Q4 2021 Brainsway Ltd Earnings Call
[music].
Greetings and welcome to the brain's way fourth quarter and full year 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.
As a reminder, this conference is being recorded.
I'd now like to turn the conference over to your host Bob yet of lifestyle Advisors. Please go ahead.
Thank you Brock and thank you all and welcome to <unk> fourth quarter and full year 2021 earnings conference call with US today are <unk>, President and Chief Executive Officer, Christopher von JAKO, Chief Financial Officer, Scott <unk>.
Format for todays call will be a discussion of recent trends and business updates 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 <unk>.
Released financial results for the three months and 12 months ended December 31, 2021 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'd like to remind you that this conference call, putting both management's prepared remarks, and the Q&A session may contain may contain projections or other forward looking statements regarding among other topics <unk> anticipated.
<unk> 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, a global supply chain crisis as well as the use of non-GAAP .
Financial information.
Additional information regarding these and other risks are available in the company's earnings release and its other filings with the SEC, including the risk factors section contained in <unk> form 20-F with those prepared remarks, it's my pleasure to turn the call over to Christopher von JAKO CEO Chris.
Thank you Bob welcome everyone and thank you for joining us today.
Streams, we pleased with the continued strong momentum throughout our business. We expect that the current positive operating trends that drove a robust performance in 2021 highlighted by achievements on the commercial clinical regulatory and reimbursement fronts will lead to further growth for <unk> in <unk>.
2022 and beyond.
While I will review, our future prospects in greater detail shortly.
First I will provide a brief summary of our full year 2021 accomplishments.
And an overview of our key fourth quarter financial results.
In 2021, we overcame a number of challenges primarily driven by Covid and the overall operating environments.
Continued advancing our business we.
We achieved year over year growth in each quarter during 2021 and have now demonstrated year over year growth in six consecutive quarters.
Our full year 2021 revenue of $29 $7 million represents growth of 34% over 2020.
From a regulatory perspective, we were proud to receive two significant FDA clearances during 2021 and three over the past 18 months.
Other key commercial highlights in 2021 included the expansion of our sales force from 12 to 18 professionals and the successful launch of our deep Tms system in anxious depression and smoking addiction.
Our substantial reimbursement accomplishments included establishing positive payer coverage policies in 2021 for OCD with the number of covered lives at approximately $50 million a number that recently increased even further this is a topic that will cover shortly.
Looking at the fourth quarter, specifically demand for our deep Tms system remains strong in multiple indications despite various challenges posed by omicron too.
Too many industries, including ours importantly, this demand was driven by both depression and anxious depression as well as OCD.
We generated $8 $5 million in revenue for the fourth quarter of 2021, which represents both a quarterly record and a substantial 20% increase over our fourth quarter 2020.
With that I'd like to discuss our key our 2022 key priorities with plan to carry that out within the broader context of the five year plan, which we began executing in 2021.
Our strategic plan is based on four core pillars. The first of these pillars is becoming the market leader in the noninvasive brain stimulation market.
Brands with strong revenue growth in 2021 demonstrates that we are leading the way and we are taking steps that we believe will allow us to continue this trend.
To achieve this revenue growth, we have assembled a best in class commercial team.
In 2022, we are building out our infrastructure by going from two regions with 18 territory sales managers.
Three regions with 'twenty, one territory sales managers.
<unk>. These sales professionals are focused on broadening our U S customer base.
Our territory sales managers are complementary and supported by skilled teams of practice development consultants and field clinical engineers.
These highly knowledgeable professionals have in the past and will continue to be laser focused on achieving customer success, cultivating our expanding customer base and delivering on our overall mandate to provide superior support to our customers.
The expansion the expansion in the commercial team are made possible by our strong balance sheet deferring differentiate our deep Tms technology, expanding number of indications and superior clinical evidence.
Another aspect of the strategic pillar is increasing market awareness, which will remain a key priority for us in 2022.
Ah recently overhauled web site has been enhanced for search engine optimization to make deep Tms therapy more visible for all of the knee.
I'm pleased to report that our organic website traffic increase substantially in 2021 as compared to 2022.
Up 93% year over year.
