BrainsWay Ltd.

Greetings. Welcome to BrainsWay's second quarter 2020 earnings conference call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Bob Yeted with LifeSci Advisors. You may now begin.

Thank you, Rob, and welcome to BrainsWay's second quarter. 2020, or in this conference call. With us today are BrandsWay's President and Chief Executive Officer Christopher Vaniaco and Chief Financial Officer Judy Huber. The format for today's call will be a discussion of second quarter trends and business updates from Chris, followed by a detailed discussion of financials from Judy. Then we will open up the call for your questions. Earlier today, BrandsWay released financial results for the second quarter ended June 30, 2020. A copy of the press release is available on the company's investor relations website. Before I turn the call over to Chris and Judy, I would like to remind you that this conference call, including both management's prepared remarks and the question and answer session, may contain projections or other forward-looking statements regarding future events or the future performance of BrandsWay, including but now limited to Any statements related to commercial plans or activities, financial projections, clinical studies, R&D plans, and or anticipated timelines. These statements are only predictions, and BrandsWay cannot guarantee that they will, in fact, occur. BrandsWay does not assume any obligation to update that information. Investors are cautioned that all forward-looking statements involve risks and uncertainties, such as reliance on third parties, and shifting market conditions, particularly the COVID-19 pandemic, which may cause actual results differ from those anticipated by BrainsWay at this time. Additional risks concerning factors that could cause actual events, results or achievements to materially differ from those contained in the forward-looking statements can be found in the company's registration statement on Form 20F, and its other filings with Securities and Exchange Commission. With those prepared remarks, it's now my pleasure to turn the call over to Chris Vaniaco, CEO. Chris?

Thank you, Bob. Welcome, everyone, and thank you for joining us today. Today we reported second quarter 2020 revenues of $4.8 million, which were below the revenues for the same period last year, but are nonetheless on the higher end of the guidance range, We are very pleased that this represented a 16% sequential growth over the last quarter despite the impact the pandemic has had on many medtech companies. As I described in the last earnings call, many clinics continue to progress toward near-normal operations, and most importantly, patients are steadily returning Many clinical practices have worked to develop protocols to allow patients back into their offices. A significant number of these clinics are offering a virtual, touchless treatment experience. As continues to be noted in many press reports, the impact of COVID-19 extends far beyond physical health and is having a significant effect on mental health for many people. Unfortunately, this trend has continued to worsen as the pandemic continues. I will highlight just a few of the sobering statistics around this mental health impact. I previously noted the recent Census Bureau survey finding that one in three Americans are reporting symptoms of depression or anxiety. I would like to add that this is a staggering high rate since this is more than three times the rate from a similar survey conducted in the first half of 2019. Young adults especially seem to be struggling. According to a survey by the American College Health Association, 41% of college students reported feelings of depression from March through May of 2020. Consequently, patient visits with psychiatrists are up over 40% during this period versus the pre-COVID period. While a lot of these visits occur via telepsychiatry platforms, this reflects an important increase in access to professional mental health care. This all serves to highlight how important a role BrainsWay needs to play with patients suffering from both depression and OCD, and we're trying to do exactly that. We continue to have an enthusiastic response from our current and potential customers with our increased focus on education and awareness. through both digital physician education programs presented by BrainsWay, as well as by attending various virtual industry conferences. Specifically from April through July, about 2,800 registrants enlisted in the 44 webinars presented by BrainsWay. This is up from 31 webinars from our last earnings call, which was just seven weeks ago. We attended two recent virtual mental health conferences. The Elevate by Psych Congress virtual experience and the online OCD conference. The Elevate by Psych Congress included global mental health organizations and industry leaders, and the online OCD conference included individuals suffering from OCD, their family members and supporters, and the professionals who treat them. Both of these events were excellent opportunities for us to raise awareness around our innovative deep TMS treatment. In addition, we are gaining meaningful traction with our newly launched streamlined website, which is intended to provide a more seamless web experience for both patients and providers. Education materials are now more accessible to meet the heightened need of people seeking treatment. Over each of the past two months, our organic user volume has increased monthly by 9% and 13%, respectively. with July reaching our highest volume in the past 12 months. We are encouraged by these results and believe this strategy will allow us to continue increasing market awareness of our groundbreaking TMS technology. Turning to our expenses, as clearly seen from the quarter's financial results, we continue to act aggressively to offset the effects of COVID-19 from a financial perspective without diminishing any of our core capabilities. Our significant expense reduction program remains ongoing. However, as we mentioned on our last call in June, our financial results in the second quarter reflect that we are still in a challenging COVID-19 environment where physicians, like most other businesses, are hesitant to make capital expenditures and new financial commitments. In order to mitigate this, we have put an attractive lease pricing program in place. I'm pleased to report that we began to see an increase in orders towards the end of the second quarter. We believe this is reflective of an overall increase in the willingness of providers to resume operations and in patients to proceed with treatment plans that were, to some extent, halted early in the quarter with the shelter-in-place restrictions. That said, we continue to operate in a dynamic and fluid healthcare environment as we see spikes in COVID-19 infection rates and various hotspots It is fair to say that at this point, we are encouraged by the general direction of the trend. I would like now to provide an update on some of the progress we have achieved recently with reimbursement. Let's begin with depression. As we mentioned on our last earnings call, there has been a recent trend of payers relaxing the reimbursement requirements for patients to allow for deep TMS coverage after failing just two prior antidepressant medications rather than the four failures previously required. Now, Healthcare Service Corporation continued this trend. They are one of the largest Blue Cross Blue Shield health insurer groups in the United States, operating plans in Illinois, Montana, New Mexico, Oklahoma, and Texas. I'm pleased to report that on July 1st, They reduced their requirement from failing four prior depressions to two before being eligible for deep TMS coverage. This will increase access to deep TMS for nearly 16 million Blue Cross Blue Shield members in these five states. These prior treatment failure reductions are an encouraging trend for our business. You may recall in our last call that we announced similar reductions from Cigna and Aetna. We believe that ongoing adoption and implementation will positively impact our business as more patients now have access to DTMS or can qualify after fewer treatment failures. In addition, I'm pleased to announce that PEHP, which serves Utah's public employees, is now for the first time covering BrainWay DTMS for depression. They cover over 170,000 lives. For OCD, we continue to work with payers in our efforts to secure reimbursement. As I said in our last call, in support of this effort, we recently gathered post-marketing clinical data of 192 patients from 22 deep TMS sites. Our analysis of this real-world data revealed that about 58% of OCD patients benefited from deep TMS treatment and that the onset of improvement usually occurred within about 18 sessions. We also saw that extending the treatment course beyond 29 sessions resulted in the continued reduction of OCD symptoms, raising the prospect of examining extended treatment protocols for this hard-to-treat disorder. Again, we look forward to sharing these further details on the results of this postmarking study in the future. We're also working to bolster the already robust clinical data surrounding the efficacy of DTMS in depression patients even further. and we look forward to sharing this information with providers, payers and the investment community in the future. As far as our clinical pipeline, we have discussed in previous calls that in addition to our FDA cleared treatments for depression and OCD, we've had various ongoing or planned studies and several potential new indications for DTMS. Our discussions with the FDA on our 510 application for smoking cessation are ongoing and we plan to make Before turning over the call, I want to emphasize that Judy and I have significantly increased BrainsWay's overall outreach to the investment community. We are sharing BrainsWay's compelling growth story as well as continuing to build relationships with both institutional and retail investors that will serve us well. We have had a great number of virtual one-on-one meetings with investors in Thank you, Chris. We continue to be pleased with the way our business is performing amidst the ongoing COVID-19 pandemic.