Company also announces changes to U.S. Management Team
JERUSALEM, Israel and HACKENSACK, N.J., August 26, 2019 – BrainsWay Ltd. (NASDAQ & TASE: BWAY) (“BrainsWay” or the “Company”), a global leader in the advanced non-invasive treatment of brain disorders, today reported financial results for the quarter ended June 30, 2019, and provided an operational update.
“We achieved significant progress in the second quarter and first half of the year,” said Yaacov Michlin, President and Chief Executive Officer of BrainsWay. “Increased demand and use of our Deep Transcranial Magnetic Stimulation system (Deep TMS), both in the U.S. and internationally, continue to drive significant top-line growth. In addition, we have attained important operational achievements in multiple key areas, including the expansion of our sales force, entrance into new territories, growing clinical evidence of the effectiveness of our therapy demonstrated by publications in peer-reviewed journals, and the further advancement of our clinical pipeline for the treatment of additional psychiatric and neurological disorders. Moreover, we are supported by a solid balance sheet, following our NASDAQ IPO, that positions us well to continue executing our growth strategy.”
Financial Results for the Second Quarter Ended June 30, 2019
- Quarterly record revenue of $5.7 million, an increase of 53% over the second quarter of 2018.
- Recurring (primarily lease) revenues of $3.2 million, an increase of 43% over the second quarter of 2018.
- Installed base of 456 Deep TMS systems, a quarter-over-quarter increase of 40 systems.
- 30 Deep TMS obsessive-compulsive disorder (OCD) coils shipped, reaching a total of 115 OCD coils as an add-on helmet to BrainsWay’s Deep TMS systems since marketing clearance was obtained in August 2018.
- Gross margin for the second quarter of 2019 was 76%, compared to second quarter of 2018 gross margin of 77%.
- Research and development expenses for the quarter were $2.4 million, compared to $1.3 million in the same period in 2018. The increase was due to the continued development of BrainsWay’s proprietary Deep TMS technology (including completion of the treatments for subjects recruited in the smoking cessation study and continued progress of clinical trials for the treatment of post-traumatic stress disorder), as well as lower Israel Innovation Authority (IIA) participation in expenses.
- Sales and marketing expenses for the second quarter of 2019 were $3.3 million, an increase of $1.4 million over the prior year. The increase was primarily driven by an expansion of the sales force and enhanced marketing activities for both MDD and OCD.
- General and administrative expenses for the quarter were $1.4 million, as compared to $0.7 million for the same period in 2018. The increase was due to additional costs associated with becoming a public company in the U.S.
- Operating expenses totaled $7.0 million, compared to $3.9 million in the second quarter of 2018. The increase was primarily driven by the enhanced sales and marketing activities, the increase in R&D expenses and, as mentioned above, the increased general and administrative costs incurred following BrainsWay’s IPO.
- Operating loss for the quarter was $2.7 million, compared to $1.0 million for the same period in 2018. The increase was primarily driven by the increase in expenses and was partially offset by the increase in gross profit of $1.5 million.
- Net loss was $3.5 million, compared to $1.8 million in the second quarter of 2018. The increase was primarily due to the increase in operating loss, and finance expenses mainly due to non-cash amortization of the royalty-bearing sales-based obligation to the Israel Innovation Authority and $0.2 million associated with the debt repayment completed in the second quarter.
- The basic and diluted net loss per ordinary share for the second quarter of 2019 was $0.17 per share, compared to $0.12 per share in the second quarter of 2018.
- Cash used in operating activities was $3.0 million, compared to $1.8 million in the second quarter of 2018. Cash used in investing activities was $0.4 million, compared to $0.6 million in the second quarter of 2018.
- As of June 30, 2019, the Company had cash and short-term investments of approximately $27.6 million, compared to $7.7 million at March 31, 2019. This includes $26.3 million of net proceeds derived from BrainsWay’s U.S. IPO on the Nasdaq, completed in the second quarter.
- Following a $3.3 million debt repayment in the second quarter, BrainsWay has no debt other than the royalty-bearing sales-based obligation to the Israel Innovation Authority.
Changes in U.S. Management Team
- Hadar Levy, the Company’s Chief Financial Officer (CFO), will relocate to the U.S. and assume the additional role of Chief Operating Officer (COO). The newly created position of COO in the U.S. is expected to enhance the alignment of the organization and support the Company’s next phase of growth.
- Joseph Perekupka, Senior Vice President of Sales and Operations North America has notified the Company of his intention to resign from BrainsWay, effective October 15, 2019. Until this time, Mr. Perekupka will assist in the orderly transition of his duties. “We thank Joe for the role he played in our activities in the U.S.,” said Mr. Michlin. “On behalf of the entire BrainsWay team, we wish Joe well in his future endeavors.”
Recent Corporate Highlights
- In April 2019, BrainsWay successfully completed its U.S. IPO of 2.8 million ADSs, each representing two ordinary shares of BrainsWay, resulting in gross proceeds to the Company of $30.8 million, before deducting underwriting discounts and commissions and other offering expenses.
- Trading of BrainsWay’s ADSs began on the Nasdaq Global Market under the symbol “BWAY” on April 17, 2019.
- Expanded commercialization efforts to increase adoption of Deep TMS, including hiring additional sales representatives in the U.S. and Europe.
- Results of BrainsWay pivotal study demonstrating that Deep TMS showed a significant clinical benefit compared to sham in treating OCD were published in the American Journal of Psychiatry.
- Results of a study showing that Deep TMS plus standard medication was significantly more effective at generating remission rates and reducing depression levels among major depressive disorder (MDD) patients compared with standard medication alone were published in the Journal of Psychiatric Research.
- Reached target recruitment and completed treatment of subjects in the multicenter smoking cessation study; final top-line results expected in Q4 2019.
- Continued enrollment in post-traumatic stress disorder trial; interim results anticipated by year-end 2019.
- Entered into exclusive distribution agreements with Unison Healthcare Group, among the largest distributors of medical equipment in Taiwan, Prime Medix, a provider of safe and innovative healthcare solutions in the Philippines. These agreements follow other recent distribution agreements for Deep TMS in South Korea and Thailand, as well as the receipt of regulatory clearance in Japan. Additionally, BrainsWay terminated its distribution agreement with its Israeli distributor, assuming direct operations for customers in Israel.
Conference Call and Webcast
BrainsWay’s management will host a conference call prior to the market open on Monday, August 26, 2019, at 8:00 a.m. Eastern Time to discuss these results and answer questions.
Monday, August 26, at 8:00 a.m. Eastern Time:
Dial in information:
Standard international: +44 (0) 2071 928000
Israel, Tel Aviv (Local): +972 3 721 7998
United States (Toll-free): +1-866-966-1396
Confirmation Code: 4379676
To listen to a live webcast, please visit the Investors section of the BrainsWay website at www.brainsway.com. The webcast replay will be available on the website for two weeks following the completion of the call.
BrainsWay is a commercial stage medical device company focused on the development and sale of non-invasive neuromodulation products using the Company’s proprietary Deep Transcranial Magnetic Stimulation (Deep TMS) technology for the treatment of major depressive disorder (MDD) and obsessive-compulsive disorder (OCD), for which BrainsWay received marketing authorization from the U.S. Food and Drug Administration (FDA) in 2013 (for MDD) and in August 2018 (for OCD). BrainsWay is currently conducting clinical trials of Deep TMS in other psychiatric, neurological and addiction disorders, including smoking cessation and post-traumatic stress disorder, and is planning trials for opioid addiction, fatigue in multiple sclerosis (MS) and post-stroke rehabilitation.