Welcome to Nexton's webinar for investors, analysts and media. In this webinar, Nexton's CEO, Mikko Carvinen and CFO, Jonas Jokhlafi, will be giving a presentation that will take about half an hour followed by a Q and A session. The webinar will be recorded and we will inform you later on where you can find the recording. For the Q and A session, after the presentations, we ask you to send any questions through the webinar's Q and A chat. Questions can be sent at any time during the webinar, but they will be replied to only during the Q and A session.
You are representing. As you send us a question, it will first be visible for us organizers only. And now, let's move on to the webinar. First presenting is Nxtend's CEO, Mikko Karvinen. Go ahead, Mikko.
Thank you, Esty, and welcome, everyone. My name is Mikko Karvinnen. I'm the CEO Of Nextim. I'm joined in this first half twenty twenty one half yearly report webinar with our CFO, Jonas Joachslaati. I'm very glad to go through our results soon.
I'll start with putting The presentation mode on. So now the slides should be visible. So at Nexstim, we're all about personalized brain diagnostics and therapy. Our share is listed in the NASDAQ First North Growth Markets, both in Finland, Helsinki And then also in Sweden and the Stockholm Exchange. So before investing into Tim Sher, please take a look at some of these important information regarding the company.
To begin with, I would like to start with an overview of Nextim as a company and tell a little bit about our business. So maybe there's some of you joining who haven't heard about Nextum earlier. So just a couple of minutes overview. So on the right side, you can see this is Our fully integrated neuro navigation TMS system, a Nextim system, whether it's a diagnostic or a therapeutic system, it looks about the same. And this technology of ours is unique and proprietary.
We're a Finnish medical technology company Operating in the international markets, our neuro navigation TMS technology platform, so transcranial magnetic stimulation, TMS, enables individual treatment and diagnostics of patients with severe brain diseases and disorders. Thinking about both our diagnostic and therapy applications. First of all, we Our NBS systems is what we call a navigated brain stimulation system is what we use for our diagnostic applications. It's a non invasive brain stimulation method of which we can map the brain's speech and motor cortices prior to a Brain surgery, very usually a tumor surgery. And this way we can show that in which places of the brain are the Motor and speech functions located.
This provides the neurosurgeon very useful information. And then on the therapy side, we have a system called the NBT, Navigated Therapy System, And we are approved in the U. S. Markets for major depressive disorder treatment. And then also in addition to that in the European markets were approved also for chronic neuropathic pain treatment.
And the diagnostic system is both U. S. FDA approved and in the Europe CE marked for pre surgical mapping of the brain's motor and speech areas. We have quite a large installed base already. So some of the world leading centers already rely on a Nexstim device.
There's a total of over 220 NEXTIN's NBS and NBT systems that have been sold to research centers, hospitals and clinics worldwide. And Just to mention a few, I mean, in the close home markets, all university hospitals in Finland have a NEXTIN device. We have a good presence also in the Nordic and German markets as an example from Europe. And then in the U. S, we have our Own direct sales team and have tens of systems already installed for both NBS and NBT, so diagnostic and therapy purposes.
And then
finally about our Positioned for the future development, we're very well positioned for treatments that we are called the accelerated Dataverse treatment protocols. And we have piloted this new form of TMS treatment Where just to give a bit of background, a normal FDA approved TMS depression treatment is 1 TMS treatment per day for as long as 6 weeks. And in this accelerated ITBS treatment protocols, We've piloted methods where protocols where there are multiple treatments a day, as many as 10 treatments a day for 5 days in a row. And with these accelerated treatment protocols, We've shown very encouraging results and we continue to pilot these and this is an interesting Area of study with global interest. But we have done Three pilots in Guapio University Hospital in Finland for severe depression patients.
And then we're running a pilot Right now in Helsinki University Hospital for chronic neuropathic pain treatment with these accelerated treatment protocols. And I'll talk a bit more later on this presentation about also these pilots and their statuses. So moving on now to today's main part, which is, of course, the H1 2021 report. So we published the half year numbers for the first half of this year earlier this morning at 9 am finished time. And I'm very happy to tell that this was the Nexten's historically best first half measured by net sales operating result and result for the review period.
We can see that our business has adapted Very well to the changes in the operating environment caused by the COVID-nineteen pandemic. So even though our business did, of course, Suffer a bit from this pandemic, we saw that, first of all, with our diagnostic business, We were able to sell 7 new NBS systems and deliver them during the review period. This helped us a lot in In the system sales side and the system sales grew faster than the full revenue. So system sales for This first half was very strong. On the NBT on the therapy business side, We had 5 new NBT systems sold to clinics in North America and Europe across multiple sites for the treatment of major depressive disorder.
