Q2 2021 Brainsway Ltd Earnings Call
And then.
[music].
Greetings and welcome to the Brain's way and 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 for you.
And once you require operator assistance during the conflicts. Please press star zero on your telephone keypad. Please note. This conference is being recorded I would now I'll turn the conference over to your host Brian Ritchie with lifestyle and Ryder you may begin.
Thank you all and welcome to your brain for a second quarter 2021 earnings conference call with US today operating suites, President and Chief Executive Officer, Christopher von JAKO, and Chief Financial Officer, Scott Ihrig Lotto the format for today's call will be discussion of second quarter trends and business update.
From Chris followed by a detailed discussion of the financials from Scott and we will open up the call for your questions earlier. This morning range weighted 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 Christian 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 range waves and 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 and brain waves form 20-F, 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 for the second quarter, we expect that the current operating trends and our business and our most recent achievements, especially on the reimbursement front, we will continue to drive further growth and momentum for brain's way although.
All of this further shortly but first I will provide a brief overview of our key second quarter financial results we.
We achieved 7 million net 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.
Now demonstrated strong year over year growth and multiple consecutive quarters and believe the progress we have achieved during this period of sustainable throughout 2021.
Importantly, the operating environment continues to improve as we learned to cope with the pandemic.
That said and 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, we're continuing to increase since the end of 2020.
I am pleased to report that this is once again, the case and the second quarter.
As I've mentioned in prior quarters mental health issues continued to rise dramatically as we all live for the impacts of the pandemic.
As a result, we have all seen an increase and the prominence of mental health and the media.
Moreover, these issues are affecting those at younger ages and 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 and support has led to an increased stress and anxiety and feelings of hopelessness for students across the U S and.
It's more younger individuals are seeking treatment for mental health raising awareness around newer treatment methods like deep Tms has become critical and 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 and we have a number of additional webinars for 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 and the benefits of deep Tms and <unk>.
And the ration of recent trends we are pleased to report that our organic website traffic has again increased significantly.
Up over 210% and 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 and our website.
Moreover, on my brain sway our customer portal, we have streamlined navigation and improved the content, including robust insurance reimbursement and policy and probation.
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, and we initiate it 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 our social media followers campaign.
<unk> micro to mid tier influences to create content in line with Brian's weighted broader message and mental health awareness and the utility of deep Tms.
Campaign result at brands, we are securing hundreds of new followers, including increases of 91% on Facebook and 25% on Instagram.
The mental health awareness initiative and 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.
And as pleased as we are with the success of our collective digital efforts. We all know that there is no substitute for in person interactions and this regard I'm pleased to report that our sales professionals in person access to customers has increased typically from the first quarter for the second quarter.
Likewise, we returned to live in person conferences with our participation at the June 2021, and it will clinical Tms Society meeting and important medical meeting and our space.
We had a significant presence at this meeting including presentation by Professor Abraham as and gain a co developer and our deep Tms technology and by Dr. Eric <unk>, Our Chief Medical Officer.
The event also featured 11 poster presentations highlighting important research done a deep Tms, which represented 25 per cent of all posted as displayed at the meeting.
The meeting also included to showcase presentations, but first focused on the impressive body of evidence behind deep Tms treatment for OCD and important driver behind our recent favorable LCD coverage decisions.
The second presentation was delivered by Dr. Sean Siddiqi of the Brigham and Women's Hospital in Boston, whose lab is dedicated to research on brain circuitry.
His presentation focused on how brands with three commercially available helmets are specifically designed to broadly engage various anatomical and functional brand circuits.
Looking ahead, we are scheduled to participate and for additional in person and industry conference over the balance of the year and we are hopeful that the COVID-19 environment will allow these events to proceed as planned.
I'll now turn to <unk> 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 installed base that have opted to offer OCD treatment, which we view as a testament to the strong belief and the benefits of deep Tms treatment for OCD.
I'm very excited and discuss with you each day the critical progress we've achieved around OCD reimbursement for second quarter, which represents an important step and our plan to further expand our market penetration and this key indication.
First centene and one of the largest health care plans and the U S published a positive coverage policy for deep Tms and this indication and importantly, the establishment of this policy was the first of its kind and the treatment of OCD.
<unk> provides coverage to about 25 million members and all 50 states, including Medicaid and Medicare members as well as to individuals and families served by health insurance marketplace for Tri care program and commercial and search.
