BrainsWay Ltd. (BWAY) Earnings Call Transcript & Summary

Good morning, and welcome to the BrainsWay Virtual KOL event. [Operator Instructions] As a reminder, this call is being recorded, and a replay will be made available on the BrainsWay website following the conclusion of the event. I'd now like to turn the call over to Hadar Levy, Chief Executive Officer at BrainsWay. Please go ahead, Hadar.

Thank you, Tara. Hello, everyone, and thank you for joining us. So my name is Hadar Levy, CEO of BrainsWay. I have spent over 25 years in med tech and my focus has always been the same, take real innovation and turn it into a scalable business that's changed patients' life. Before I jump into the slide, I want to thank 2 partners who bring the clinical and operational day-to-day reality of our work into life. So we're joined Dr. Owen Muir, Co-Founder and Chief Medical Officer of Radial. Dr. Muir is leading clinician, who sees the unmet need in mental health every day. He's also been a key driver of the accelerated protocol in the U.S. and helped shape how we think about delivering faster relief to patients. We're also joined by Michael Gershenzon, CEO of Stella, one of the fastest-growing mental health networks. Michael or Gersh will share what it looks like the scale care delivery with BrainsWay, especially since our strategic minority investment in Stella. So for both of you, thank you for being here and for helping shape the future of mental health. All right. So just to remind everyone, what do we do? So BrainsWay is a global leader in noninvasive Brain Stimulation. Our FDA cleared, Deep TMS technology delivers target neurostimulation to treat major mental health conditions. Today, we are the global leader in TMS. We have more than 1,600 systems installed and over 7 million treatments delivered. That scale and impact are unmatched in our field. Let me start with the headline of this slide about the third quarter. So Q3 was a quarter of strong growth and real profitability, proof that our strategy is working in the field. So revenue was $13.5 million, up 29% year-over-year. Gross margin stayed strong at 75%, and that translates into earnings. Adjusted EBITDA of $2 million, up 81% and net profit of $1.6 million, up 137%. So we are growing, and we're doing it profitably. Now let's talk about momentum in our business. Remaining performance obligation reached $65 million up 37% year-over-year. That future revenue already signed and visible. We shipped systems up 43%. And remember, every system out there is clinic treating patients, generating recurring revenue and strengthening our clinical footprint. About 70% of new deals are multiyear leases. That's a big shift towards stability and predictability. On the clinical side, we hit the milestone that changed the playing field, FDA clearance for the accelerated protocol for MDD. This isn't incremental. It's a new way of delivering treatment faster with the potential to reshape access across clinics. Dr. Muir will expand on that as part of his presentation. We also announced that the VA Palo Alto secured $2.5 million NIH grant, supporting Deep TMS for alcohol use disorder. That's not just funding. It's a validation from one of the highest scientific bars in the world, another step forward in our expansion into the addiction space. Finally, we continue to build an ecosystem, not just a product company. We now have 4 strategic minority investment. And just to summarize, the story for Q3 is simple: more systems, more contracts, more clinical momentum, more recurring revenue on top of profitability and cash strength. So looking ahead, it comes down to execution and the numbers show we are delivering with discipline. Revenue growth has been steady across 11 straight quarters, and our 2025 guidance of $52 million remain fully supported by pipeline and recurring base. On the visibility front, so as I said before, $65 million in remaining performance obligation, 70% of new engagement are multiyear leases, customer retention rate is 93% and book-to-bill ratio is 1.3x carry momentum into 2026. Profitability continued to scale, 75% gross margins, $7 million annualized EBITDA run rate, 10 consecutive quarters of positive free cash flow, and we're doing it from a position of strength, $71 million in cash, no debt. I want to capture a second with you on one of the most important shift on our evolution. We moved from one time sale model into a true ARR business model. Recurring revenue grew 34% year-over-year, faster than nonrecurring at 23%. In simple word, BrainsWay now behaves like a platform company, which provides more visibility, more scalability and more predictability, and that's a key driver for long-term value. With the new shift in our business model, you can see the mix shifting toward recurring revenue, growing from $10 million in 2023 to 18.5 -- $18.4 million in 2025. Nonrecurring growth as well, but slower so the mix keeps improving. And that upgrade creates operating leverage. Revenue has been growing about 25%, while we keep OpEx growth under 15%. From 2023 to 2025 guidance, revenue increases by about $25 million, while OpEx increases by less than $8 million. Simple takeaway, we are growing faster than cost, so profitability extend naturally. So let's talk about scale. How can we triple the new signed backlog? We are already at $65 million remaining performance obligation. We are profitable, and we are growing. The real question is execution. How do we deploy the $71 million with precision, turning capital into capacity, capacity into momentum and momentum into accelerated growth? So today, I'm going to share with you the road map that already in motion. So let's review the growth driver for the next chapter of BrainsWay. So organic growth remains the base. Demand is growing due to the accelerated protocol due to the OCD due to the vast majority of approved indication. Utilization is climbing, recurring revenue compounding. The next step is to make strategic equity investment in mental health clinic. By partnering with leading clinics that already have scale, strong patient flow and experienced management, we're able to extend access, increased utilization and create long-term recurring revenue stream with minimal incremental OpEx. From there, we're going to move into new care settings and new territories, like home use setting with the last investment that we made at Neurolief, addiction, rehabilitation and