Q1 2020 Brainsway Ltd Earnings Call
Attention. Thank you for stopping by to the price way down to the speaker presentations. There will be a question-and-answer session to ask a question during this question should see that the conference today 24th of June 2020 is being recorded. I would like now to have the conference over to your first Speaker today, Bob. Yes, please. Go ahead start.
Thank you all for participating in today's call with us today. Our brains waves president and chief executive officer Christopher Bonn Yoko and Chief Financial Officer.
Earlier today Brands way released snap results for the first quarter ended March 31st, 2020 a copy of the press release is available on the company's website before it turned off all over to Chris and Judy. I'd like to remind you that this conference call including both Management's prepared remarks and the question answer session may contain contain projections are forward-looking statements regarding future events or future performance of Brands way including but not limited to any statements relating to commercial plans or activities Financial projections clinical studies R&D plans and or anticipated timelines, these statements are only predictions and Brands wait cannot guarantee that they will in fact Checker translates not assume any obligation to update that information investors are cautioned at all for the statements involve risks and uncertainties such as
Reliance on third parties
And shipping market conditions particularly during the covid-19 pandemic which may cause actual results to differ from those anticipated by Brands way at this time additional rep concerning factors that can cause actual results actual events results or achievements to materially differ from those contained in the forward-looking statements can be found in the company's for distribution Dave and on form 20-f and and it's other filing with the Securities and Exchange Commission goes prepared remarks. It's now my pleasure to trim a call over to bring the e l prester Wanaka, Chris.
Thank you, Bob and welcome everyone to bring into his first quarter 2020 earnings call on today's call is we continue to operate in the midst of the ongoing covid-19 demek. I will provide an update on how we have worked to address the unique set of challenges caused by the virus all then turn the call over to Judy Huber our new Chief Financial Officer to discuss our financial results. I will conclude by highlighting our reimbursement progress clinical trial activities in R&D operates off as well as other key recent achievements and focus areas for the remainder of 2020. We will then open up the call for your questions.
With that let me Begin by discussing our broad response to covid-19 first and foremost. Our top priority is the health and well-being of our loyal and growing customer base wage. The patients they serve and of course are dedicated employees and their families. We remain firmly committed to serving our customers during this difficult. We fully understand the importance of patience continuing to receive their deep TMS treatment.
Therefore brainsway has remained fully operational in the United States throughout the covid-19 pandemic despite the outbreak many of our customers have always remained operational during this time. The most impacted states have been along the east and west coasts, of course throughout the country. There was some clinics that temporarily shutdown saw some fewer patients in some clothes for a mandatory two-week. Upon learning that it covid-19 patient off the clinic.
Many clinics are progressing toward near normal operations at this time and have instituted various steps to decrease the risk of spreading the virus off these include social distancing cleaning and disinfecting the equipment between sessions and other operating measures.
It is very important to note that beyond the direct effect of the physical health. We are unfortunately beginning to learn more about the substantial impact on mental. These uncertain times are having on a significant number of people some sobering statistics a federal emergency hotline for emotional stress register to 1,000% increase in calls from April 2020 versus April 2019 and talk space which provides online therapy has logged a 65% increase in new page.
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According to Mental Health America the use of their free screening tools for anxiety and depression are up 370% and 394% respectively since January indeed just a few weeks ago the FDA plays Olaf a popular antidepressant drug on his shortage list. This was followed from a report from the same data, which revealed back over a third of Americans are showing signs of clinical anxiety or depression. The survey of the US households was done between late April and mid-may.
Furthermore is thought that OCD May potentially be heightened by the fear of the virus. For example, causing patients to feel in even greater need to wash their hands excessive due to the fear of germs also experts are concerned about it rise of suicides overdose deaths and substance abuse disorders that historically follow economic downturn in natural disasters.
All of this means that Brands way needs to be even greater resource than ever for our customers which treat patients suffering from depression and OCD and we are trying to do exactly that we have used this. To enhance awareness from an educational standpoint. For example, since the beginning of April. We have hosted a total of 31 webinars for a current and potential new customers that have been presented by a wide variety of key opinion leaders customers practice success Consultants our chief medical officer. Dr. Aron tendler wage and other brands Way employees. In addition. We recently launched a new web site which offers significantly upgraded user friendliness and add to a broader range of our educational confirmation and new webinar content, which is now available on demand.