So despite the COVID pandemic affecting the therapy, depression therapy business in particular a bit more due To the restrictions for mobility for patients, we managed to Sell 5 new NBT systems and this was also partially ended up as a result of a strong system sales for the first half of twenty twenty one. So system sales were €1,600,000 there's an increase of 186.6% in comparison to last year's first half. The recurring revenue accounted for 1,400,000. There was also an increase of 29.3% in comparison to the first half of twenty twenty. In this about the recurring revenue, I'd like to mention that This was affected slightly of course by the mobility restrictions in certain markets like in the U.
S. And Europe that affected the patient's possibilities to travel for treatment or their likelihood of reaching out for help during this pandemic. The first half was the company's best reported half to date with net sales being €3,000,000 That was an increase of 83 percent, 83.3 percent in comparison to last year's first half. And then also our operating result was negative €900,000 and that resulted in over 50% decrease in the losses that we saw a year before at this time. So very happy progress in both growth and profitability.
And to talk about bit about the different sides of our business, so the diagnostic net sales grew by 96% And first half revenues were €1,800,000 and the therapy side net sales grew also with a healthy 67.3% during the first half of twenty twenty one amounting to €1,200,000 So both businesses growing, but due to the sizable amount of NBS systems we sold in the diagnostic side during the first half, Diagnostic net sales grew even faster than our therapy sales for the first half. During the springtime, we had a successful rights issue and it was happily oversubscribed and we raised a total of €6,600,000 of new equity. And new capital was raised. And I thank all the Subscribers of Nexton Shares for this very good result. And then finally, we had some time during the spring summer time to review our strategy for 2021 to 2024.
And the main take from that process right now is that we will focus on profitable growth in both the Diagnostics and Therapy businesses. And as we can see, this first half of twenty twenty one is also already producing results towards that are very favorable with our selective focus, strategic focus. So at this point, I would like to ask Jonas Jokhlafi, our CFO to go through a bit more detail for our first half 'twenty one numbers.
Thank you, Mikko, and good afternoon, everyone. The review period was the strongest first half in the history of the company, and that is by almost any metric. Despite the continued pandemic, we were able to reach a record growth pace of revenue. And Our total net sales grew by 83 percent to €3,000,000 Now the Diagnostic NBS business almost doubled in sales to €1,800,000 At the same time, our NBT Therapy net sales increased by 67% to €1,200,000 Now if we break down the total net sales to system sales and recurring revenue, We can see that the most significant growth driver this period was the sale of new systems. The system sales grew by 187 percent to €1,600,000 year on year.
At the same time, the recurring revenue, which is really important for us strategically, continued to grow at a good steady pace of 29% to €1,400,000 Now what I would like to highlight is that We were able to generate this kind of growth while at the same time increasing our gross margin level profitability. The personnel expenses for the period was €2,000,000 showing growth of 27%. At the same time, the other operating expenses grew by 14% to €1,600,000 Now the growth in operating expenses is was mainly due to the cost saving measures taken in the comparative period in 2020 in the second quarter. On the operating results level, we saw the best first half operating result of €900,000 And we can see that the operating loss decreased by 51% year on year. Now I wanted to have one graph in this webinar, which is shown under the financials table.
The graph is showing our H1 net sales and operating results Development through recent years. In the orange columns, we can see the net sales growth. It has been at a very good pace and the growth pace has been accelerating strongly. In blue, we can see the Operating losses are decreasing. And we could roughly say that for 2 years now, we have cut our losses in half back to back.
At the end of June, our cash balance was €6,700,000 and we estimate that the working capital is sufficient at least until the end of Total is sufficient at least until the end of 2022, that is next year. And the increased cash balance was mainly due to the successful over Subscribed rights issue executed earlier in the spring. And also as a result of that, our group equity increased and our equity ratio grew to 39%, so significantly. After the first half, our future outlook remains the Same. And that is that the company expects its revenue to continue to grow during the year 2021 and the loss for the period is expected for the financial year.
If there are any questions regarding the financials, I would be happy to answer those later in this webinar. But for now, back to you, Mikko.
Thank you. Thank you, Jonas. And I thank at this point also, I thank our customers. I thank the full Nexon team and our partners and also our shareholders for these exceptional results we have seen during this first half of twenty twenty one. I'd like to towards the end of this presentation, I'd like to take a look at our Key strategic objectives for the year 2021.