Our new website chat robot aptly named H coil logged 13000 engagements with individuals from September through December 2021, importantly, approximately 10% of these online chats led to live discussions.
Many with prospective patients.
Moreover, a meaningful number of sales meetings with psychiatrist and clinics have also been booked via this new innovative tool.
You were you may recall, our recent patient awareness initiatives included posting a patient story each week via our social media channels each patient detailed their experience with deep Tms and we held a live moderate Q&A Q&A session for prospective interested patients in the fourth quarter we.
Also continued to develop patient testimonials to the usage of mobile apps and these stories are being used as a strong advocacy tool by our clinics to help promote their practices.
Collectively the goal of these initiatives is to reach any patients.
Seeking an alternative to traditional medical management of their mental health.
We believe that increased web site engagement and greater use of social media channels will ultimately lead to more patient engagement and awareness of our breakthrough technology.
We also have a number of other exciting market awareness related initiatives planned for 2022 that we look forward to sharing with you in the coming months.
Where and whenever possible, we continue to leverage critical in person interactions.
As was the case with many other companies our sales professionals in person access to customers was impacted by only corn in the fourth quarter.
Our strong performance during the period that much more impressive.
A return to live in person conferences, which began in the second quarter continued this past quarter as well.
In December Professor Abraham <unk> of Bank Gordon University, and a scientific consultant for the company recently spoke about addiction, including the results of our alcohol and smoking addiction studies at the fourth international brain stimulation conference in Charleston, South Carolina.
Also at this conference we displayed a future version of the platform that will serve as the basis for our fourth generation deep Tms system.
And we hosted a key opinion events with several leading industry psychiatrists and researchers.
I'll now turn to the progress of <unk> for the treatment of OCD.
Which is another aspect of our first strategic pillar.
As a reminder, brain's way is the first Tms company to achieve FTE clearance for this hard to treat condition. It remains the only Tms company to have received this clearance based on pivotal.
M controlled data conducted on its own device.
During the fourth quarter, we shipped 22 add on helmets for OCD, increasing the total number to 302.
We're pleased that 40% of our total installed base now includes OCD treatment capability.
We view this progress is a testament to our customers' strong belief in the benefits of deep Tms treatment for OCD and within the broader context of our emerging reimbursement in this area.
Most recently in January of this year, we received a final local coverage determination, providing coverage applicable to deep Tms for the treatment of OCD.
The final OS.
The final LCD was issued by Palmetto, a Medicare administrative contractor or Mac, which covers 9 million Medicare patients in Alabama, Georgia, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia.
The formal policy issued by Palmetto, one of seven Max in the U S brings the total number of covered lives now eligible for OCD coverage to approximately $60 million.
The Palmetto LCD also positively impacted those using deep mass to treat depression and anxious depression.
Moving from a requirement of four failed medications to to fill dedications.
Further expansion of OCD reimbursement is an ongoing area of focus for brain's way.
The collective OCD development achieved to date, both in terms of customer adoption and reimbursement are indicative of the significant traction we're seeing with this key indications.
In order to further accelerate customer adoption and additional reimbursement progress we continue to publish compelling data in support of the use of deep Tms No C. D to this end we were excited to have an important research data recently published in two leading peer reviewed journals highlighting the durability.
And the cost effectiveness of deep Tms does T D.
First a study published in brain's way, sorry brain stimulation shows the durability of deep Tms and the significant reduction in functional disability.
Secondly, positive data recently published in the journal of psychiatric research supports the cost effectiveness of deep Tms relative to other available OCD treatment options.
Moving on the second key pillar in our strategic plan is to lead through superior science and evidence to.
Further advance on this front, we added two highly experienced individuals to our scientific advisory board over the past five months.
Professors, just desperate lockers and markets highly professor Deca lock as a chair of the department of Psychiatry at UCSD School of Medicine.
His research is focused on developing a better understanding of neurophysiology of severe psychiatric disorders and the role of brain stimulation in treating these conditions.
Professor desk Lochus has authored more than 450 peer reviewed publications and serves on the editorial board of multiple journals.