Management has also acted aggressively to offset the effects of the covid-19 pandemic from a financial perspective. We had implemented a significant expense Reduction Program includes cutting all non-essential spend such as On promotional items and events. In addition. We reduce salaries across the board beginning April ranging from 5% for employees in a fashion to 30% for myself. It's previously communicated our remote from the first quarter impacted due in part to certain customers being able to finalize orders wage to accept delivery of warning system as a result of the temporary shutdown of certain physician offices and Clinics this trend continues the second quarter and we expect similar impact of financial results for the current.
However, they noted earlier many plants are nearing the ability to conduct business operations will now pass the call to Judy Palm View of our first-quarter financial results.
Hi.
Yes, okay dissipated my first grade very involved and thrilled with joins growing ending in my company. We are out of their business before the numbers order and it's probably $19 in definite turn-off Financial results the first quarter of 2020, we generate Revenue 4.2 million decrease of 20% over the first quarter of 2019 recurring revenues primarily drive down two point five million an increase of 13% year-over-year as of March 31st, 2020 rank-and-file Beethoven 548 DMS system. The quarter-over-quarter increase of 18 units during the first quarter of 2019 grand lady already has a c 532 or over 32% during the first quarter of the shift end of the new and existing customers. Bring the company's total 283 in response to the impact of covid-19 on messaging
Action Program in place that remains on. Activities wage higher Department. It was critical that down for you. With the need to invest in the long-term business for twenty twenty three point 1 million four hundred r. P which is slightly in the first quarter of 2018 Maharaja. Seventy-eight percent. This is due to a higher percentage than 73 purchases research and development sizes for the quarter took one point eight million dollars are the same. In 2019 and primarily consisted of cost associated with the continued development of a patented deep. That was a marketing expenses of the first quarter is dead.
I need to keep on seven million an increase of nine hundred thousand over the prior year. The increase was primarily driven by enhanced are the activities or depression of the largest Lincoln's birthday, 2019 General and administrative expenses for the quarter 1.3 million the 1 million in the prior year. The increase was driven by an angry, but not a gender double account off. So I already went to the first quarter goes before 8 million. V. Last year for the first floor ended March 21st, 2020 heard of that last month for a million compared to the hospital appointment, you know yet recorded in the first quarter of 2019 willing to say all she ended the quarter with cash flow of 18.2 million the package 1.9 million in December 31st, 2019 cash used during the before with in line with our expectations, even that most of the covid-19 cost reduction efforts were implemented in Q2. Yep.
Leave it. I'm stronger and she will allow us time to drive additional adoption of the system in order to age or pencil invitation looking ahead.
Similar impact the other button and it will result while we do not intend to provide. Bottoms of the standard practice here in the extenuating circumstances caused by covid-19. We believe that I am having trouble understanding of the currencies our business as possible and stability Healthcare environment quarter of 2026 tax revenues in range of 4.5 million with that like go back over.
Thank you. Judy would like to provide an update on some of the progress reimburse them both depression and OCD off the question at the end of the first quarter. We received reimbursement coverage for deep and ask for Nana you major national health care plan, which had not previously covered ecms game plan includes approximately twenty million covered lives may be eligible for TPMS. Also the first quarter signal reduces requirement from sale and promotion preference to before the eligible TPMS coverage likewise last month. I had never used this requirement from 4 to 2 and also reduce the patient minimum age requirement for 2018 per OCD. We continue to work with payers on securing the embarrassment it continued to collect those functioning data off.
In support of our efforts to expand coverage to include the syndication reimbursement results for the bank Asia smart because I will study from 20 to submit to her journal enable. It is value for the Dory bulb or mistreatment and the onset of imprudent usually occurred been twenty sessions. The authors also saw that sending the treatment cord from the training sessions result of the continued reduction closely these symptoms waiting at the factor that that exciting treatment protocols in non-responders.
We look forward to sharing further details on and also this post-marketing study once we have additional information on the time of the publication.
I'd like now to discuss our ongoing average of our R&D initiatives. We have a robust pipeline in addition to our fda-cleared treatment for depression and OCD. We have various studies and settled attention new indications for DTS calling final positive results for our multicenter smoking cessation of your last year. We submitted an application to the update April this potential education. If we receive that the experience we expect to execute a control Mark release and early twenty Twenty-One and I find approximately 38 million and 480000 smoking each year. So obviously serious public health issue there a limit to your knowledge that exists in this area must be able to address the significant unmet medical need a current objective is to initiate at least wanted it was filed by the end of the year, and we're correct.
