Europe Editor

On the strength of a 29-patient Phase II clinical study that generated a strong newsflow about a potential treatment for stroke rehabilitation, Nexstim (Helsinki, Finland) CEO Janne Huhtala took his company to market, raising €15.3 million ($17 million) from investors with a dual initial public offering (IPO) on the Nasdaq First North Finland and Nasdaq First North Sweden exchanges. The funds will carry the company through the end of a Phase III trial with 198 patients at 12 centers in the U.S.
 

Spinning technology out of Aalto University (Helsinki, Finland) in 2000, Nexstim won approval by the FDA in 2009 for a navigated brain stimulation system for use in the assessment of the primary motor cortex for pre-procedural planning. In 2012 the company won FDA approval for another diagnostic application, pre-surgical mapping of speech cortices. Now it is applying the same technology with only modest tweaks to a therapeutic indication in stroke rehabilitation, targeting what it estimates to be a $1.8 million opportunity.
 

Medical Device Daily spoke with Huhtala by telephone during a recent visit to London.
 

MDD: You are moving into a therapeutic space where there are no comparative devices but a massive potential. How can this be?

Huhtala: To this point, stroke has been a graveyard for new projects and a lot of money has been lost, in both the acute phase and the post-acute phase. At the same time, everyone acknowledges that it is a huge market. We happen to be in a place where we have something that is enabling clinical efficacy and that we are hoping will show in the pivotal trial the kinds of results we have seen in earlier data. Once we get there, it will be a different ballgame.
 

MDD: What is inside the magic box?

Huhtala: That's a trade secret. The system is built on the accuracy of the navigational software used for tumor resection already FDA-approved and CE marked for a different indication [pre-surgical mapping]. This means it is validated, which makes the risk with us lower than it might be normally. This is why no one can question our accuracy, it is entirely validated. 
 

We start with the MRI of the patient, which is done independently. We input that to our own algorithms to build a 3-D model of that patient data with millimeter accuracy. It takes on average about 30 seconds to do that. In real time we can model the potential e-field, which we use a magnetic field to stimulate. By itself, the magnetic field does not do anything. It is the electric field that the magnetic field induces in the conductive brain tissue that is key because the neurons in the cortex react to this electric field. Our coils use about 3,000 volts in microseconds, which creates a 1 Tesla to 2 Tesla magnetic field that is built with precision to induce a specific electric field in the brain. When this field touches neurons, they fire. 
 

Modeling in real time means we can show where the e-field is induced. During stimulation, where an EMG [electromyography] is attached to a muscle, you will see a response. We can stimulate the brain without any help of the patient and measure the result.
 

MDD: What is the opportunity you see?

Huhtala: Stroke patients do not have much in the way of therapy after three months. They are treated and then discharged after some rehabilitation. Our value proposition in that rehabilitation setting is helping patients get better earlier. What we want to show is that we can help these patients get better, to get back some independence and to avoid being a chronic patient care case. The patient goes into the stimulation for stroke rehab for 17 minutes. Then they go on to regular occupational therapy. We prime the brain for the occupational therapy.
 

This has a huge value. Ongoing rehabilitation for chronic patients in the U.S. costs $8.5 billion per year, and patients are not getting any real benefits from it. There is a huge unmet need, yet there is nothing for these patients. One in every six people will experience stroke in their lifetime. So this is touching everybody. 
 

The results of our Phase II trial that we released at the International Stroke Conference [Feb. 12, 2014; San Diego] were remarkable with an 80% response rate and almost quadrupled the effect of almost anything else tried in this space. This was the basis for starting the pivotal Phase III study in Q3 [2014].

 

MDD: Are you building a health economic study as well?

Huhtala: It is built into the Phase III trial. We are collecting patient data points six-months post treatment. As there is not a comparable therapy, we have to build the model ourselves to show there is a clear value in the treatment for the patients, physicians, payers and providers. We are providing treatment in the outpatient setting where it is far cheaper than in-patient interventions. The system is built to be so simple to use that the therapy can be performed by a nurse or a technician, not a highly educated neurosurgeon. And we are using criteria from other rehabilitation trials to show, for example, where a patient becomes less dependent on care. This becomes very relevant for payers, to show an impact on the support needed for patients at home.

MDD: You have approval for selling in Europe with a CE mark. Yet you are not pushing a commercial roll-out. What is your strategy?

Huhtala: We are going slow because a CE mark doesn't prove anything about efficacy to anyone. It only shows safety. For clinicians, we want to show how effective this is before they start treating so that they are confident 

 

We are selling the system in Europe, but we are not promoting it yet, waiting for the clinical data. We could spend so much money pushing it, but it is too easy for physicians or administration people in a hospital or rehabilitations center to say that 'You haven't done this or that.' So we decided not to spend on marketing yet, expecting strong clinical data so that people would not argue against it. We are getting KOLs [key opinion leaders] to understand what we are doing. We are showing the clinical data, and we are going for FDA approval. Once we have ticked these boxes, then we can move on. 
 

We do not have a predicate device so we are hoping to obtain FDA de novo 510k clearance for the right to market and sell in the U.S., and at the same time it is not a PMA [premarket approval], because this is a non-significant risk device. It is non-invasive, and the intensities that we are using to stimulate the brain are so low and so quick that because it has been shown to be safe, there are no issues about adverse events.
 

MDD: Are your investors comfortable with your commercial strategy?

Huhtala: We have not announced any specific strategy because during the IPO we said the financing was needed to run through the clinical trial, and starting early commercialization, the basics. We will announce at a later moment how we will approach commercialization. The reason for that is we want to see how strong our clinical data is going to be. This will shape the strategy for commercialization. 
 

MDD: Some might say you are waiting for this value inflection point with data because a trade sale is your exit strategy.

Huhtala: One could argue that, and as the CEO of a public company I would neither agree nor disagree. Our strategy is to build a company that is self-sustaining and move it forward.

MDD: So are you ready to take it forward yourself?

Huhtala: Or to partner with someone. This remains to be seen.