And teams new policy specifies the coverage will be exclusive for the treatment of OCD utilizing deep Tms system.
And this decision followed and teams for a review of and 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 deep Tms system for the treatment of OCD.
The draft LCD was issued by Palmetto, a Medicare administrative contractor or Mac, who has jurisdiction covers Medicare members, and 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 health care services Corporation, or H, CSC and independent licensee of Blue Cross Blue Shield Association issued a positive coverage policy applicable to deep Tms for the treatment of OCD.
H CSC as the largest customer owned health insurance company and the fourth largest in the U S covering approximately 17 million lives.
H CFC 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 and enhance and streamline access to deep Tms for OCD. We will of course continue to work to drive further coverage.
Part of it.
Further positive coverage developments from other major health plans, we continue to reach out to payers without our growing body of clinical evidence to support deep Tms treatments for patients with OCD.
Our request or 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 'twenty two medical centers.
We also continue to achieve incremental reimbursement progress and depression.
As a reminder, for the top 10 commercial payers and the U S. Representing approximately 83 million lives now provide coverage for deep Tms for depression falling to fail 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 like.
Likewise, the recent draft Palmetto LCD reduce the number of required medication treatment failures from for two.
Once the Palmetto LCD is final for of the seven Max across the country will provide coverage for our depression therapy. After just one or two failed medication trials. These formats cover 42 million lives and represent nearly 70% of all Medicare beneficiaries and 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 a phased rollout.
We have now completed the first phase, which was a controlled market release designed to engage the customer experience and initial receptiveness amongst 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 patient is being tracked as part of this phase.
We're now conducting additional consumer market research to further cultivate our messaging around this market offering and preparation for a broader launch, which we intend to execute and two additional phases, a limited mark or at least 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 health care investment conferences. During the remainder of 2021, and we will host a KOL event for investors and analysts on August 31 that will highlight youll see dedication.
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 and treating patients with OCD.
In addition, Dr. Tiller will discuss deep Tms as a wall, a well tolerated and effective treatment for OCD.
And we look forward to your participation and this informative for that.
Finally, as always I would like to express my gratitude to our hardworking customers on the frontline of this mental health crisis and of course for the entire <unk> team for their 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.
Thank you Chris.
I will jump right and with a discussion of our financial results.
Revenue for the second quarter of 2021 with $7 million, a 45% increase compared to the second quarter of 2020 revenue of $4.8 million.
Which was impacted by the pandemic.
This year over year revenue growth was driven by the increase and our direct sales.
On a sequential basis second quarter revenue of 2021, who point $9 million or 14% over the first quarter.
2021.
Our recurring revenues, primarily derived from leases were $3.6 million.
Lease revenue and the second quarter of 2021 represented 51% of our total revenue highlighting the recurring nature and predictability of brains range overall revenue.
For the first half of 2021 revenues were $13.1 million, representing a 46% for $4.1 million increase compared to revenue of $9 million for the first half of 2020, which as I mentioned previously it was pandemic impacted.
As of June 32021 range ways install base totaled 682, deep Tms systems, which reflects an increase of 30 systems on a sequential basis.
Gross profit for the second quarter of 2021 was $5.7 million compared to $3.8 million during the prior year period.
Gross margin for the quarter was 81% as compared to 79% and the second quarter of 2020.
Gross profit for the first half of 2021 was approximately $10.4 million or 79% margin compared to a $7 million gross profit or 78% margin during the prior year period.
Margins can fluctuate slightly however, we expect margins to be in this range and the back half of 2021.
Moving onto operating expenses for.
The second quarter of 2021 research and development expenses were one $7 million as compared to $1 million and the second quarter of 2020, and primarily consist of costs associated with the continued development of our patented deep Tms technology.
Research and development expenses for the first half of 2021 were $2.6 million as compared to $2.8 million and the prior year period.
Sales and marketing expenses for the second quarter of 2021 were $4.2 million compared to $2.2 million for the second quarter of 2020.
For the first half of 2021 sales and marketing expenses were $7.3 million as compared to five nine and the prior year period.
As Chris mentioned, we are investing in digital marketing campaigns to create awareness as well as increased sales professionals to drive further growth.
Moving on to G&A expenses for the second quarter of 2021 were $1.4 million compared to $8 million for the second quarter of 2020, and $2.8 million for the first half from 2021 as compared to $2.1 million and the prior year period.
Total operating expenses were $7.2 million for the second quarter of 2021 compared to $4 million for the same period and 2020.