Professor highlight is the founder is the founding director of the center for social and effected Neuroscience Lynch opinion University in Sweden.
His center focuses on the study of brain mechanisms behind addiction, and anxiety disorders using translational approaches.
Notably from 2004 to 2015 Professor highly served as the director of clinical and translational research at the National Institute on alcohol abuse and alcoholism.
Division of the U S National Institutes of health.
We also completed multiple important feasibility studies in 2021, including one in adults with alcohol use disorder. This randomized placebo controlled double blind clinical trial in 46 subjects measured the reduction in the percentage of heavy drinking days over a 12 week period.
After deep Tms treatment.
While subject to receiving a placebo treatment averaged $10 nine heavy drinking days during the follow up period subjects, who had undergone a our deep Tms therapy averaged only two 9% of heavy drinking days.
This is a clinically meaningful and statistically significant difference.
We intend on continuing our real World data collection efforts in all of our major indications, including depression, anxious depression, OCD and smoking with a focus on publications and presentations at key industry conferences.
In addition, we also plan to initiate several new feasibility studies in 2022.
Certain psychiatric and neurologic and addiction indications.
Finally from an IP perspective, several new important patents for deep Tms were issued in 2021.
We now have nearly 80 issued patents that extend protection on our technologies for up to another 10 years.
The third and fourth pillars of our strategy are capitalizing on our platform and enhancing business development activities.
These are both critical long term drivers for us well, we prefer not to get into too much detail on these matters I will generally when they're right brains with ongoing commitment to continue pursuing new indications and new market opportunities in both the U S and internationally.
In a way that maximizes value for our stakeholders.
With that I'd like to now provide a brief update on our commercialization plan for the deep Tms for smoking addiction.
As a reminder, this offering the first of its kind in the medical device space and our first addiction product was launched in a phased rollout we pursued this strategy in order to further cultivate our messaging.
Developed optimized business models for customers refine ideal addressable patient populations and build post marketing data to develop a reimbursement strategy.
We previously completed the first phase, which was a controlled market release and more recently concluded our limited market release.
We now have data on numerous commercial patients in our database.
During the fourth quarter, we successfully held our second users group meeting to share best practices, among practitioners and our existing customer base has received materials educating them on how to integrate.
This offering within their practice.
We recently transitioned to a full market release, and we are looking forward to sharing additional details and updates with you in the future.
I would also add that smoking trends are unfortunately rising.
Which underscores the need for smokers to have additional treatment options and they increased demand for smoking addiction treatment.
Accordingly to a study published in October of 2021.
Cigarette sales across the country were up more than 40% from March 2020 to June 2021. This is in contrast to the long term declining trend in cigarette sales from January 2007 to February 2020.
While the need for solutions to address this addiction is dust clear our ultimate commercial success of this market will be of course influenced by insurance landscape and as you know coverage does not yet exist for deep Tms for smoking addiction to facilitate our efforts in this regard we are planning on conducting post marketing research.
And data collection efforts in 2022, which we believe will serve us well in our commercialization efforts.
Turning to Investor Relations.
Following our well attended Kols event for investors and analysts in the third quarter, which highlighted the OCD indication we will be hosting another cable event on March 22nd. This virtual event will feature doctors shawn's deep in neuropsychiatry at the Brigham and women's hospital and instructor of Psychiatry at Harvard Medical School.
Yeah.
He will discuss the clinical and market importance of the recent expansion of our depression labeling to include anxious depression.
We also presented at several health care investment conferences in recent months and conducted multiple institution.
And high net worth focus virtual non deal road shows.
Proactive investor marketing efforts will continue throughout 2022.
Finally, and as always I would like to thank our valued partners and providers, who battle the mental health crisis, each and every day as well as the entire <unk> team for elevating their commitment to excellence in delivering on our mission of advancing neuroscience to improve health and transform lives.
With that I will pass the call to Scott for his review of our fourth quarter and full year, 'twenty or 'twenty, one financial results stock.
Thank you, Chris and good morning, everyone.
As Chris noted the brain's way team delivered a record fourth quarter and full year of revenue growth.
