Get ready for a brain revolution! Nexstim, a Finnish powerhouse, is leading the charge in personalized brain health. Their mission? To tackle severe brain diseases and disorders with cutting-edge, non-invasive technology. And they're not just talking the talk; they're walking the walk with their navigated transcranial magnetic stimulation (nTMS) technology. This innovative approach delivers a gentle electrical current to specific brain regions with pinpoint accuracy, offering a safe and painless treatment option. But here's where it gets controversial... Nexstim's technology isn't just about treatment; it's also a game-changer for diagnostics and research. Their NBS System 6 is the only one of its kind with FDA and CE approval for pre-surgical brain mapping, giving surgeons a precise roadmap to navigate. And this is the part most people miss: Nexstim's technology is modular, meaning it can be adapted for new treatments and indications, keeping them at the forefront of brain health innovation.
Nexstim's journey is built on three pillars: diagnostics, therapy, and research & neuroscience. In diagnostics, their NBS system is a commercial success, helping surgeons map out the brain's speech and motor areas pre-surgically. In therapy, the NBS System 6 is FDA-approved for major depressive disorder in the US and CE-marked for major depressive disorder and chronic neuropathic pain in Europe. But their reach extends beyond these indications, with applications in neuroscience research and development.
Throughout 2025, Nexstim focused on profitable growth with minimal capital requirements, expanding partnerships, and maintaining their technological edge. And their efforts are paying off. In mid-2024, they signed a letter of intent with the American startup Sinaptica Therapeutics, and in early 2025, a prototype device was delivered for Sinaptica's clinical evaluation. Following a successful evaluation, the parties signed an exclusivity agreement, solidifying their partnership.
This agreement is a game-changer, as it covers the co-development of a neuromodulation system, SinaptiStim, aimed at treating Alzheimer's disease. Sinaptica has committed to ordering future research systems from Nexstim and, in return, gains exclusivity for any potential commercialization of Nexstim's technology in the Alzheimer's field, with a payment of EUR 1.5 million in 2025. This long-term partnership, spanning ten years, includes initial fees, milestone payments linked to system development and sales, and opens up Nexstim to the broad dementia segment.
Another significant partnership was formed with German neurosurgery specialist Brainlab AG at the end of 2024. This agreement, worth up to EUR 5.095 million, aims to develop new neurosurgery solutions based on Nexstim's integrated navigation and intraoperative neuromonitoring. The Brainlab agreement is expected to boost sales of Nexstim systems to third parties, further solidifying their position in the market.
These partnerships have created a tailwind for Nexstim, as reflected in their half-year report. Net sales for H1 reached EUR 4.5 million, a significant 41.8% growth from the previous year. Diagnostics saw a 65.3% increase to EUR 2.5 million, while therapy sales decreased by 8.4% to EUR 1.4 million. Research revenues increased dramatically by 565.7% to EUR 0.6 million. Gross margin improved to EUR 3.6 million, and EBITDA turned positive by EUR 0.2 million. Cash reserves stood at EUR 2.7 million at the end of the half-year, setting the stage for continued growth.
The growth is driven by Nexstim's global installed base, with a focus on recurring revenues from service agreements, consumables, and leasing fees. The launch of NBS 6 has broadened their product offering, and they expect increased revenues through existing agreements, direct channels, and future partnerships. With Sinaptica, they've opened doors to the Alzheimer's area, where the need for new therapies is critical.
In his CEO speech, Mikko Karvinen emphasized their focus on profitable net sales growth, with a promising sales forecast for the full year 2025. The following autumn brought a steady stream of orders, with the launch of NBS 6 for diagnostics in October, following EU MDR and US FDA approvals. This development strengthens Nexstim's position in the US market, despite ongoing customs challenges.
As Nexstim enters its new strategy period for 2025-2028, they're poised for continued growth and increased profitability. BioStock spoke with CEO Mikko Karvinen to delve deeper into their journey.
Given the strong growth in diagnostics and the dip in therapy sales during H1, what strategies are in place to reignite the therapy segment's momentum in 2026?
Mikko Karvinen: Therapy system sales can vary each period due to end-customer purchasing. However, recurring revenue is a larger portion of our Therapy business, providing stability to our estimates. Our system's navigation features set us apart from other TMS systems, and we believe the need for navigation functionality will become even more critical in treating brain disorders. This could open new markets for us beyond severe depression and chronic neuropathic pain. Our technological leadership, ease of use, and scalability create an attractive foundation for growth through partnerships. We'll continue to focus on offering our unique value to leading hospitals and clinics worldwide.
How do you assess the risks associated with the licensing disputes with Magnus Medical, and what contingency plans are in place to mitigate potential royalty shortfalls?
Mikko Karvinen: In June 2024, we announced disagreements regarding our technology licensing to Magnus Medical, Inc. We received additional information about their commercial product, leading to a disagreement over licensed technology use. Nexstim is gathering more information and planning measures to defend its financial interests and intellectual property rights. We don't expect any royalty income from Magnus Medical in our 2025 forecasts. Due to ongoing discussions, we're not providing an estimate of the total royalty value or financial expectations.
With the Sinaptica collaboration advancing, what are the projected timelines and revenue milestones for the SinaptiStim system's commercialization?
The financial structure of our partnership includes a signing fee for exclusivity rights, a milestone-based development project, and system sales. The milestone project and clinical system purchases are defined in final agreements, subject to negotiation changes. The exclusive rights arrangement depends on Sinaptica's 2025 payments and final agreement signing before 2025's end.
As you eye expansion in Asia, which markets are prioritized, and which partnerships are being pursued to accelerate entry?
We're expanding our Diagnostics Business into Asian markets through our Brainlab partnership. We already have approvals for large APAC markets like India and Australia. We're also exploring expansion possibilities in Japan and China, where our earlier products were used for research.
Aiming for continued growth and profitability during the new strategy period, what key performance indicators should investors track most closely in upcoming quarters?
We're still dependent on new system sales, so growing system sales is crucial. Recurring revenue growth adds to our story, with each new system driving some revenue. We've successfully maintained our gross margin levels in a turbulent geopolitical environment through smart operations planning. Managing expenses and cost of goods sold remains vital to our profitable growth strategy.
Considering your current market position, multiple agreements, and new launches, how certain are you of reaching success?
Despite the tense global political situation, our future expectations are positive. Our current business is EU and US-focused, but with our new partners, we'll actively expand into the Asian market. Nexstim is committed to developing personalized and effective brain disease and disorder treatment and diagnosis methods. We believe our work will drive long-term shareholder value growth through competitive advantages, rapid growth, and improved financial results.