The significant change and operating expenses on a year over year basis are reflective of cash preservation efforts to mitigate the effects of the pandemic in 2020.
Total operating expenses for the first half of 2021 totaled $12.7 million as.
And as compared to $10.8 million in the prior year period.
We expect to continue to invest and initiatives to drive commercial adoption of our primary indications and depression, OCD and smoking and additional clinical studies with the Q2 run rate reflective of expenses and the second half of the year.
Operating loss for the second quarter was $1.5 million compared to an operating loss of $215000 for the same period and 2020.
Collecting the cash preservation efforts and the second quarter of 2020.
Operating loss for the first half of 2021 totaled $2.3 million.
As compared to $3.8 million in the prior year period.
For the second quarter ended June 32021, we incurred a net loss of one mine one.
And one $9 million compared to a net loss of $571000 and the second quarter of 2020.
For the first half of 2021 net loss was $3.3 million as compared to a net loss of $4 million and the prior year period.
Moving on to the balance sheet, we ended the quarter with cash cash equivalents and short term deposits of <unk>.
<unk> $5.9 million compared.
Compared to $17.2 million as of the end of December 31.2020.
We believe that our strong balance sheet allows us to continue our sales and marketing and definitely efforts to drive additional adoption of our multi indication deep Tms system as.
And as well as investing R&D in order to commercialize additional potential indications of our differentiated innovative technology.
We believe these initiatives and investments will help drive long term shareholder value.
This concludes our prepared remarks I will now ask the operator to please open up the call for questions operator.
And at this time and will be conducting a question and answer session.
We would like to ask a question. Please press star one on your telephone keypad.
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And one moment, please while we poll for questions.
And our first question is from Jason Bedford with Raymond James. Please proceed with your question.
Okay.
Good morning, and congrats on the progress just a few questions for.
Chris you alluded to the Delta variant and have you seen and impact on your business over the last few weeks.
Okay.
And we haven't.
And.
Obviously and you go into Q2, and just looking at procedure volumes and procedure volume has actually continued to increase and all of Q2 and actually going into Q3 as well and.
And nothing no changes also on the on the side of the sales force either.
Okay, and then just in terms of the <unk> strength do you feel confident that this wasn't just a fulfillment of kind of backlog to orders.
And I guess, it's just you're.
You talked about seeing continued momentum and maybe that answers. The question, but I guess just commentary on backlog and was <unk> helped by just fulfillment of backup orders.
You mean coming from Q1.
Correct.
Yes, no I don't think we had any hangover from Q1 at all I think we continued to build up momentum going into Q2 as you know we have been increasing sales people this year as well and I think we.
We've been continuously working on improving.
Our sales force and our talent and I think that that kind of showed through into Q2.
Okay, and then just a couple of OCD questions.
Is there a direct correlation between the new OCD reimbursement and <unk>.
D placements, meaning.
Are the new coil is being placed in settings, where there is comparatively per be heavier coverage from 17 or for.
H CFC.
Yes, that's a great question I think that.
Probably the news of the first three.
Positive coverage policies was definitely more helpful and the second quarter as they started to see the trend continue. So we saw obviously with the number of systems that we shipped was a higher number of component of OCD add on helmets to it so and we're extremely encouraged by this so this is the highest probably number of.
OCD helmets with number of systems that we shipped.
So we're really excited about that I mean, obviously the.
<unk> of the coverage termination and actually came right. After our last earnings call and I think it ramped up the sales team as well as a number of our customers.
Okay.
Yes on that and looking on the other side.
It looks like only a couple of your existing users added OCD and in the quarter, which from a bit surprised by.
What's the source of resistance right now for for those users who have not yet adopted OCD, which appears to be two thirds of the base.
Well I think in general there are certain per.
Practices that are not focused on OCD and particular right. There are some practices that just don't focus on the C. D and I think others are probably.
And encouraged by the news, but continuing to wait for further expansion of the OCD coverage right now we have probably about 40 million covered lives and we serve.
We'll have some continued work to do but I think overall.
From our customer base as well as from our sales force is a great deal of excitement.
And we continue to have great results with.
With our post marketing efforts as well on and understanding how these patients are doing.
Okay.
That's helpful and maybe just last one for Scott.
Gross margin strength into Q. Your comments suggest that it will continue in the second half what's the driving force around the step up and gross margin as it just yes and maybe.
And it might've been a I.