Working with our collaborators and the FDA clinical trial design.
This problem can be another addiction disorder disorder that main page received break through to the nation from the agency. I'd like to highlight that may what mental health awareness month as part of this position. If we were guided the service as we take call Sandy insisted on a conversation about mental health among the general public.
through this engaging campaign many people shared their own personal mental health experiences helping us who are toward the goal of these things and sizing Mental Illness, but Health kick off the campaign start conversation, which happened to DPMS Patient Advocates who record short videos talking about their own mental health Journey received any entries in this campaign and rerecord over 1 million audience Impressions serving to significantly enhance awareness around mental health generally and brains with specifically
Let's now turn to some recently announced management hires and promotions that position brains way for long-term success.
In may we were pleased to promote Levy to senior vice president and general manager of North America Hadar know overseas many aspects of our North American Business Office is an integral leader of brains way. It has been a key contributor to our strong growth simultaneously with this promotion. We also announced Judy Hubers appointment as CFO has more than 30 years of Financial and strategic experience and we're excited to have her on board to further enhance our financial infrastructure. We also promote it a meet Gino to page site manager in Israel has a long-term employee brainsway has been invaluable asset in the development and execution of the important deep TMS Club trials that have directly fuels our growth
And most recently we appointed Chris Boyer as vice president of Global Marketing and met Chris has more than 15 years of medical device marketing and Business Development experience in both privately held in multibillion-dollar publicly traded medical device companies, and we were excited to leverage his extensive experience leading and growing commercial organizations.
We have an extremely strong leadership team in place and we know the role that our industry plays is more essential than ever. We have brains. We are proud to be deeply engaged with our customers and providing the tools support and services and most importantly hope to the many who depend on them in their daily lives.
Before turning it over to the Q&A. I'd like to thank our talented and dedicated employees for the continued support and commitment which is produced significant achievement this quarter despite the challenging environment. We are all find ourselves in
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Is focused on improving people's lives with our game-changing product with that. I will now ask the operator. Please open up the call for questions operator off to me when I'll begin to question on secession as a reminder. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced.
We will now be taking off ask question from the line of Jason from Raymond James, please go ahead. Good morning. Thanks. Can you hear me? Okay.
Sure. Perfect Jason. Thanks. Okay, perfect. So a few questions here just on the expectation of 4.6 to 4.9 million not many companies seeing a sequential Improvement. So I just wanted a little bit more detail is the two Q number just fulfilling the first quarter backlog or have you seen progress throughout the last couple of months of two Q?
So do you understand you correctly are you saying is is is some of the orders that the from the backlog from q1? Is that was that your question? I mean from yeah from from from the end of the are the question I guess is more into Q. Cuz obviously there's a an implied sequential increase from 1 Q to Q is underlying demand increasing here in 2 Q relative to one Q or is the two Q expectation just a fulfillment of the the the deferrals in 1 q v. It's probably a combination of the both there was there was some systems in q1 that we were that obviously we had orders for we couldn't fulfill during that time period and off and then and those obviously leaked into Q2 but we we do see as I mentioned in my prepared statements. There is an opening up, you know, we we have been getting orders in some places and have faith.
Able to ship in some places and now we're we're we're having that additional ability to now ship some of those orders now.
Okay, and when you look back at at one Q what are their orders that were in fact canceled or were they largely just deferred whether it be just took two or three Q?
Yeah, just deferred just deferred.
Okay, and can we assume that most of the new installs in practices are new to TMS or are you displacing others at this point?
It's a combination of our current customers that are you know expanding and also new customer
Okay, and then just maybe a lot last one for me and this is a little bit more qualitative but given covet and and and kind of the current state of the world and your your comments around the unfortunate increase in in anxiety and depression have your discussions with psychiatrist changed or have you seen more interest or or around deep TMS? Thanks. Thanks, Jason. I say in general. Yes, most of the psychiatrists that we've spoken to understand that with covid-19 demek. Like we're hearing you see in the media quite a bit and also my bank statements that anxiety and depression are on the rise. There's no question and you know, we feel obviously that we have a major role to play in that.
And you know, we're obviously happy that that we can play that role. Thanks, Jason.
Thank you. We will now be taking our next question from the line of Steven Richman from open. Sorry oppenheim. Aramco, please go ahead.
