BrainsWay Stock

BrainsWay Ltd. (BrainsWay) is a leader in advanced noninvasive neurostimulation treatments for mental health disorders.

The company is boldly advancing neuroscience with its proprietary Deep Transcranial Magnetic Stimulation (Deep TMS) platform technology to improve health and transform lives. The company is dedicated to leading through superior science. The company is the first and only TMS company to obtain from the U.S. Food and Drug Administration (FDA) three cleared indications backed by pivotal studies demonstrating clinically proven efficacy. Indications include major depressive disorder (MDD) (including reduction of comorbid anxiety symptoms, commonly referred to as anxious depression), obsessive-compulsive disorder (OCD), and smoking addiction.

The company has also received CE Mark for a variety of psychiatric and neurological indications. The company focuses on increasing global awareness of and broad access to Deep TMS. Deep TMS uses magnetic pulses to stimulate neurons and consequently modulates the physiological activity of the brain. The company’s technology can either increase brain activity in neuronal networks which are hypoactive, or alternatively decrease brain activity in neuronal networks which are hyperactive. The company’s proprietary electromagnetic coils, which it refers to as H-Coils, are designed to safely stimulate deep and broad brain regions, which provides an advantage over other available TMS products, which it refers to collectively as Traditional TMS. In the United States, the company sells its Deep TMS system for the treatment of MDD (including reduction of comorbid anxiety symptoms, commonly referred to as anxious depression) and OCD and has began marketing its products for the treatment of smoking addictions. The company’s Deep TMS technology has the potential to be safe and effective for the treatment of a wide range of additional psychiatric, neurological, and addiction disorders. Additional clinical trials of Deep TMS in various psychiatric, neurological, and addiction disorders are underway or planned.

The company’s first commercial H1 Coil Deep TMS product received clearance from the FDA in 2013 for the treatment of MDD in adult patients who have failed to achieve satisfactory improvement from anti-depressant medication in the episode. The company’s pivotal trial for MDD demonstrated statistically significant response and remission rates of 38.4% and 32.6%, respectively, in week five of Deep TMS treatment of 20 minutes per session, compared to 21.4% and 14.6%, respectively, after sham treatment. The company’s Deep TMS system for MDD is marketed to and installed at psychiatrists’ offices and other facilities principally in the United States and in certain other countries throughout the world.

Additionally, in April 2021, the company received FDA clearance for a shorter 3-minute Theta-Burst protocol for its MDD treatment. In support of the company’s successful application to the FDA for this protocol, it submitted safety and efficacy data from 146 subjects who had received either the standard Deep TMS protocol or Theta Burst Deep TMS. Clearance was obtained after it was demonstrated that subjects in both groups experienced a statistically and clinically meaningful reduction in depression scores, and the results met the equivalence criteria needed for clearance of the shorter treatment.

In August 2021, the FDA cleared an expansion of the company’s existing MDD clearance to include the noninvasive treatment of anxiety symptoms among subjects with MDD, commonly referred to as anxious depression. In support of its application for this labeling expansion, the company demonstrated statistically significant results from three randomized controlled trials and open label studies which found favorable outcomes with Deep TMS when compared to sham or medication as a standard of care. The data from the three randomized controlled trials studies of Deep TMS demonstrated effect sizes ranging from 0.34 (when compared to sham) to 0.90 (when compared to medication).

Furthermore, in August 2022, based on a randomized, double-blind, controlled multicenter, non-inferiority study of its H1 and H7 Coils, the company's MDD clearance, which had previously applied to its H1 Coil, was extended to also apply to its H7 Coil. The Deep TMS H7 Coil had been previously cleared for use in treating obsessive-compulsive disorder since 2018, and with this new clearance it can be marketed for the treatment of MDD (including anxious depression). The FDA’s grant of clearance was based on its review of successful results from a randomized, double-blind, controlled multicenter trial completed by the company. The study, which included 144 subjects, found overall efficacy rates for the H7 Coil that were comparable to those achieved with BrainsWay’s H1 Coil. With this clearance, there is no need to upgrade or add software to systems installed in the field.

The company is the first medical device company to offer an FDA-authorized noninvasive treatment for OCD, the marketing authorization for which it received in August 2018 as an adjunct therapy for adult patients suffering from OCD. The company’s customers are principally doctors, hospitals, and medical centers in the field of psychiatry. Treatment with Deep TMS is typically performed as an office-based procedure using the company’s Deep TMS system, which consists of its proprietary H-Coil helmet, as well as several other components, including a stimulator, cooling system, positioning arm and an operator interface.

The company estimates that over 90% of the total private insurer adult covered lives in the United States have coverage for reimbursement of MDD treatment with Deep TMS. In addition, the company’s MDD treatment (including for reduction of anxiety symptoms, commonly referred to as anxious depression) with Deep TMS is eligible for reimbursement from Medicare. Deep TMS treatment for MDD reimbursement coverage is generally available after between one and four failed (inadequate response or intolerable) trials of anti-depressant medications.

The company is actively communicating its FDA clearance and evidence outcomes to payors for future coverage consideration as its evidence and commercialization efforts for that indication progress, based on the novelty of the technology, unmet clinical need, and the efficacy and safety profile of the treatment.