And I think Q2 in particular was it was a little blip. There I think what I was trying to say is that the year to date margin is probably more reflective of where we're going to be in the back half.
Maybe that didn't come out right.
Okay, I think we're still going to see 70, 879% and the back half there I think I think Q1 was a.
A bit of a blip.
Okay. Thank you.
Yes, thanks, Jason.
And our next question is from Steven Lichtman with Oppenheimer. Please proceed with your question.
Hi, guys.
And congratulations.
Chris.
How are you thinking about the potential for incremental OCD revenue here in the near term.
<unk> treatments.
Graphic areas, where there are new policies and if that is.
Something we could see here and the second half of the year or should we be thinking about that as well.
And so we'll pick up and.
In 2022.
I think it's probably further downstream and again, we're still in the early phases right.
With Centene.
And Acs C right.
And obviously, we're really excited about palmetto, but it's only covering a certain number of state and a certain number of covered lives. So I would I would say probably go into 2022, we will see probably further momentum around it.
Got it.
You talked about sales force investments were.
Or are you now in terms of number of reps and what's your latest thinking on where you'd like to and at the end of the year.
Yes, if memory serves me correct I think at the beginning of the year. We were at 12 and were up to 16 now and.
Probably mentioned before our short term goals right now and I'll get to 18.
And I think probably by the end of Q3 will be at 18.
Okay great.
And then just on the smoking cessation.
When are you thinking timing wise about the limited launch and and and then the potential for launch.
Yes, thanks for the question.
And so as I mentioned in the prepared remarks.
Early data has been really extremely good for us and the controlled market release, we've actually we've actually hit our criteria for all of that to head into the Ltd market launch now.
We just.
Over the last several weeks, we just for.
<unk>, our education for the sales force and we're already starting to quote out too.
A more limited group of customers. There. So we're already into the Ltd market phase and we're looking for probably the full commercial phase probably start sometime later this year.
Great and then lastly, obviously OCD.
Reimbursement has been sort of a headline and last few months, but the.
The reduction and a number of sales net on the depression side as.
You mentioned continues and what are you seeing in terms of that driving increased demand for systems.
For a potential new customers.
And back over the last few quarters.
And I think I think it's I think it's really impactful when it comes to the small private sites.
Psychiatrist offices, who have these patients already in there.
And they are waiting room and to be able to.
<unk>.
Go to a patient that has already two failed medications as opposed to two.
And so waiting for an additional two additional medications, which could push it out another year year and a half for two years.
And timeframe before they are applicable to have reimbursement I think is a big difference and I think that.
And when it happened with a number of our customers anecdotally I spoke to a number of them in different places and in the U S and they were very excited.
He said it impacted them quite a bit on.
Just looking and understanding of how theyre going to be treating these patients moving forward.
Great. Thanks, Chris.
Thanks, Steve.
And our next question is from Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
Alright, personal skirt and how are you good.
Good morning, Jeff good Thanks, Jeff.
Just a couple for more or less.
Firstly going back to true sins original question for true if you could give us a little color for help for interest.
And your geographic overlay versus some hot spots on the Covid, sorry, which is true for the better quantification for current cadence for Q3, and the journal Rebecca kilometer.
Yes, Thanks, Jeff like I said earlier, we haven't seen any real effects.
As of recent and looked at the numbers, we were tracking from a sales perspective.
And number of meetings and things like that it's steadily progress from Q1 to Q2 and has increased also into Q3.
So we're not seeing any regional effects at this time.
Okay, Great and then.
Secondly, and or could you talk a little more about.
The payer environment, and how that reflects or for the sales.
And you had some commentary and it looks like you're moving a little earlier and the treatment paradigm from.
And one or two for sales for three or four could you provide any commentary there and what kind of a discussion of the provision.
Or something.
One of the <unk>.
<unk> things, Jeff is that since we're having all of these conversations directly with the payers related to OCD. We also take the opportunity to actually chat and update information about depression as well and.
And I would say.
As I mentioned in my prepared comments more and more even though smaller payers and now moving from for medications down to the three or two which is I think really exciting and then as I also mentioned that there are seven Medicare administrators throughout the United States that cover the whole global area and.
And now in fact with Palmetto moving from for down too.
That makes for the $70 two or one in fact, the other three Medicare.
Providers are actually at one one failure. So I think it's overall, it's a really good trend is going to open up access is going to be good.
For patients and.
And it's going to be good for the providers as well no and I think we'll see that continue I hope to be a trend that moving closer.
