BrainsWay Ltd.

Greetings. Welcome to the BrainsWay second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Brian Ritchie, with Lifestyle Advisors. You may begin.

Thank you all and welcome to BrainsWay's second quarter 2021 earnings conference call. With us today are BrainsWay's President and Chief Executive Officer, Christopher Vaniaco, and Chief Financial Officer, Scott Ariglato. The format for today's call will be discussion of second quarter trends and business updates from Chris, followed by a detailed discussion of the financials from Scott. Then we will open up the call for your questions. Earlier this morning, BrainsWay released financial results for the three and six months ended June 30th, 2021. A copy of the press release is available on the company's investor relations website. Before I turn the call over to Chris and Scott, 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, among other topics, BrainsWay's anticipated future operating and financial performance, business plans and prospects, and expectations for its products and pipeline, which are all subject to risks and uncertainties, including shifting market conditions resulting from the COVID-19 pandemic, as well as the use of non-GAAP financial information. Additional information regarding these risks are available in the company's earnings release and in its other filings with the SEC. including the risk factors section contained in BrainsWay's Form 20F. I would now like to turn the call over to Chris.

Thank you, Brian, and welcome everyone, and thank you for joining us today. We're extremely pleased with our strong performance in the second quarter. We expect that the current operating trends in our business and our most recent achievements, especially on the reimbursement front, will continue to drive further growth and momentum for BrainsWay. I'll discuss all of this further shortly, but first I will provide a brief overview of our key second quarter financial results. We achieved $7 million in revenue for the second quarter of 2021, which represents a significant 45% increase over our second quarter 2020 and demonstrated the continued resiliency of our business through the pandemic. We have now demonstrated a strong year-over-year growth in multiple consecutive quarters and believe the progress we have achieved during this period is sustainable throughout 2021. Importantly, the operating environment continues to improve as we learn to cope with the pandemic. That said, in light with the recent spread of the Delta variant, we will, of course, continue to closely monitor the situation and work to adapt appropriately. I noted on our last call that patient treatments with deep TMS were continuing to increase since the end of 2020. I'm pleased to report that this is once again the case in the second quarter. As I've mentioned in prior quarters, mental health issues continue to rise dramatically as we all live through the impacts of the pandemic. As a result, we have all seen an increase in the prominence of mental health in the media. Moreover, these issues are affecting those at younger ages than historically been the case. According to a recent article published by the Washington Post, The pandemic has negatively impacted college students' mental health during a year of remote schooling and increased isolation. The article focuses on how a lack of human connection and in-person support has led to an increased stress, anxiety, and feelings of hopelessness for students across the U.S. As more younger individuals are seeking treatment for mental health, raising awareness around newer treatment methods like DTMS has become critical as they reach adulthood. As such, we continue to ramp up our patient awareness initiatives. During the second quarter, we hosted six well-attended webinars. We have a number of additional webinars throughout the third quarter, including one we are particularly excited about, which will be led by a deep TMS patient who has benefited tremendously from our technology. We also continue to leverage our website to educate prospective patients on the benefits of DTMS. In continuation of recent trends, we are pleased to report that our organic website traffic has again increased significantly, up over 210% in the first half of 2021 as compared to the first half of last year. We continue to add fresh content and enhance the user experience on our website. Moreover, on MyBrainWay, our customer portal, we have streamlined navigation and improved the content, including robust insurance, reimbursement, and policy information, thus enabling our customers to have the information they need at the click of a mouse. I will now briefly review the patient awareness campaign we initiated in May around Mental Health Awareness Month. The goal of this initiative was to reach any patient seeking an alternative to traditional medical management of their mental health. We conducted a social media follower campaign utilizing micro to mid-tier influences to create content in line with BrainsWay's broader message on mental health awareness and the utility of DTMS. The campaign resulted in BrainsWay securing hundreds of new followers including increases of 91% on Facebook and 25% on Instagram. The Mental Health Awareness Initiative in May was part of our ongoing large-scale digital patient awareness campaign. While still in the initial phases of this campaign, our patient inquiries have grown by nearly 300% in June and July. As pleased as we are with the success of our collective digital efforts, we all know that there's no substitute for in-person interactions. In this regard, I'm pleased to report that our sales professionals' in-person access to customers has increased aesthetically from the first quarter to the second quarter. Likewise, we return to live in-person conferences with our participation at the June 2021 Annual Clinical TMS Society Meeting. An important medical meeting in our space. We had a significant presence at this meeting, including presentations by Professor Abraham Zangen, a co-developer of our DeepTMS technology, and by Dr. Aaron Tenler, our chief medical officer. The event also featured 11 poster presentations highlighting important research done on DeepTMS, which represented 25% of all posters displayed at the meeting. The meeting also included two showcase presentations. The first focused on the impressive body of evidence behind deep TMS treatment for OCD, an important driver behind our recent favorable OCD coverage decisions. The