Revenue for the fourth quarter of 2021 was $8 $5 million, a strong 20% increase compared to the prior year quarter revenue of $7 1 million and an increase of <unk> $4 million on a sequential basis versus the third quarter of 2021.
Revenue for fiscal year, 2021 was $29 7 million, an increase of 34% when compared to the total revenue of $22 1 million for 2020.
Revenue growth in the fourth quarter and for fiscal year 2021 was driven by increased demand for our brain's way deep Tms system with 37 system placements in the fourth quarter of 2021.
This increases our installed base to 754 systems as of December 31, 21, as compared to 629 systems or 20% growth versus year end 2020.
Gross profit for the fourth quarter of 2021 was $1 9 million.
Dollars or 77% compared to $1 6 million or 78% during the prior year period.
Gross margin for fiscal year, 2021 was $6 6 million or 78% as compared to $5 $1 million or 77% for fiscal year 2020.
Moving on to operating expenses for the fourth quarter of 2021 research and development expenses were $2 million as compared to $1 6 million in the fourth quarter of 2020.
Research and development expenses for the full year 2021 were $6 4 million as compared to $5 $8 million in 2020.
Sales and marketing expenses for the fourth quarter of 2021 were $4 5 million compared to $3 million for the fourth quarter of 2020.
Sales and marketing expenses for full year, 2021 were $15 9 million compared to $11 $3 million in 2020.
This increase reflects our continued investment in our digital marketing activities and our sales team to drive future growth. We have also invested in additional clinical and field support personnel guided by our mission of superior support.
Moving on to G&A.
Expenses for the fourth quarter of 2021 $415 million compared to $1 3 million for the fourth quarter of 2020, and $5 $8 million for the full year 'twenty, one as compared to $4 7 million in 2020.
Total operating expenses were $8 million for the fourth quarter of 2021 compared to $5 9 million for the same period in 2020.
Total operating expenses for 'twenty, one totaled $28 1 million as compared to 21 $8 million in the prior year period.
As I mentioned last quarter the increase in operating expenses on a year over year basis is partially reflective of cash preservation efforts to mitigate the effects of the pandemic in 2020 as well as the increased investments I have highlighted a buck.
Looking ahead, we continue to invest in our commercial and research activities and expect that operating expenses to reflect these additional levels of investment.
Operating loss for the fourth quarter was $1 5 million compared to an operating loss of $407000 for the same period in 2020.
Operating loss for 2021 totaled $5 million as compared to $4 $8 million in 2020.
For the fourth quarter ended December 31, 21, we incurred a net loss of $1 3 million daus.
Compared to a net loss of $406000 in the same period of 2020.
So the full year of 21 net loss was $6 $5 million as compared to a net loss of $5 $4 million in the prior year.
Moving on to the balance sheet.
We ended the year with cash cash equivalents and short term deposits of $57 $3 million, an increase of $2 million as compared to Q3 2021.
Cash at December 31, 2020 was $24 $3 million.
We believe that our strong balance sheet and prudent management of expenses in 'twenty, one have positioned us well for 2022.
We will continue to expand our sales and marketing efforts to drive additional adoption of our multi indication deep Tms system as well as well as invest in product development and clinical research to explore innovative new indications for deep Tms to keep our technology differentiate it.
Confident that these initiatives and investments will support long term shareholder value.
This concludes our prepared remarks I will now ask the operator to please open up the call for questions operator.
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One moment, please while we poll for questions.
Our first question today is from Jeffrey Cohen of <unk>.
Brookdale, but please proceed with your question.
Oh, Hi, Christian Scott how are you.
Good morning, Jeff Good morning, great. Thank congratulations on the quarter and the year two questions I think.
Firstly from a scientific standpoint, particularly in your opinion or information related to alcohol abuse.
This compares to smoking cessation, so you're using the H four corridor for smoking addiction.
And the data from December was usually it's sort of inquiry for alcohol abuse, how are you thinking about.
The difference both technically it's rule so moved.
Italy.
Yes, Jeff Thanks for that question I appreciate it so you're right. So the H for actually targets the bilateral inslaw.
The 87 targets, the ACC, which is sort of the same.
Which is the same area that we're targeting for OCD.