international markets. And the next major driver is new clinical indication in which we have built the strongest clinical platform in the category. And we are pushing into PTSD, addiction, cognitive decline and more. That's our strong performance turn into long-term momentum. So let's touch base on the organic growth. So just to remind, again, to everyone, we changed the model from one time sell into high-margin ARR, powered by leasing and pay per use. With our new mix lease -- or fixed lease or pay-per-use offering, clinics can start without major CapEx, adoption is much faster and volume rises, recurring revenue increases. Now we are widening the final with the accelerated protocol clearance, with the adolescent MDD clearance and our strength in OCD, all will push demand higher, which means more patients, more referrals and more sessions per systems. Let's jump into the strategic equity investment in mental health provides. Just to give you some kind of sense how is it going to look. But before that, I want just to -- just touch base on the -- one of our main shareholder that's called Valor Equity Partners. Valor Equity Partners is roughly $20 billion technology-focused investment fund, known for helping and build scale from iconic companies of the last decade. So when they lean in, it's not passive capital. It's a signal. And it matters for 3 reasons: one, they know how to scale, they help build global platform before; two, they're active partners, not passive capital, supporting talent, operations and expansion; and three, they validate the platform opportunity. The investment sales, Deep TMS technology is not just a product. It's a global platform. So we internally and together with Valor, we try to think how to accelerate the growth, right? So yes, we are growing organically. We are profitable, how can we really accelerate the growth into the future. And we came to a conclusion that the best way is to invest minority stake in leading mental health networks, clinics that already deliver care of scale, and we identified more than 200 qualified clinics that can potentially be a good fit for this initiative. Each network adds 10 to 15 sites a year that's going to translate into machines. So if we're going to do a simple math, 10 clinics create a potential of $100 million to $150 million in your booking over the 3 years without additional OpEx. Only 10 signed contracts with leading mental healths clinic, can yield between $100 million to $150 million in new bookings in the next couple of years. So how do we partner? This is a scalable partnership engine. So there is a minority investment with preferred share into this leading mental health clinics, only in clinics with aligned DNA which means clinical excellence, growth, profitability and the right management team. Every dollar drive utilization, ARR and brand strength. We have already done 4 investments this year, and we're just getting started. Let's think about the new care setting and territories. So in general, Deep TMS starts in the clinic, but care cannot end there. Patient needs continuity at home, and that's why Neurolief matters. We partnered and invested in Neurolief to develop a home use neuromodulation system for MDD. The vision is simple. Treatment begins in the clinic and continue at home and vice versa under medical oversight. This is the first toward BrainsWay 360, a connected mental health ecosystem built around Deep TMS, next-generation rotational Deep TMS 360, digital tools, diagnostics and smart cloud platforms. We are building continuity of care and real-time data that improve outcome and scale impact. Very quickly, just to touch on the international growth opportunity. So we have presence in -- outside of the United States, and the momentum is real. The demand is growing. The distributors are pulling Deep TMS faster. This isn't a future option. It's already contributing, and it's a meaningful global runway in the next couple of years in Asia Pacific, in Europe, in the Middle East and in Latin America. So last but least, I want just to touch base on some of the new care settings. So Deep TMS 360 is the future platform of BrainsWay. With the rotational field, we can stimulate more neurons in a much more effective way. We believe that we can meet shorter treatment with a better outcome and new indication. Clinical work is already underway in alcohol use disorder, post-stroke rehabilitation, and broader neurology indications. This is the bridge to the next chapter of the company. So just to give you some kind of taste of some upcoming milestones with the road map. So now we pretty check the box on kind of the near-term view for the next 12 months, accelerated in adolescence demand now is increasing. New alcohol use disorder trial has been launched already. We are planning to sign 5 enterprise deployments before the end of 2025. And the data collection for the FDA co-morbidity PTSD application together with MDD is underway. We are targeting it for 2026. For the midterm, Neurolief home-use device launch will be something that we're really, really looking for just to conduct a pilot and see how it's going to move because we do think it's going to reshape the market. We're going to continue to have a broader enterprise roll out, up to 10 new investments and wider core adoption with more payers win and for the long run, bigger platform, neurology portfolio, global, BrainsWay 360 launch and some selective global expansion. So if I need to just to summarize this slide, in the near term, demand and acceleration in the midterm, scaling up the growth and for the long term, we are focusing on some very interesting indication outside of mental health as well. So let me close with a simple takeaway. We lead the category with our 4 FDA-cleared indication. Our market is expanding through a new indication, home use and international growth. The business is recurring by design, 70% multiyear leases. We have a very strong visibility into 2026 and even beyond with a $65 million remaining performance obligation. We are costs consistently profitable, 10 straight quarters of positive free cash flow, and we are back to grow $71 million in cash and Valor as a scaling partner. Put it all together, and we are in a real inflection point. 2025 was a record year for BrainsWay, 2026 will be the breakout year for the company. So now I'll turn the call to Gersh just to share his experience and view working with BrainsWay.