And even getting to and maybe one like sub is Medicare providers are allowed.
Okay got it and then one more quick one.
Cadence and rollout of as Youre kind of planning and that's correct.
Nicotine addiction side, and so it kind of looks similar to.
And the OCD coils and from solar and a change.
And your original since June and getting towards true.
200 and couple of years later.
Yes, I think it's probably too early to kind of give some numbers around that at this time I mean as I mentioned, probably on the last call we rolled out to 10 of our customers.
With our with our new smoking addiction helmet or as we call it.
Internally and H for system.
And then and then over the second quarter, we rolled it out to additional five so up at 15 customers right now that have the technology.
And.
And once we will get into little bit Margaret and we will continue to kind of provide insight and later quarters.
Perfect. Okay. Thanks for taking the questions.
Thanks, Steve.
Sorry.
Our next question is from Jason.
With Northland. Please proceed with your question.
Hi, Thanks for taking the questions.
For OCD you guys have.
And I've done a pretty good job of making sure that if I'm correct.
The Ram the reimbursement is specific to deep brain.
Is that the strategy or is that.
And that's been the strategy and the case in terms of and most of your discussions with it.
With the insurers and secondly.
Does that does that help in terms of copycats trying to sneak and even though I know they don't necessarily have direct OCD approval.
Jason Thanks for the question, Yes, you're right that it's been a strategy for us I think of it as I mentioned in our prior calls.
We're meeting with these.
And with these payors its really a primary focus for us to make sure. They understand the difference between deep Tms and traditional Tms and the benefits of Dts us going deeper and broader makes a huge difference, especially and the outcomes for the patients and as you know we're very very.
Particular about the way, we do our research and conduct our clinical trials and in that way. We've shown really the benefits of what <unk> is doing particularly for these OCD patients and we have been very particular, as you mentioned and getting deep Tms is to be the provider.
Of this OCD technology or treatment is as you mentioned.
So and Thats, how important part of the strategy. Thanks, Jason Yeah.
Helpful and also related to that.
And the Mac decision to go from four to two failed therapy attempts.
Specific to all.
Stimulus deeper our stimulation or is that specific to deep brain stimulation.
But net net.
And that's for all Tms weather for us for deep Tms or traditional CNS.
Okay, and then I know, it's still early and smoking cessation.
So you May have you may have limited comments, but.
The Big question I have and I think a lot of investors have is it seems like there's a big out of pocket opportunity here.
Has that been tested yet can you comment on how big or how realistic or that opportunity might be.
Yes, that's been a big part of our focus with the.
And the control market leads to try to understand how our marketing to patients are there opportunities for other reimbursements associated around the treatment as well.
And we in fact, just a couple of weeks ago, we brought all of our controlled market release.
Customers together and had a had a call with them.
Helpful to kind of understand.
Thoughts specifically.
Best practices.
Around patient targeting patient messaging.
Insurance billing and treatment protocol, so we're learning a lot and.
And we look forward to kind of share further information as we continue down this path, but I think as I mentioned in the prepared remarks.
Early and total.
Evidence was very good about treatments, we've probably treat it around a couple of dozen patients to date and it's been it's been very well accepted so far.
Okay. That's helpful and then on OCD.
Know that you talked about different pricing strategies.
Is there a suffered is it still basically.
Elisa type agreement or is there actual additional payments related to OCD from the third of your installed base and is off to get the helmet.
Yes, thanks for thanks for that question so.
Traditionally in the past we were more on a fee per use but we've kind of opened it up with all of our free strategy. So doing what we call. It like a risk share model, which is the pay per use.
We also sell the helmet directly and we also leased the helmet is an uptick on increased.
If they're if they're getting their questions.
And then they can pick it up and to also lease the helmet as well.
Okay and is there is there and incremental.
Of OCD and those revenue numbers that you supplied tonight today or is it I guess, its just not something you're breaking out at the moment.
Yes, so we don't break it out but certainly this incremental revenue associated with the additional helmet.
And it also obviously drives additional sales overall system sales right because of the differentiation of the technology between us and other traditional Tms systems.
Okay and then maybe last question I think you mentioned.
Your goal is to get to 18 sales reps and the U S.
<unk>.
<unk>.
It.
It seems like you could go bigger.
Special or are you or is that something that maybe you reevaluate. After you look you kind of.
Complete your evaluation of the smoking Association.
Trials.
Nobody can work.