So this there.
I think we've looked at it from an HR perspective, and some of the.
Early trials that we did and then we were excited to run this.
Another early feasibility trial with the 87 with great results. So we're really excited about this and another.
<unk> space.
So going forward, how should we think about the on the.
The equipment related to the addiction space as far as who's serving versus search for.
Yes, so I think I pointed out before on calls and maybe some time, even in my investor decks in the past there are certain places where.
We feel that the seven works certain addictions as well as the city and then for smoking and some other areas.
Potentially like food addiction would be the H four so it's sort of like you know, they're just different areas of the brain that we're focused on with our with our deep Tms technology.
Okay, Perfect and then secondly for US how should we think about growth in 2022, and you don't have any.
Oh look Whit I think consensus and stone in the mid teens, let's call it.
21 was or a 34% growth on the telephone so.
Charter Rustler stuff going forward, yes, Jeff that's a great question. Thank you. So I think you know looking at 'twenty, one and the growth rates over 2020, obviously 2020 was pandemic induced but I do think we're still expecting and thinking and modeling for our business and our plans for 'twenty two.
<unk> modeling strong double digit growth.
Sure.
Okay.
Yes, sorry model and strong double digit growth in 2022.
Jeff, we're still not giving guidance right.
Okay.
First particular questions.
Thanks, Jeff I appreciate it.
The next question is from Jason Bedford of Raymond James. Please proceed with your question.
Hi, Good morning, just maybe to follow on on the last question you alluded to the impact of on Micron in the fourth quarter can you just talk about that.
Current conditions today that youre seeing in the market versus what you saw back in December and maybe some comment on.
On the backlog exiting the fourth quarter.
Yes, Jason Great question so.
We obviously in December and November saw some of the in person meetings with our sales folks kind of decline.
And interestingly enough, though looking at the patients we had heard obviously from the field that there were some declines in the patients.
Either patients getting COVID-19 or.
The the treaters the providers getting COVID-19 , but we didn't see a decline at all in our patient volume for us.
In the back half there so actually November December were our highest months of treatments that we saw and then of course things were a little slower in January and I think we're starting now to see a pick up of our sales professionals be able to get in front of people again. So I think things are clearing up and we're very excited about the prospect of moving into the <unk>.
Sure.
And the backlog Chris.
The backlog.
Weighted to what specific Oh, sorry orders order order flow.
So from an order perspective from an order perspective, all the orders that we got in Q4, we shipped in Q4.
So we had no we had no backlog I don't know if youre alluding to maybe.
Supply chain issues that we haven't had any supply chain issues, either we've been managing those.
Okay.
Just in terms of.
OCD can I assume that the vast majority of OCD helmets went with new systems and just.
It looked like it was down a little bit from three Q can we assume that.
This was part omicron related or was <unk> a bit of an anomaly or folks just waiting for reimbursement.
Yes.
I think I think the.
Definitely Q3 was an exciting time for the 87 helmets, specifically for OCD I think.
I think we still had what roughly about 60% or maybe over 60% Scott of our systems that got shipped.
They were all they were all with new systems by the way like you mentioned and you know we had a few international.
Sales also in Q4 that didn't go with the 87, net maybe that sort of tipped it a little bit.
But still I would say, Jason just to add on to that point.
Lots of interest in OCD, especially obviously with palmetto picking up their coverage next Monday.
Right Okay.
Okay, and then Oh.
One more and jump back in queue.
We're limited to a new platform the fourth Gen system.
What's the timing on that.
Yeah. Thanks for.
Thanks for asking about that I really appreciate it yes, we were really excited to show that platform.
In December at the brain stimulation meeting that's really comprised of a lot of researchers in the area of brain stimulation that meeting only happens every two years and we're excited to be able to demonstrate the system. There showed some key opinion leaders in the field.
And it's going to be the basis for our future system. So what we intend on doing probably most likely later this year.
Is installing some system is into the research space and really better understanding the technology as we move forward for our next generation. It has some really exciting advances.
Maybe not for this call, but I'll just say that.