In Israel, in June 2022, for the first time the Israeli Ministry of Health has approved coverage applicable to the company’s Deep TMS system for the treatment of depression. The inclusion of the treatment within Israel’s health basket of essential medical services means that the country’s health funds must make the treatment available to qualifying patients free of charge.

The United States is the company’s primary and most strategic market, representing approximately 75%,88% of its revenues for the year ended December 31, 2022. The company operates in the United States through its wholly owned subsidiary, BrainsWay USA Inc, as a direct marketing and sales channel, where the company has existing sales, marketing, and support infrastructure.

Deep TMS Platform

The company’s proprietary Deep TMS technology is intended for noninvasive treatment of psychiatric, neurological, and addiction disorders. The system includes an H-Coil uniquely designed to transmit electric flows at varying rates, creating an electromagnetic field that serves to depolarize cortical neurons and activate neural networks in certain areas of the brain in accordance with the operating frequency, with the effect of treating the disorder associated with that area of the brain. The company’s innovative technology is capable of stimulating deeper and broader regions of the brain than any other commercially available TMS product.

The company has developed a number of H-Coils with differing configurations, building upon its technology with important changes for each coil. For different regions of the brain which are known to be associated with specific brain disorders, the company offers different H-Coils that are designed to influence the neurological networks of those regions. For example, the company has two H-Coils, targeting different brain regions, that may be used for MDD (including anxious depression), one H-Coil used for OCD, and one H-Coil used for smoking addiction. Some of its H-Coils are also able to treat more than one indication. The H-Coils transmit pulses which are generated by a power supply, known as a stimulator. The company developed its own proprietary stimulator that is more advanced than its previously used third-party stimulator and improves its approved Deep TMS systems through its user-friendly software interface and other features. The company expanded its FDA clearances in MDD, OCD, and smoking addiction, which had previously applied to its older model systems with third-party stimulators, to also include current systems which incorporate its proprietary stimulator. In addition, the company is developing a next generation multichannel stimulator allowing for simultaneous modulation of different areas of the brain with independent stimulation parameters.

The company’s Deep TMS system consists of the various key components. Each system can accommodate two helmets, and a third helmet can be incorporated using a separate auxiliary stand.

The company completed a Phase III trial at 20 different sites in the United States, Canada, Israel, and Germany to test the efficacy and safety of using Deep TMS to treat MDD between 2009 and 2013. The therapeutic effect was clinically meaningful in both patients who failed one to two medications and patients who failed three or more medications, indicating that Deep TMS is effective in an even more treatment-resistant population.

The company’s randomized, double-blind, controlled multicenter, non-inferiority study of its H1 and H7 Coils trial, which included 144 subjects, found overall efficacy rates for the H7 Coil which were comparable to those achieved with its H1 Coil. Based on this trial, the company's MDD clearance, which had previously applied to its H1 Coil, was extended by the FDA to also apply to its H7 Coil, which until this clearance were used only for the treatment of OCD.

In 2021, for the first time, several payors issued policies and coverage determinations allowing for reimbursement coverage applicable to Deep TMS for OCD. While the criteria for this emerging Deep TMS coverage varies with each payor, generally, coverage requires the failure of between two and four medication trials before qualifying for reimbursement.

The company completed a Phase III trial at 11 sites in the United States, Israel, and Canada to test the efficacy and safety of Deep TMS as a treatment for OCD, which was conducted from 2014 through 2017. In this trial, Deep TMS met its safety and efficacy endpoints and based on these results, it filed a de novo application to the FDA for the Deep TMS (using BrainsWay OCD) in this indication. In August 2018, the FDA classified and granted marketing authorization for Deep TMS as an adjunct treatment for adult patients with OCD to be used together with other first-line therapies.

Strategy

The company focuses on expanding the commercialization of Deep TMS with respect to MDD, OCD and smoking addiction. In September 2021, the company received a 510(k) clearance from the FDA for expansion of its Deep TMS MDD treatment also to include treatment for reduction of anxiety symptoms, commonly referred to as anxious depression. In August 2022, the company received FDA-clearance for treating anxious depression with its H7 Coil, which had been previously cleared for treating OCD. In addition, the company is actively engaged in research for other potential applications for Deep TMS for patients suffering from neurological conditions and addictions. For each potential indication, the company assesses and evaluates its technology’s efficacy, safety, patent status, market potential, and development and regulatory pathways.

The key elements of the company’s strategy are to increase the full-scale commercialization of Deep TMS for MDD, OCD and smoking addiction; pursue additional indications and technological innovations for Deep TMS; expand reimbursement coverage for Deep TMS for OCD, smoking addiction and other approved indications in the future; develop innovative enhancements and features for its Deep TMS systems; and increase its international commercial footprint

Sales and Marketing United States

The United States is the company’s primary and most strategic market, representing approximately 75% of its revenues for the year ended December 31, 2022. The company operates in the United States through its wholly owned subsidiary, BrainsWay USA Inc., as a direct marketing and sales channel, engaging in the marketing, sales, support, and logistics independently in the United States.