So we've number wise, we've seen what has happened during the first half, But also when we look at the second half of twenty twenty one and our full year strategically, then what should we look for? First of all, as the key strategic objective number 1 is to continue focusing on achieving profitable revenue growth and strict management of operating expenses. So what we saw during the first half, the very strong increase both in revenue and profitability, We want to pursue this also for the full year 2021. And of course, we haven't guided in detail What kind of growth levels we're expecting or profitability wise, but we expect that, of course, the full year to grow and we'll Manage all the sales and operational activities in a manner that we will have a successful year for also for the full year of 2021. There are certain things we look forward to.
We've had some recent New market openings and new partners that have been ordering also Systems, we have the Canadian partnership where we delivered 3 NBT systems, new NBT systems During the first half, we also our new Australian partner and the regulatory approvals we got for the Australian market During this summer, those are things that we also look forward to for the future years and of course 2021 to supply us with growth, Not to, of course, forget our markets both in EU and in the U. S. Where we have teams and we do more regular business. And on the digital side, if we think about the operating expenses, we've learned during the COVID pandemic that We've adjusted our ways of doing sales and demonstrating the systems and utilizing virtual tools for this. And we've seen also that we can be operationally efficient in the future using these tools now during the COVID pandemic, but also very likely once On some day, this pandemic hopefully will be over and more normalized business environment.
A second very important strategic objective for us is the accelerated therapy treatment protocols and the pilots that we're running. So the Cuopio, Cuopio pilot, Cuopio University Hospital pilot, which focused on treating severe depression With these accelerated protocols, we provided results already in springtime, so in March of this year. But we are looking forward to Continuing pilots with Coavio with some increased patient amounts, but We're quite not ready yet to release this more information about this pilot, but this is something we look forward to informing more during the second half. So continuation of the Kuopio pilot studies. And then in Helsinki, We're looking forward to hopefully getting the chronic neuropathic pain treatment pilot study Finalized with the treatments during Q3 of this year, by the end of Q3 and then reporting The early results from that pilot study once they are available soon after the treatments have all been made.
So This will provide us with more information on how we will then make decisions on progressing 2 possible even further trials, but the pilots and continuation of those pilots is a main is a big focus for us strategically during the second half of twenty twenty one. A third important objective and a focus is developing and executing deeper profitable Partnership business models in key therapy markets together with valued partners. And here as I mentioned, We had success with the Canadian partnership that a distribution partnership and selling free systems during The summertime, but we're also talking to some of our clinic partners and both in key markets in the U. S. And in Europe about the future ways of how we could do business in an even more deeper manner.
And this is also a way to look at the TMS therapy Markets in a more broader manner and think about how could we do these treatments In a more sustainable manner financially, I mean looking from a device company or from a system provider's point of view. So it is in order to be sustainable in the long term and in providing TMS therapy treatment, The business model needs to be in a manner arranged in a manner that it is also financially Profitable for the device company. So this is the only things I can tell at this point about this. But Partnerships in the key market is an important development area for us. And we've slowed down a bit due to COVID because Meeting people, meeting new business partners and meeting innovate I mean, trying to innovate business models It's somewhat easier, of course, when having face to face meetings.
So it's been taking a bit more time than we expected and anticipated earlier on. But this Process is moving on and we have good discussions and good partnerships that have already been established and some are On the working and we'll be presenting hopefully more news flow on this topic during the second half of this year. It's important for our strategy to progress with this objective. The 4th strategic objective For this year 2021 and it was about our patient registry. So the patient registry of over 200 completed Joachsla.
Treatment sessions of depression patients, that's our objective for the full year 2021. In June of this year, we published the first 187 patients treated in the United States at clinics for major depressive disorder. And out of those results, we can see over 50%, so 50.3% remission rates And then also 77% rates were of there was 77% rate of Clinical response. So very, very good numbers and the numbers are in comparison to other patient registry data out There, it is better. And if we look at the same ratings of Patient gathered data, so PHQ-nine or BDI, we can look at competitive Patient registries were our numbers are better than in the comparative and also better to the clinical trial data out there.
So we feel confident about our neuro navigated TMS therapy system Providing better or at least as good better results than The competition at the moment and patient registry growing is the way that we selected to provide this data also in the future. So this is also an important objective for us for this year. And you might notice our 5th objective that we had when we started off this year was about Our funding and the financial the funding to progress with our strategy. And as we have completed our fundraise the stock exchange issues that we had, The rights issue this year, earlier this year in springtime. We no longer have needs for fundraising right now.
And as Jonas mentioned, we have a cash runway at least until end of 2022. At the moment, this is our estimate. So there's no financial objective on that side right now. To end my presentation and to remind us in a nutshell about Nexstim, so Nexstim, we have a unique proprietary neuro navigated TMS technology. We deliver the best in class mapping and treatment for patients with brain diseases and disorders.