Traditional Tms, even deep Tms typically own well it only trades neurons that are in the same plane with a magnetic stimulation being attached to it this new technology, which has the patents are being able to treat not only those neurons and that location, but full 360 degree of neurons.
Within the brain is it is a huge and impactful thing that we believe is going to really.
That brings us to the next generation of Tms.
Okay. Thank you.
Sure.
Thanks Joseph.
The next question is from Jason Wittes of Loop capital. Please proceed with your question.
Hi, Thanks for taking my questions actually first a follow up.
So.
Announcing this new system.
It doesn't necessarily impact ongoing sales right now, especially since you guys are leasing most of your systems or how does that work mechanically in terms of the marketplace.
We don't we don't envision the new system right. We just we were actually highlighted in the system. It's not FTE clear, it's going to have to go through a process on that so I.
I don't have a timetable of when we're going to introduce the new system.
Just think it's exciting.
One of the three things that we highlighted from a company perspective is superior science evidence and support and it really kind of shows and is a testament to the superior science side that we're working to further advance the technology.
In deep Tms to be able to better treat the current indications we have today as well as expanded to other indications. So I'm really excited about it but right now theres, no particular guidance or anything on the timing of that it'll be going into some clinical trials later this year.
Early next year.
And we will.
We'll provide additional information when the time's right.
Okay. Thanks, and then on the OCD I mean, you mentioned I think 40% of installed base has.
<unk> do you have utilization data on that and are there any trends that you could pick out to kind of get a sense of.
What the interest.
Real World interest is out there.
Yes, Theres no question.
Do have the data on that thanks for the question Jason.
There's no question that there has been a ramp up specifically around OCD treatments with our 87 helmet and yes, we're pretty excited about that we think that's it's a combination of coupled with the excitement of reimbursement, but also coupled.
With sort of the more our salespeople and our marketing people are getting the information out there.
Anecdotally I continue to get even direct feedback from patients sometimes patients that are educating our customers of the reimbursements and and then going and having the treatment done it's really encouraging with great results by the way so.
So very encouraged overall about where we're heading with OCD. We think it's an important driver for the future of our business as well.
Yeah.
Okay, and then is 18 sales reps or sales reps plus managers, the right number or should we anticipate that expanding and in terms of recoveries. I think you mentioned you went from three to four regions.
Is that right.
RJ said, yes.
It was two to three regions, Jason and we're sorry I think.
And Christmas prepared remarks, I think he said he was going from 18 to 21 18 and 21 were at 19 right. Now if you wanted to know the number we're at 19 right now.
So then I'll.
My question is I apologize for not getting all the details.
So it's 21 enough for full U S coverage and it sounds like also there's you start there's also opportunities for international expansion as well.
Well, yes.
Certainly the case for international I'd say in the U S side, where a couple in the U S side as we always have done in the past and we've actually expanded our support team there both practice development consultants as well as field clinical engineers, who are allowing our our territory managers to be more I would say efficient.
And going out and cultivating and expanding the business we.
We feel that's the right number for right now to set our plans for 2022, and we're going to continue to invest in it.
In the right places, where we feel necessary at the time.
And then just one last question I'll jump back in queue and that is in terms of your outlook for cash burn cash.
Cash generation in 2022 can you give us some some general guidance.
Yeah. So I think we are we had a good fourth quarter here I think I mentioned, we we actually generated $2 million worth of cash. So we were on a run rate. We had I think we were burning we had burned 4 million through Q3, we generated $2 million. So we ended up with 2 million use in <unk>.
'twenty one but.
But I think a lot of that was working capital and certainly just some you know man.
Management of expenses in Q4.
That said, we're planning to invest we mentioned and highlighted some of the investment areas.
And I think our cash burn would probably be more like annualizing, our Q3 burn rate from.
From 2021 in 2022 is sort of how we modeled it.
Alright, so increasing our level of investment increasing our expenses obviously.
What we're anticipating.
Investing and building for revenue growth as well, but I think we're going to invest in some key areas, especially on the clinical side.
I just I'll just add to that if you may remember in the fourth quarter of 2020, we also.
Had $1 million from from operations at this time, we had to and I think obviously, we show we can run the business you know on a profitable or.