In the United States, the company sells or leases Deep TMS systems by one of the following two methods: a fixed-fee lease model in which the Deep TMS system is leased to a customer for a fixed annual fee, generally with a term of between 48 to 60 months, for unlimited use; and a sales or purchase model in which the Deep TMS system is sold to the customer for a fixed purchase price. sales or purchase model. The company also utilizes and/or is planning to utilize other commercial models, including those based on a pay per use model, with certain customers in certain territories.

As of December 31, 2022, approximately 46% of the company’s global Deep TMS systems installed base for MDD utilized the fixed-fee lease model, and approximately 54% utilized the sales model. The company generally commercializes Deep TMS for OCD utilizing a leasing or purchase model, and often as part of a combined offering with its MDD system.

Following its receipt of FDA clearance for smoking addiction, the company completed controlled and limited market releases of its system for this indication, and are in the process of a clinical data collection effort to facilitate a long term commercial plan for this product.

After installation of its system, the company offers high quality service, technical support, and repair to customers. Customers leasing the device generally receive support including maintenance and warranty for repairs and replacements during the full term of the lease. In contrast, customers purchasing the device receive this support for the first year following purchase.

The company’s marketing activities include, amongst other things, corporate presence in major commercial and professional conferences, press releases, advertising, participation in open house and other similar events, social media, Search Engine Optimization (SEO), and other internet-based promotional campaigns, and release of both direct and online marketing materials, which are all designed to increase the use of its systems for the authorized indications.

Outside of the United States

A significant part of the company’s sales outside the United States are made indirectly with local distributors and agents. Most of the company’s sales outside the United States are made only via the purchase model, although it leases some of its Deep TMS systems in France and Israel. The company’s primary focus is on selling to hospitals, medical centers and clinics dealing with the treatment of psychiatric neurological and addiction illnesses and disorders.

The company’s non-U.S. sales are managed both by its internal team in Israel and by local agents in various countries. The company has exclusive distribution agreements in various territories, including, notably, in Japan, South Korea, Thailand, Taiwan, the Philippines, and the United Arab Emirates, and are seeking new distribution partners for other strategic markets. Under its distribution agreements, the distributor typically receives an exclusive right to commercialize the Deep TMS in the relevant territory. The exclusivity is contingent upon fulfillment of certain quotas, or pre-defined minimum orders of a number of systems per period. The company has the right to cancel the exclusivity of the distributor if the distributor fails to fulfill the set targets. The distributor is required to pay the company for each Deep TMS system installed in the territory.

In territories in which the company uses a local distributor, the distributor is generally responsible for obtaining and maintaining the regulatory approvals required for marketing of Deep TMS systems in the territory and for the installation, training, and maintenance of the systems in the relevant territory. In Japan, the company has obtained PMDA regulatory approval for its Deep TMS system, which is a precondition to receiving reimbursement coverage under the Japanese National Health Insurance Plan. The company is working through its Japanese distributor with the relevant bodies in Japan in an effort to update the local society guidelines to include Deep TMS in order to obtain such coverage.

Government Grants

As of December 31, 2022, the company had received grants from the IIA. The company is required to pay 3% royalties of sales of its Deep TMS products. In addition, the company received from MAGNET approvals for grants.

Manufacturing and Supply

The company manages all aspects of product supply through its Jerusalem and/or U.S.-based operations teams. The company must ensure that all of the processes, methods, and equipment are compliant with the Quality System Regulations (QSR) for devices on an ongoing basis, mandated by the FDA and other regulatory authorities, and must conduct extensive audits of vendors, contract laboratories and suppliers.

Research and development expenses, net

The company’s research and development expenses, net, were $7.7 million for the year ended December 31, 2022.

Competition

Competitors that sell other forms of TMS therapy for MDD include Neuronetics, MagVenture, Magstim, MAG & More, Cloud TMS, and Nexstim, that compete directly with the company.

Government Regulation

The company’s products and its operations are subject to extensive regulation by the FDA and other federal and state authorities in the United States, as well as comparable authorities in foreign jurisdictions. The company’s products are subject to regulation as medical devices under the U.S. Federal Food, Drug and Cosmetic Act (FDCA), as implemented and enforced by the FDA.

The company’s Deep TMS system is classified as a Class II medical device. For MDD, smoking addiction, and subsequently granted applications relating to MDD (including a 3-minute Theta Burst protocol and a labeling expansion to include reduction of comorbid anxiety symptoms among depressed patients), it obtained FDA marketing authorization through the 510(k) clearance process. For OCD, the company obtained FDA marketing authorization through the de novo classification process. Subsequent changes made to its Deep TMS system will be made through one or more of the various existing FDA review pathways. To obtain 510(k) clearance, the company must submit to the FDA a premarket notification submission demonstrating that the proposed device is substantially equivalent to a predicate device already on the market. The company also has received European Conformity (CE) marking in the European Economic Area (EEA) and in Israel for MDD, OCD, and smoking addiction, and 11 other indications in psychiatry, addiction treatment, and neurology.

History

BrainsWay Ltd. was founded in 2003. The company was incorporated under the laws of the state of Israel in 2006.