A key uncertainty for Nexstim was removed in December as the FDA confirmed that only one additional stroke rehabilitation trial in 60 patients will be required to seek de novo 510(k) regulatory approval for the NBT system. US approval might be obtained during Q418. Nexstim has used €8.8m from the Bracknor/Sitra funding arrangement and had €8.2m in cash in December. A further €3.2m can be raised from the arrangement. Excluding 30m issued warrants, this could fund Nexstim until late 2018. The NBS system achieved €2.5m in sales in 2016, with modest increases anticipated by Nexstim for 2017; new US distributors have been appointed.
Written by
Nexstim |
Funded and back on stroke trial track |
FY16 results and update |
Healthcare equipment & services |
7 March 2017 |
Share price performance
Business description
Next events
Analyst
Nexstim is a research client of Edison Investment Research Limited |
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A key uncertainty for Nexstim was removed in December as the FDA confirmed that only one additional stroke rehabilitation trial in 60 patients will be required to seek de novo 510(k) regulatory approval for the NBT system.US approval might be obtained during Q418. Nexstim has used €8.8m from the Bracknor/Sitra funding arrangement and had €8.2m in cash in December. A further €3.2m can be raised from the arrangement. Excluding 30m issued warrants, this could fund Nexstim until late 2018. The NBS system achieved €2.5m in sales in 2016, with modest increases anticipated by Nexstim for 2017; new US distributors have been appointed.
Year |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/15 |
2.53 |
(9.55) |
(119) |
0.0 |
N/A |
N/A |
12/16 |
2.48 |
(6.48) |
(54) |
0.0 |
N/A |
N/A |
12/17e |
2.56 |
(4.59) |
(8) |
0.0 |
N/A |
N/A |
12/18e |
2.98 |
(2.83) |
(5) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. EPS is estimated after current dilution only.
Going for de novo in stoke rehabilitation
Nexstim anticipates that this trial will report in Q118. The FDA confirmed that Nexstim’s 60-patient supplementary stroke rehabilitation trial (E-FIT), costed by Nexstim at about €2m, will be sufficient, pooled with data from the Phase III NICHE trial, to seek regulatory approval for Navigated Brian Therapy (NBT). The trial could complete by March 2018 allowing a spring de novo 510(k) application and launch by late 2018. The NICHE trial showed meaningful clinical improvements in 66% of patients in both the active and sham (placebo) arms. Nexstim has developed a non-active sham procedure instead of the active sham used in NICHE. Nextstim will apply for 510(k) approval in 2017 for use of NBT in depression; there are three predicate devices to act as benchmarks. A pain indication is also being developed.
Finnish share storm
The financing arrangements with Bracknor and Sitra (see our note FDA de novo filing, funding package published on 27 July 2016) have been extensively used, raising €8.8m (€7.7m equity, €1.1m unconverted loans) in H216. Shares in issue rose 39m from 8.1m in June 2016 to 47.1m in December 2016. A further 10.2m shares were issued to 28 February, taking the total to 57.3m. There are now 31.2m warrants and 1.3m management options, with €3.2m of potential drawdown funding remaining plus any warrant proceeds. Cash on 30 December was €8.2m; H2 cash burn was cut to €2m.
Valuation: Tough call while waiting for 2018 data
Sales over 2016 of Navigated Brain Stimulation (for brain mapping) were about 10 units, worth €2.5m. New distributors should enable modest 2017 sales growth. Forecasts have been updated with 2016 results. On an unchanged indicative value of €28.6m and using 89.8m fully diluted shares in issue (current level), the indicative value is about €0.3/share, formerly €0.58 share. There may be further share and warrant issues; more cash will be needed for the NBT launch in 2019.