Thank you. Good morning, Chris. You mentioned a lot of positive movement on TMS reimbursement in the quarter. I guess questions on that one. Was there a particular publication that drove these changes and to have you seen an increase in interest yet from potential customers given that it can be used earlier now in the in the treatment paradigm.
Thanks to you thanks for the question Steven in general. I'm not sure if there was a publication that really spawned that on. I think that we have seen over the last several years that some of these payers maybe would just in general the data becoming better and better around TMS and more knowledge around TMS that they have been reducing that so I think overall it's generally a very good and I think it's also very good Trend with with Covetous. Well,
Yeah, sure. No problem giving that you're on a lease model and not on a per click model. Just wondering what the positive impact could potentially be here from the the improve reimbursement. Check our customers yet given showing more interest given that it can be used earlier in sort of their their treatment Paradigm. And what's the positive impact you you think you might see from this page, you know sort of improve reimbursement environment 40 MS.
Yeah, so I think overall it's generally it's very good. It's very good for the patients. It's very good for our customers who can open up more access to the treatment to their patients. I think in general these things just these two the current has just happened in the last couple of months, but I think it's overall. It's a very positive sign as you know, most of our business office is based on leasing we do do in some cases payments per patient, which is a positive effect of that for us, but I think in general it's it's positive for the patience and faith so for for for our customers,
Okay.
I got it. And then on OCD have you seen yet interest in more out-of-pocket ugh payments from patients, you know given the impacts you you spoke about from from covid-19. Are you seeing you know more interesting to people who's paying out of pocket even before reimbursement or or not yet?
Yeah, I don't think we see that yet. We we know that you know, there are pockets in in you know, in in in areas in the country where they they has been reimbursement from that obviously takes some time and effort on our customer standpoint working together with us to try to do the appeals and get reimbursement. But we know that there's also in general there is out of pocket page or proceed as well. So we haven't actually seen the trend yet. I think it's probably too early to see that Trend but obviously I mean the main the main thing for us is to continue to work on with our reimbursement efforts and I'm just delighted today to kind of share uh, you know, this hundred ninety-two patient, uh, you know study that was done a journal some very funny that out as well.
Yeah, and and thank you talk about the rollout of smoking in general. Will it look similar in terms of the Dead well, um placement in and it will be more out of provocation basement a basis. Is that is that the intention?
So yeah, so we're really looking forward obviously for bullying that out and Depends really obviously coming on that figure out when we can get it cleared off. So the bull would be to roll into a control Mark relief. Hopefully towards the end of the share of the dating of next year and I'm really excited to have Chris border on now, but he had worked together the past and be done similar types of role Less in the past. We hadn't finalized actually the the commercial roll out how we're going to do it. And so we're hoping to share that with you on Thursday is all the one after that, but I could say it may be simple in the way as we've done by that.
Great. Thanks for asking.
Thank you.
We went out.
One moment, please. Go ahead and Judy. How are you?
Good. Thanks, Jeff. How you doing? So
question so firstly on the OSD indication looks like you you said you placed that then you have to take the shuttle to 3 off the quarter off. The other units are talking about 5:48 for q1. I'm a little lost and number five twenty-five. I think I'm thinking about how long would I have 202 Souls commercialized around 3:20 for as far as the lease program a site there as far as off-road low or off of the corner from they were commercialized and with a purchase order.
So I'm not sure where you may be low. I think that you know, we have a strong places of 18 systems majority of those were on the lease side and you can fax, you know, Millie. How about 70% of direct purchase deals Universe Court?
Okay. Yep, and since I'm sorry, because since your reservation in a discussion of the Ephesians or navigate home.
Oh, yeah. No, we we've had some discussions with ongoing discussions right now with the FDA.
Okay running and directly with some of these positions out. There is Franklin and income besides your head off.
Sorry say again repeat any of the box or SRS and doing some studies off comparisons.
Yeah, no, we we haven't actually left that discussions around that as of now.
Okay, got it. And then the other one is for me. So, thank thank you so much.
I have a question on the same.
Sorry, say again. Sorry. The questions on the phone, please. Go ahead. Okay, so in conclusion, I want to thank all of the addresses and other participants for the increase in rent way they're doing it all adults, like customers are partnering with their unrelenting dedication to age Wellness without please enjoy the rest of your day operator. You can only call
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