko Karvinen, CEO
+358 50 326 4101
mikko.karvinen@nexstim.com

Erik Penser Bank AB (certified adviser)
+46 8 463 83 00
certifiedadviser@penser.se

Distribution:
Nasdaq Helsinki
Key media outlets

Read the full financial statement release:
Nexstim Plc_Financial statements FY 2021_EN
Nexstim Plc_Financial statements FY 2021_FI
Nexstim Plc_Financial statements FY 2021_SV

About Nexstim Plc

Nexstim is a Finnish, globally operating growth-oriented medical technology company. Our mission is to enable personalized and effective diagnostics and therapies for challenging brain diseases and disorders.

Nexstim has developed a world-leading non-invasive brain stimulation technology for navigated transcranial magnetic stimulation (nTMS) with highly sophisticated 3D navigation providing accurate and personalized targeting of the TMS to the specific area of the brain.

Nexstim’s Diagnostics Business focuses on commercialization of the Navigated Brain Stimulation (NBS) system. The NBS system is the only FDA cleared and CE marked navigated TMS system for pre-surgical mapping of the speech and motor cortices of the brain.

Nexstim’s Therapy Business markets and sells the Navigated Brain Therapy (NBT®) system, which is FDA cleared for marketing and commercial distribution for the treatment of major depressive disorder (MDD) in the United States. In Europe, the NBT® system is CE marked for the treatment of major depression and chronic neuropathic pain.

Nexstim shares are listed on the Nasdaq First North Growth Market Finland and Nasdaq First North Growth Market Sweden.

For more information, please visit www.nexstim.com