We're very well positioned to a disruptive shift that we see in depression therapy. And with our improving economics driven by record revenue growth and increasing operational efficiencies, Nexstim It is now a unique investment opportunity. So I thank you for your attention until now. I apologize for the slight technical problem with the Internet connection and I welcome any questions To myself or Jonas through the Q and A chat. So thank you.
Okay. There's a question from Frederic Kour from Redeye. About the prototype NBS system for research purposes, we announced, Is it going to be delivered in Page 2? Are they still on track? Yes, that's a good question.
And we are still on track. So for the second half of this year, we are looking forward to delivering These prototype systems and the value of the order was €900,000 So Upon delivery upon a successful delivery of the systems, we would look also to recognize that revenue during the second half. But is that still on the working, so it means that we haven't delivered it yet, but we are looking forward to that and everything Should be aligned with that. Okay. So there's another one I'm reading now also from Frederic.
Thank you. From Red Eye, you reported higher revenue per system in H1 compared To full year 2020, is it mostly explained by a decreased pandemic effect? Can we expect further increases as the treatments normalize this year? Well, Jonas, do you want to comment on that? I do know that, of course, on the therapy side, The pandemic effect last year's H1 was more dramatic.
So there is definitely Partially us having a better revenue this year is explainable by last year being we suffered more From the pandemic, but anything else you would want to, Jonas?
No, that is true. And we were estimating Some sort of a dip to utilization in Q1 this year with the news about the second and third wave, But we haven't actually seen that in our actual H1 figures. So the utilization of our systems has been higher than expected.
And if we look about the increase, well, at some point of time, I think We were also discussing and thinking about whether we start publishing more estimates on how this Her system revenue is going to be developing. But I think that you can see from the pattern that how it has recently developed. And my only kind of estimate and the guidance at this point is that there are differences between markets In because of reimbursement, because of issues related to how TMS has already Then I mean, in Europe and in U. S, we already have differences. Once we start progressing to new markets, such as Possibly Australia, then Asia.
I think it's still difficult To have a very accurate estimate about the average revenue, we definitely have some numbers that we model to our own strategy. And we are expecting some levels in order to be successful in our strategy. But at this point, it's too early To give too much of a guidance on that. We're happy to see that if we compare our per system revenue To some of our competitors that publish data also in that area or what you can calculate based on their public data, we're happy to see That even though our volumes of systems that we sell or that we deploy are slightly lower in comparison to what some of our therapy competitors are doing. We can see that Our model and the way we do business is more valuable For both our customers and ourselves, so we can see that the revenue levels are in a very good level per system.
So this is a happy note in comparison to some of the competitive numbers. Let's see. There's a few new any update of Stanford patient studies It's an anonymous question. Well, I mean, We do have a system at Stanford, also a Nexton system. At this point, It would be too early to give any notes on the studies that they've done with our systems And for us commenting on Stanford studies, I wouldn't want to do that right now.
But I do know that as a general note, In California, the COVID-nineteen pandemic has restricted Quite a bit of both research and especially on the research side, it's restricted quite a bit Of things and treatments that have been done. So I think it has had quite a bit of an effect to also the accelerated Therapy treatment protocol studies that Stanford was running at some point, but I don't want to go into detailed commenting on that On behalf of Stanford. A coverage of competitive landscape. I'd like to first of all, if we look compare ourselves in a general manner to the competition, most of the TMS companies that operate and some of them are public, but most of the TMS companies public or not operate in the area of therapy treatment and mainly in depression therapy. So we do compete with most of the TMS companies with our therapy Applications and especially in depression therapy, less in chronic neuropathic pain.
But With that said, our uniqueness, the way we have our neuro navigation technology helping us with the accuracy And how we can based on the patient's own MRI as the data we need for our system to begin with, We can have a 3 d model of the brain created to our system and then accurately stimulate wherever in the brain's cortex. That helps us with a few things. First of all, we have a diagnostic application of our system. So the pre surgical mapping of our brain of the brain As a TMS company, we're the only FDA and CE marked FDA approved CE marked company that for the pre surgical mapping of the motor and speech areas of the brain. Competitive wise, this is definitely an advantage for us.
And as you can see, Growth wise, this also helps us currently and we look forward to it helping us also for the future growth. So a definite competitive advantage is through the neuro navigation providing us with the possibility of having this diagnostic application, Pre surgical mapping of the brain. On the other side, as we can see, there is more fierce competition in the depression therapy area. So in the depression therapy area, the clinics and the partnerships that we are pursuing need to be, I'd say, willing and wanting to acknowledge the fact that with More accurate stimulation of the brain helped by our neuro navigation capabilities, you get better results. So but at this point, we have our patient registry data to back up that data.