Exhibit 1: Financial summary
€'000s |
2015 |
2016 |
2017e |
2018e |
||
Year end 30 June |
FAS |
FAS |
FAS |
FAS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
2,528 |
2,483 |
2,560 |
2,983 |
Cost of Sales |
(821) |
(645) |
(1,025) |
(1,162) |
||
Gross Profit |
1,707 |
1,837 |
1,535 |
1,821 |
||
EBITDA |
|
|
(9,984) |
(6,436) |
(4,590) |
(2,804) |
Operating Profit (before GW and except) |
|
(10,096) |
(6,446) |
(4,600) |
(2,814) |
|
Intangible Amortisation |
(274) |
(250) |
(250) |
(250) |
||
Exceptionals |
- |
- |
- |
- |
||
Operating Profit |
(10,370) |
(6,696) |
(4,850) |
(3,064) |
||
Other |
- |
- |
- |
- |
||
Net Interest |
544 |
(34) |
16 |
(15) |
||
Profit Before Tax (norm) |
|
|
(9,552) |
(6,480) |
(4,585) |
(2,828) |
Profit Before Tax (FRS 3) |
|
|
(9,826) |
(6,730) |
(4,835) |
(3,078) |
Tax |
(1) |
(2) |
- |
- |
||
Profit After Tax (norm) |
(9,553) |
(6,483) |
(4,585) |
(2,828) |
||
Profit After Tax (FRS 3) |
(9,827) |
(6,733) |
(4,835) |
(3,078) |
||
Average Number of Shares Outstanding (m) |
8.0 |
12.0 |
55.0 |
57.0 |
||
EPS - normalised (c) |
|
|
(119) |
(54) |
(8) |
(5) |
EPS - FRS 3 (€) |
|
|
(1.23) |
(0.56) |
(0.09) |
(0.05) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
67.5 |
74.0 |
60.0 |
61.1 |
||
EBITDA Margin (%) |
-394.9 |
-259.2 |
-179.3 |
-94.0 |
||
Operating Margin (before GW and except.) (%) |
-399.4 |
-259.7 |
-179.7 |
-94.3 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
974 |
911 |
911 |
911 |
Intangible Assets |
631 |
652 |
652 |
652 |
||
Tangible Assets |
333 |
249 |
249 |
249 |
||
Other |
10 |
10 |
10 |
10 |
||
Current Assets |
|
|
8,233 |
9,506 |
4,574 |
1,396 |
Stocks |
421 |
292 |
292 |
292 |
||
Debtors |
659 |
789 |
789 |
789 |
||
Cash |
6,875 |
8,156 |
3,224 |
46 |
||
Other |
277 |
268 |
268 |
268 |
||
Current Liabilities |
|
|
(2,417) |
(2,137) |
(2,140) |
(2,140) |
Creditors |
(1,084) |
(397) |
(400) |
(400) |
||
Short term borrowings |
(384) |
(1,012) |
(1,012) |
(1,012) |
||
Short term leases |
0 |
0 |
0 |
0 |
||
Other |
(948) |
(728) |
(728) |
(728) |
||
Long Term Liabilities |
|
|
(3,245) |
(3,802) |
(3,702) |
(3,602) |
Long term borrowings |
(3,197) |
(3,778) |
(3,678) |
(3,578) |
||
Long term leases |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
(47) |
(24) |
(24) |
(24) |
||
Net Assets |
|
|
3,545 |
4,479 |
(356) |
(3,434) |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(9,065) |
(7,250) |
(4,587) |
(2,804) |
Net Interest |
(544) |
25 |
16 |
(15) |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(380) |
(310) |
(260) |
(260) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
5,280 |
7,700 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
100 |
0 |
(100) |
(100) |
||
Net Cash Flow |
(4,609) |
165 |
(4,932) |
(3,178) |
||
Opening net debt/(cash) |
|
|
(7,945) |
(3,293) |
(3,366) |
1,466 |
HP finance leases initiated |
- |
- |
- |
- |
||
Other |
(43) |
(92) |
100 |
100 |
||
Closing net debt/(cash) |
|
|
(3,293) |
(3,366) |
1,466 |
4,544 |
Source: Nexstim accounts, Edison Investment Research forecasts
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|
Research: Metals & Mining
On 10 February, Amur announced a 50kt (or 6.8%) headline increase in contained resource nickel tonnes, but a 214kt (or 41.7%) underlying increase (ie at a constant cut-off grade). This follows the January announcement of metallurgical test results by Gipronickel on a c half tonne sample of ore from Maly Kurumkon-Flangovy. Over seven metals, average recoveries were 13.0% higher than those derived from earlier bench-scale tests. The results represent the first production-scale test work from the Kun-Manie licence area and, owing to their larger size, are expected to be more reflective of actual production processes.