Breakeven basis, but that's not our intent our intent is to continue to grow.
That's what we're trying to do is invest in the business to continue that growth.
Great. Thanks, a lot.
Okay.
The next question is from Carl Byrnes of Northland Capital. Please proceed with your question.
Hi, Carolyn.
Hi, guys congratulations on the results and thanks for the question.
With the recent OCD reimbursement additions.
How long or how fast do you see these these adoptions taking in terms of translating into two system placements.
Yeah, Great question I will highlight that the Palmetto I think is going to be extremely important for current users in that in that base as well.
Really the Palmetto followed exactly the guidance that we gave we put together a clinical Tms society, which is they get 29 treatments.
If they show response of 30% or greater they can get up to an additional 20 treatments and I think that's powerful because in our clinical our post marketing data. We showed that the patients actually don't plateau, and I think that coupled with great reimbursement from that area will continue to kind of fuel the efforts that we've had.
And I think the sales team is extremely excited about it our customer base I think is extremely excited about it. So we're hoping to launch that out and we're still working hard to get coverage in other areas. All other other coverage areas, including the other six Medicare administrators as well as other.
Large insurance companies.
Great. Thanks, that's very helpful. And then just as a housekeeping item what was the fully diluted share count at the end of the year. Thanks.
Yes, It was 32 million shares sorry.
Remember again.
Yeah, that's a share count in the U S. Because we have $32 nine for supporting that.
Great Thanks, and congratulations again.
Thank you.
Yeah.
The next question is from Steven Lichtman of Oppenheimer <unk> co. Please proceed with your question.
Good morning, Thank you.
Hey, guys.
I guess first on the OCD.
Given the progress you guys need on reimbursement in 2021.
How should we think about the tailwind from OCD in 'twenty. Two overall, how are you thinking about.
OCD contribution this year versus last.
Are you seeing an increase in blended average lease level as customers start using those.
C D Moore with reimbursement in hand.
So as you know the OCD, we use the 87 helmet.
Big year for I think the eight seven helmet in general and we're excited about the potentials of everything Thats 87, Helmut can do including OCD.
I think theres going to be.
What's happening every time or most of the time or 60% of the time break down, but I think it will increase as we start to increase.
Reimbursement efforts throughout the United States is that more and more customers are getting both the H one as well as the seven.
And that will increase basically our overall asps as we continue to move forward with our efforts.
Got it so we should be thinking about higher blended ASP on the lease side.
With more OCD coils going out.
Yes, both on the lease side as well as on the direct sales side as well.
Okay great.
On smoking cessation.
Now in full launch congratulations on that.
How should we thinking think about contribution there will it will be similar to OCD. Initially and then you'll see some modest revenue from new.
Hum coil sales and based on your visibility today hospitals and thinking about what kind of data you will need to get.
Covered for that indication.
So I think I think you should look at it the same way as the 87. So the H score was smoking addiction will be an add on to it as well.
But we're actually looking one of the big things that we did.
A few things that we're doing this year specifically on smoking.
One we're looking at the international market too we're also looking at.
Collecting data help us real world data to help us with reimbursement and the third thing that we're doing is we're looking at alternative sites. So.
Looking at sort of business development opportunities for alternate sites outside of specifically the psychiatric.
Centers. So I think we're pretty excited about that and what we're really excited about it I think is that the data that we have thus far in the real world and our efforts right now is to really amp up that real world data to give us additional.
Overall to be able to make up.
Publication in Xian helps support our reimbursement efforts. So we're pretty excited about that and I think that.
In fact, we just did a we just did a.
Our video down at Medical College in South Carolina with.
An individual who I think has hit us late thirties and started smoking when he was at 11 years old and he had a great.
Great outcome with this and we're looking forward to launching that video and the short term.
Great Great and then lastly, Scott just following up on margins.
Gross margin held up well in 2021 anything we should be factoring in for 2022, given inflationary pressures or.
Sure.
Stayed up here.
Higher <unk> level.
Yeah. So I think our team did a great job in 2020 months, managing the supply chain and really sort of and I think I mentioned last quarter.
In the fourth quarter with some of the longer lead times, we had our inventory in place to ship in Q4.
