20-F: BrainsWay Achieves Profitability in 2024, Eyes Further Expansion

BrainsWay reports its first operating profit in 2024, driven by increased adoption of its Deep TMS technology for mental health disorders.

Summary

• BrainsWay Ltd. achieved its first operating profit in 2024, marking a significant milestone for the company.
• The company's revenue increased by 29% to $41.0 million, compared to $31.8 million in 2023.
• Net income reached $2.9 million for the year ended December 31, 2024, a substantial improvement from the $4.2 million net loss in the previous year.
• The company's success is attributed to the growing adoption of its Deep Transcranial Magnetic Stimulation (Deep TMS) technology for treating mental health disorders.
• BrainsWay's Deep TMS system is FDA-cleared for major depressive disorder (MDD), obsessive-compulsive disorder (OCD), and smoking addiction.
• The company is focused on expanding its commercial footprint in the United States and internationally.
• BrainsWay is also investing in research and development to explore new indications and enhance its Deep TMS technology.
• As of December 31, 2024, the company had cash, cash equivalents, restricted cash and short-term deposits of $69.6 million.
• The company believes its existing cash resources and anticipated revenues will be sufficient to fund its operations in the foreseeable future.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with the company achieving profitability and demonstrating strong growth. While risks are acknowledged, the overall tone is optimistic.

Positives

• BrainsWay achieved its first operating profit in 2024.
• Revenue increased by 29% to $41.0 million.
• The company has a strong cash position with $69.6 million in cash, cash equivalents, restricted cash and short-term deposits.
• BrainsWay is expanding its commercial presence and exploring new indications for its Deep TMS technology.
• The company has a growing installed base of Deep TMS systems.

Negatives

• The company has an accumulated deficit of $98.4 million as of December 31, 2024.
• Reimbursement for Deep TMS for smoking addiction is not yet available.
• The company faces intense competition in the mental health treatment market.

Risks

• The company's success depends on the market perception and acceptance of Deep TMS technology.
• Failure to secure or maintain adequate reimbursement for Deep TMS may hinder its adoption.
• The company relies on third parties for manufacturing, distribution, and clinical trials, which exposes it to uncertainty.
• Clinical trials involve a lengthy and expensive process with uncertain outcomes.
• The company faces the risk of product liability lawsuits and warranty claims.
• Geopolitical instability, war, supply chain disruptions, and global pandemics could affect the company's operations.
• The company's reliance on technology may expose it to cyber-terrorism or other compromises.
• The company may be subject to claims that its employees have wrongfully used or disclosed confidential information of third parties.
• The company has manufacturing, assembly and other significant functions that are located in Israel and, therefore, its business and operations may be adversely affected by political, economic and military conditions in Israel.
• Exchange rate fluctuations between the U.S. dollar, the New Israeli Shekel and other foreign currencies may negatively affect our future results of operations.
• The price of the ADSs may be volatile and may fluctuate due to factors beyond our control.
• The significant share ownership position of several of our officers, directors, and entities affiliated with certain of our directors, including Valor, may limit your ability to influence corporate matters.
• The Israeli government grants that we received require us to meet several conditions, may restrict our ability to manufacture our Deep TMS systems and transfer relevant know-how outside of Israel and require us to pay royalties, including increased royalties if we manufacture our Deep TMS systems outside of Israel or payment of a redemption fee if we transfer relevant know-how outside of Israel.
• We may be a passive foreign investment company for U.S. federal income tax purposes, which generally would result in certain adverse U.S. federal income tax consequences to our U.S. shareholders.

Future Outlook

BrainsWay plans to expand commercialization of Deep TMS for MDD, OCD, and smoking addiction, pursue additional indications and technological innovations, expand reimbursement coverage, and increase its international commercial footprint.

Industry Context

The announcement reflects a growing trend in the mental health industry towards non-invasive neuromodulation therapies as alternatives or adjuncts to traditional pharmaceutical treatments. Competitors like Neuronetics and MagVenture also offer TMS systems, but BrainsWay distinguishes itself with its Deep TMS technology and FDA clearances for multiple indications.

Comparison to Industry Standards

• BrainsWay competes with companies like Neuronetics, Magventure, Neurocare (MAG & More), Cloud TMS, Magstim, Nexstim Yingchi, Sebers (Remed/Blossom), Magnus Medical, NeuroQuore, and BTL in the TMS therapy market.
• BrainsWay's Deep TMS technology is designed to stimulate deeper and broader brain regions compared to traditional TMS systems using figure-8 coils.
• BrainsWay'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, compared to 21.4% and 14.6%, respectively, after sham treatment.
• BrainsWay's pivotal trial for OCD demonstrated statistically significant response and partial response rates of 38.1% and 54.8%, respectively, after six weeks of daily active Deep TMS treatment, compared to 11.1% and 26.7%, respectively, after sham treatment.
• BrainsWay's pivotal trial for smoking addiction demonstrated a statistically significant Continuous Quit Rate (CQR) of 28.4% among patients who completed the full course of therapy, compared with 11.7% of completers undergoing sham treatment.

Management Changes

Corporate Governance

Legal Proceedings

• The company is named as a co-defendant in a lawsuit by a patient alleging hearing loss following his enrollment in one of our clinical studies and we are vigorously defending this matter.

Related Party Transactions

• Private placement of ADSs and warrants to Valor BrainsWay Holdings, LLC.
• Consulting agreement with Prof. Abraham Zangen, a director and scientific founder of the Company.
• Sponsorship of an Obesity Study at BGU which operates a lab associated with Prof. Zangen, a director of the Company.
• Each of our directors and members of senior management are participants in our Share Incentive Plan, pursuant to which they receive from time to time grants of options to purchase our Ordinary Shares.

Stakeholder Impact

• Shareholders: Potential for increased value due to profitability and growth.
• Employees: Continued employment and potential for career advancement.
• Customers: Access to innovative and effective treatments for mental health disorders.
• Suppliers: Continued business relationships and potential for increased orders.
• Patients: Improved access to Deep TMS therapy for MDD, OCD, and smoking addiction.

Next Steps

• Continue to scale up 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 our Deep TMS systems.
• Increase our international commercial footprint.

Key Dates

Keywords

Deep TMS, Transcranial Magnetic Stimulation, Mental Health, Major Depressive Disorder, Obsessive-Compulsive Disorder, Smoking Addiction, Reimbursement, Clinical Trials, FDA, BrainsWay