And For the clinics that work together with us, they can see this happen in real life and they believe in NEXTEN system also being superior with the results provided by our patient registry. So in the therapy side, there's more competition, Especially in some markets like the U. S. And we need to of course focus on the benefits that what the neuro navigation technology For Nexton, the e field navigation, the SmartFocus TMS provides. But on the diagnostic side, we have less competition.
But of course, there's also less knowledge about TMS helping with pre surgical mapping. So that's a short competitive Kind of an update. Then there's a question about Updating our sales resources and without going into too much detail, There was a bit of information also in our H1 report. But the first thing is that we have direct Sales organizations both in U. S.
And Germany, Largely, and it's one in Germany. So those are the 2 markets where we sell directly NEXTON's NBS and NPT Systems, so both diagnostics and therapy. We've added a few new people to successfully added a few new people To our U. S. Team in the into the sales team during the first half of twenty twenty one and we can see already results that have been Provided by those additions, so systems that have been sold From the markets, we have a we have markets covered Germany, Switzerland and Austria also from the same, our German subsidiary.
And then all other markets are more or less covered By distribution partnerships, networks of distributors That's with various hospitals and clinics around the world, but especially in Europe, but also in like the Middle East And Asia. And we are also in the lookout for new partners all the time and we evaluate them very frequently. We have processes going on. And currently, we're also looking at new partners for the vast Asian market. But we'll come out With new information on that side once we have new partnerships.
So the expansion, especially outside from our current direct sales network, is very much aligned with our strategy to find new distribution partners for markets where we're not present yet. And that includes, of course, Largely the Asian market. Let's see, there's been I think we've gone through the questions that were posted at this point. We still have some time if someone wants To post a question. Very good question.
Thank you. Thank you, by the way, for all of those. I'm glad that you could discuss those topics Joachsla. Okay. There's one more question About expanding a bit on how planning to accelerate NBT system sales post COVID, What will be easier?
Well, I mean, strategically, When we talk about partnerships and working on basically having Some clinics or partners that work together with Nextim and having more Nexstim dedicated clinics in the future, instead of maybe just reaching out for totally new clinics Out of the vast, vast amount of psychiatric clinics as an example That could provide TMS. So having more deeper relationship with certain clinics And then expanding together with them in opening new clinics is one method. Post COVID wise, It's easier to, 1st of all, when we find these partners and by the way, We of course have existing partners and discussions. But if we find partners that want to engage in these type of partnership discussions, It's easier to progress things when the teams can also meet together, plan together and have a more Of a normal type of finding a new type of a business type of a relationship. So certainly that will ease a bit.
Then if we look at other things like the traditional methods of finding new opportunities, One big thing that has now been affected are all the events, all the industry events. So not all of them, but a lot of the industry events have either decided to be virtual for quite some time Or then if there has been physical possibility of participating, the participant Amounts and the amount of people and partners that meet are quite a bit less than prior to COVID. So In a salespartnership opportunity wise, it's almost It's gone a lot, is digital. That is a good thing, of course, for some of the deals. You can have Digital marketing and digital demos, even digital deal closings.
But to have a longer partnership and to establish a longer business relationship, It typically also takes time and face to face meeting time also to get that done. And I think we've done very well despite These elements being affected by COVID, but I'm at least looking forward for these mentioned type of elements also to help us once the COVID pandemic hopefully eases up. And then as I'm mentioning also on the new team building and getting new people To get knowledgeable of Nextim and the way we work and all this, this is also slightly affected of course because most of the people Even the new team members have had to work quite a bit from remotely and virtually and there's been less amount Of getting together. I think again virtually training, getting to know each other and all that. We've done as good as you can in this virtual world, but those are the things that I look forward to also meeting more with people.
And I know our Teams want to get together more and develop the way we work and the way We understand the business and operate in it. So that's the way we see NVT. So partnerships Building partnerships, building the business models and then actually having more sales opportunities Through more engagement with potential customers and partners in the future. Is there Still some time if someone wants to post a question. Otherwise, Once again, thank you for attending.
Thank you for the very good questions. And I hope that you all stay safe wherever you live and operate in this COVID world. We hope to, of course, bring you news flow during the second half. And then, of course, ultimately, in February, late February of next year, we will be We are publishing our full year 2021 results. So results wise, that's when we're going to have the Next webinars, but of course, we look forward to meeting with you hopefully at some events and investor events Or otherwise, it will have some updates on recent news flow.
So thank you everyone and I wish you all a very good weekend. Bye bye.