And they go bigger we just wanted to do it that kind of a phased approach so and our goals for this year was 18, those we're going to probably most definitely increase going into 2022, but right now our short term efforts are to get to 18.
Okay, great. Thanks, I'll jump back in queue.
Thank you.
And as a reminder, if anyone has any questions you May press star one on your telephone keypad in order to join the queue.
Our next question and from from Southern and Roger with AC Rain range. Please proceed with your question.
Thanks, so much for taking my questions and congratulations on a really solid quarter here for.
Firstly I wanted to drill down a little bit further into what you envisage to be the long term plan and the long term goal for expansion of the number of sales reps and the field and.
And if you could please relate that to the target prescriber base because it seems as though the prescriber base is enormous relative to the number of sales reps. You currently have and I just wanted to know kind of what's the ultimate goal and what's the ultimate.
Sales.
Rep number objective that you have relative to the prescriber base that you're targeting.
Yes, Brian Thanks for the question I appreciate it.
So in general we were at 12, and our goal is to grow by 50% and a systematic way.
We think probably over time.
And the short term probably up closer to around 40 is where we're thinking.
And to kind of cover the complete territories that we're looking at but that can change obviously depending on.
Our rollout of smoking, which is <unk>.
They go and a number of other different areas.
With smoking as well as an indication obviously, we know it's outside of psychiatry as well.
So I think.
Just to give you kind of a short term thought that's sort of the thinking.
Okay, and then just a couple of questions regarding the revolving reimbursement picture are you seeing and evolution and the thinking among reimbursement agencies regarding coverage of deep Tms procedures and patients who may already have had deep Tms applied ones.
At least once and their prior treatment history or are you seeing that remaining effectively static and then the second question is whether you are seeing any.
And the thinking among reimbursement agencies with respect to prior authorizations and the number of.
Prior treatments for example, and the context of M D D.
So as your first question I assume is also related to depression correct.
Correct, Yes, yes, so in general.
Without getting too technical and two day there are a couple of things that when Youre depression patients come in they look for response and someone to get to a remission and if somebody has a response to the technology.
Payers will continue to actually pay for Tms treatments in the future.
Which I think is important.
And we've shown and.
And a head to head study that our response rates are actually higher than traditional and CMS. So I think that's an important indicator so and remember that depression is episodic. So as soon as somebody gets to remission if they come back and have another episode of depression as long as they responded to the technology. The currently the payers.
And are paying again and.
And to your second question.
As I mentioned.
Initially when.
Tms started getting reimbursed by payers on a broader wider scale. They started for failed medications and the recent trends starting in about late 2019 has been moving down from four down to two we've seen as I mentioned there.
Prepared remarks that that trend continues going down from four down to and in some cases, EBIT, one which I think is just extremely helpful.
With all the details around.
We're medications and after the first medication theres only roughly about a 50% chance that there'll be a response and then just gets worse and worse. After the next medications so getting it down closer to one failed treatment I think it is.
Is going to be a continued trend that happens.
Okay and then.
On the reimbursement front also I wanted to ask if you expect any additional drafts lcb's before the end of this year.
I mean, we're hopeful to it I can't give guidance around it and my last couple of calls, including the last one that we had.
I was very hopeful that we would end up getting at least one coverage just from the receptiveness of the conversations we're having around OCD and then boom the day after the call.
And we got one and then a couple of days later, we got another one and then the third one so I'm hopeful, but I can't give guidance on it's really very hard to predict.
And I think okay. I think one what did you still think there and is that we've actually met with all of the Medicare.
Providers all of the Max.
And introduced all of the information to them already.
Great and then with respect to the smoking cessation controlled launch.
Can you just give us a bit more color on how the kinetics of the launch are going to dovetail with what you expect it to be evolution and the reimbursement picture there.
Yes, again, it's probably too early.
To kind of predict how that will go.
Obviously, we have we've done we've done a bunch of work around understanding.
The reimbursement landscape and smoking and also trying to understand exactly what our strategy is moving forward I think it's really important as we've done with OCD to be focused on gathering post marketing.
Data and also making sure that we're publishing that data and an appropriate way to give us further evidence.
Support any reimbursement efforts moving forward.
Thank you.
Thanks, so much.
And we have reached and the question and answer session and I'll now turn the call over to Christopher von JAKO for closing remarks.
Thank you so much I would like to thank all the investors and other participants for their interest and brain's way with that please enjoy the rest of your day.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
And.
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Okay.
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