I do think we are we are seeing some price pressure and some of our longer lead times in some of our components are.
Getting price increases so I do think we will see some margin pressure again, we're managing it well and we're trying to minimize that bigger.
Bigger buys those kinds of things from a supply chain standpoint, but.
I can't imagine that's going to be significant but I do think we will see some margin pressure in 'twenty, two just with ongoing supply chain issues and inflation in cost.
Cost of oil just name all the things going on in the World right now.
Yeah makes sense. Thank you guys yeah. Thank you Steve Thanks.
The next question is from Google in Japan of H C. Wainwright. Please proceed with your question.
Good morning, Hi today.
Doing great how are you.
Great. Thank you.
Yeah few questions from our side.
Obviously, congrats on the strong revenue growth.
So what are some of the trends that occurred in 2021 that might be up here in 2022.
Also what new trends do you anticipate in 2022 February impact your business positively or negatively that gifts of stock.
Yeah, I think great question, obviously, I don't want to think about the negative trends right for Covid. It's one of those negative trends that could happen.
Got obviously went through the issues around supply chain and inflationary issues I'm looking at more positive trends right I think overall there is a.
Better.
Made things much better awareness of the technology since I joined back in January 2020, we've done an amazing job of really getting the word out there both from digital.
As well as our obviously, our best our best marketing Billboards, our salespeople are our sales professionals getting into the field. So I think that overall awareness is going to continue we have a <unk>.
Bunch of different initiatives that were going to be launching this year that I'm really excited about obviously may is a big month for us because it's mental health awareness month, So we'll be doing a bunch of things around a day, but I think in general we continue to work on a number of really important things from a clinical aspect.
We'll be doing some things from a regulatory aspect as well.
And that I'm pretty excited about so I think the trends are only going to improve.
Patient access obviously through reimbursement. So I think there's just a number of really great trends that are happening in the space. So I'm really excited about where we are today.
That's super helpful.
Secondly, what would be our next steps in <unk>.
Alcohol use disorder isn't pms and can we expect a potential five 10-K in the near future.
Sorry.
I missed that.
Yeah, So what would be your next step in trading alcohol use disorder or using deep Tms.
Can we expect a potential filed 10-K.
Great Great question.
So we have this great feasibility study on alcohol, which is amazing results.
And.
Professor highlight who is on our scientific Advisory Board, who was at the NIH.
For a number of years is very excited about those results he was.
He was I think he was also a he was a.
Our principal investigator on that as well co principal investigator.
So we're looking into that we havent made any we haven't made any public announcements about sort of what our next addiction is going to be but we have a number of exciting things that were planned from a new indication and we'll give we'll give updates when I'm prepared to do it.
Okay.
Okay understood and maybe this is for Scott.
So can you comment on the revenue mix for 2021 and also what percentage of the revenue is recurring revenue.
So again, we talk about lease versus sale overall.
So.
Sale piece was 55% lease was 45% and leases really the component of recurring revenue.
I think as we grow and as we achieve our growth metrics in 2022.
I think the.
We're gonna be tilting more towards sale, obviously as you know the math around increasing recurring revenue it gets a little harder.
In terms of the number of placements and we just want we want to get boxes out we want to place systems, and I think and get our technology out to everyone who needs. It so and I do think that's going to drive a higher percentage of what we call a sale in our financials versus the recurring component that said.
The sales will drive additional service revenue, so there'll be some modest increases on that side.
And I'll just I'll just add to that is you know obviously predominantly before most of our revenue is coming from lease and we're working with our customers and we're allowing them to understand what they want to do as well right. So we've had some customers that at least the product and over time as upgraded from the previous version to the current <unk>.
And chose to actually own the technology.
So we just wanted to do was in the end, what's best for the customer as well.
That's it from me thanks.
Yes.
Okay.
There are no additional questions at this time I would like to turn the call back to Christopher von JAKO for closing remarks.
Thank you I'd like to thank all of our investors our analysts and all other participants for their interest in brain's way with that please enjoy the rest of your day.
This concludes today's conference. Thank you for your participation and have a pleasant day.
Okay.
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