Redeye recently initiated coverage of the Finnish company Nexstim, and we have one of the equity analysts here with us. Welcome, Fredrik Thor. Could you briefly describe Nexstim?
Nexstim is a medtech company active within the field of TMS, which is transcranial magnetic stimulation, it is a medtech approach to the treatment of depression. But it’s also used as a diagnostics tool for pre-surgical mapping of brain tumors. Nexstim is today active within both segments, they have sales undergoing. They are most established within the diagnostic segments, where to have a good standing among leaders and the system has been used in leading academic journals. So we think this is a good validation of the system that’s also used in the depression segment.
How large is the potential market?
Well, the full potential market for treatment resistant depression is 11 billion EUR. However, TMS is quite a small share of this market today, but we believe it will grow quite rapidly. So in 2030, we believe it will be a half a billion EUR. In terms of the diagnostic segment, it’s much smaller. But Nexstim has a stronger standing in this segment, what we deem to be about 40 million EUR.
Could you describe the business model and also comment on the competition?
Yes. Nexstim’s sales model as of today is mainly through leasing, therefore Nexstim gets a share of the reimbursement for each treatment. So while it might be costly to install a new system, the margin on each recurring revenue is very high. In terms of competition Nexstim’s main competitive advantage is the quality of the system and that it’s very precise as it’s also been validated in the diagnostic segment.
What is your assessment of management and also on the ownership structure?
In terms of the ownership structure, it’s mainly private investors and retail, but we do like that the largest shareholder is also the chairman of the board. In terms of management we have a new duo since 2020, while they are quite new in this position, we think that they have mapped out a good strategy going forward and they appear to be going in the right direction.
OK, so some new energy in the company. Could you talk a little bit about the potential risks in the case?
One issue is potentially the financing. Nexstim needs more financing to implement its strategy for the upcoming years.
And lastly, what kind of catalysts could potentially lift the share price going forward?
As Nexstim is in the commercial stage we would like to see more growth. We would also like to see that they can grow more profitably, mainly to keep down the personnel costs and operating expenses. In terms of research, Nexstim is currently undergoing two pilot studies within severe depression and chronic pain. So if these studies would show good results Nexstim could potentially go into new markets, pending large studies. This could be profitable for next year.
Thank you, Fredrik.
Editorial / Equity Analyst
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