second presentation was delivered by Dr. Sean Siddiqui of the Brigham and Women's Hospital in Boston, whose lab is dedicated to research on brain circuitry. His presentation focused on how brains waste three commercially available helmets are specifically designed to broadly engage various anatomical and functional brain circuits. Looking ahead, we are scheduled to participate in four additional in-person industry conferences over the balance of the year, and we are hopeful that the COVID environment will allow these events to proceed as planned. I now turn to Deep TMS for the treatment of OCD. During the second quarter, we shipped 22 add-on helmets, increasing the total number to 247. This represents over one-third of our total install base that have opted to offer OCD treatment, which we view as a testament to the strong belief in the benefits of deep TMS treatment for OCD. I'm very excited to discuss with you today the critical progress we've achieved around OCD reimbursement the second quarter, which represents an important step in our plan to further expand our market penetration in this key indication. First, Centene, one of the largest healthcare plans in the U.S., published a positive coverage policy for deep TMS in this indication. Importantly, the establishment of this policy was the first of its kind in the treatment of OCD. Centene provides coverage to about 25 million members in all 50 states, including Medicaid and Medicare members, as well as to individuals and families served by health insurance marketplace, the TRICARE program, and Commercial and CERMS. Centene's new policy specifies that coverage will be exclusive for the treatment of OCD utilizing deep TMS. This decision followed Centene's review of an extensive body of published clinical evidence demonstrating the safety and efficacy of deep TMS treatment for OCD. Following this, we announced the first draft Medicare Local Coverage Determination, or LCD, was published proposing coverage applicable to the deep TMS system for the treatment of OCD. The draft LCD was issued by Palmetto, a Medicare Administrative Contractor, or MAC, whose jurisdiction covers Medicare members in Alabama, Georgia, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia, representing over 9 million covered lives. A final policy is expected later this year. Most recently, Healthcare Services Corporation, or HCSC, an independent licensee of Blue Cross Blue Shield Association, issued a positive coverage policy applicable to DTMS for the treatment of OCD. HCSC is the largest customer-owned health insurance company and the fourth largest in the U.S., covering approximately 17 million lives. HCSC offers a wide variety of health care plans and related services through its operating divisions and subsidiaries, including Blue Cross Blue Shield of Illinois, Montana, New Mexico, Oklahoma, and Texas. Each of these positive reimbursement decisions enhance and streamline access to deep TMS for OCD. We will of course continue to work to drive further coverage further positive coverage developments from other major health plans. We continue to reach out to payers with our growing body of clinical evidence to support deep TMS treatments for patients with OCD. Our requests are based on the strength of evidence from our pilot and pivotal studies published in 2018 and 2019 and nine additional studies published in 2020 and 2021, including our real-world evidence study which analyzed 219 patients from 22 medical centers. We also continue to achieve incremental reimbursement progress in depression. As a reminder, four of the top 10 commercial payers in the U.S., representing approximately 83 million lives, now provide coverage for deep TMS for depression following two failed medication trials. Importantly, the trend of decreasing the number of required prior medication failures before qualifying for deep TMS is continuing among other payers as well. Again, this trend is important as it further lowers the barriers to access our life-changing approach to patient care. Recently, several smaller private payers have come down from four to two or three medication failures. Likewise, the recent draft Palmetto LCD reduced the number of required medication treatment failures from four to two. Once the Palmetto LCD is final, four of the seven MACs across the country will provide coverage for our depression therapy after just one or two failed medication trials. These four MACs cover 42 million lives and represent nearly 70% of all Medicare beneficiaries in the U.S. With that, I would like now to provide a brief update on our controlled market release of Deep TMS for smoking addiction. You will recall that this new commercial offering, the first of its kind, is being launched at phased rollout. We have now completed the first phase, which was a control market release designed to gauge the customer experience and initial receptiveness among a limited and select group of customers. We are pleased to report excellent early feedback from our customers, including very encouraging anecdotal quit rates from the patients being tracked as part of this phase. We are now conducting additional consumer market research to further cultivate our messaging around this market offering in preparation for our broader launch. which we intend to execute in two additional phases. A limited market release that will make the offering available to a somewhat wider group and then a subsequent full commercial launch. Turning to investor relations, we will be presenting at a number of healthcare investment conferences during the remainder of 2021. And we will host a KOL event for investors and analysts on August 31st that will highlight the OCD occasion. This upcoming virtual event will feature a presentation by Dr. Kimberly Kress, past president of the Clinical TMS Society, who will discuss the current treatment landscape and unmet medical need in treating patients with OCD. In addition, Dr. Tendler will discuss deep TMS as a well-tolerated and effective treatment for OCD. We look forward to your participation in this informative event. Finally, as always, I would like to express my gratitude to our hardworking customers on the front line of this mental health crisis. And of course, to the entire BrainsWay team for the continued support and dedication to our mission of boldly advancing neuroscience to improve health and transform lives. With that, I will now pass the call to Scott for his review of our second quarter 2021 financial results. Scott.