Absolutely. Thank you, Hadar. As Hadar mentioned, my name is Michael Gershenzon. I'm the CEO and Co-Founder of Stella Mental Health. I'll tell you a little bit more about what we do here shortly. But before that, I think these are probably statistics or directionally things that don't need much discussion but worth a reminder. So 70% of U.S. adults have experienced one or multiple dramatic events in their life and that in a lot of people, we said debilitating afflictions with every year, over 8 million people are suffering from PTSD, upwards of 50 people suffering from depression with 18 million within that suffering from MDD or major depressive disorders, 20 million with moderate or severe anxiety. So all to say that this is a massive and global problem that the folks on this call are trying to make our small little impact on. And as we can appreciate, all of that kind of comes with massive societal costs. So most importantly, maybe the human costs, so people suffering from PTSD are 10x more likely to attempt suicide. Obviously, self harm has very expensive downstream ramifications for ED visits and kind of just the medical care ecosystem at large with those suffering from mental health disorders upwards of 4x more likely to end up in ED. So again, a lot of words to say that -- let's say, there's a lot of people [ to help ]. The TAM is massive and innovation like that BrainsWay and the rest of the market are pushing forward, provide some, let's say, silver lining to this kind of global epidemic. So at Stella, who do we treat? We view ourselves as -- through the lens of the indications and diagnoses we treat, not so much the treatments we offer necessarily. So we are focused on depression, anxiety and PTSD. And within that, we've kind of positioned ourselves with our referral basis and within our markets as treating the treatment-resistant conditions within each of those. So as you can see, our -- the severity of the symptoms that our patients face kind of skew towards the severe symptoms. So over 50% suffer from severe depression, over 53% suffer from severe anxiety and PTSD, more than half have PTSD and a lot with kind of chronic and debilitating severe PTSD symptoms. And again, I touched on traumas. We're very focused on data outcomes collection. So we spend a lot of time focused on what it is that led people to us. So within kind of the experienced traumas, it's an average of 3 -- over 3 per person, childhood traumas being, unfortunately, more than half experienced by our patients, health and frankly, there's a list of -- and a long tail of others. So all to say that we see, let's call it, short of the inpatient cases, those on the severe side of these symptoms. And from a demographic perspective, that ranges from 18 to 84, I think, is the oldest patient currently in our care ecosystem, 54% female, 45% male, 1% nonbinary. So point being, these are afflictions that are universally felt and we treat it each and every day. So what do we offer? Everything starts with a comprehensive psycho -- biopsychosocial with a mental health provider, so either a psychiatric mental health nurse practitioner or a psychiatrist to again assess what was on the previous slide, what is it the patient suffering from and what do they need. And we have a range of tools, including medication management and therapy or what's called the frontline treatments or general psychiatric treatments as well as interventional treatments, which are kind of the fastest growing in the market and provide the best and breakthrough outcomes, which I'll share here shortly. So we offer insurance reimbursed modalities such as esketamine and dTMS, which obviously we'll talk a little bit more about as well as cash pay once, ketamine therapy and a specialized procedure for PTSD. So our goal is really to offer all or as many as we can operationalize evidence-based outpatient psychiatric and psychological treatments under one roof, that minimizes the coordination effort between referral sources. And we know there's a lot of patient drop-off when you give someone a name to a therapist. There's a great likelihood that they're not going to act on that referral. So our goal is to build kind of a cohesive ecosystem internally. And unfortunately, these are largely chronic conditions and patients need more than just one modality. So again, building kind of that internal engine and all outpatient evidence-based modalities under one roof provides most importantly, the best outcomes. So let's talk about those outcomes. So what you're seeing here -- I'll caveat with our internally collected patient reported outcomes on clinical scales for depression PHQ-9, for anxiety GAD-7. And these are from about 10,000 patients and I think 2,000 -- or 200,000 scale and survey completions. So on the depression side, I'll stratify this into let's say, general psychiatry, so therapy medication management and the combination of the two, absolutely has an important place in psychiatry and I'll caveat, I'm a nonclinician. Dr. Muir will shed a lot more light on these things in a more scientific realm. But that is how oftentimes patients come to us seeking help. They've heard about therapy. They've heard about medication management and frontline treatments are really important. However, we know that less than half the people find remission and in our kind of internally collected outcomes here 1/3 or just barely over 40% are finding clinically significant improvement 1 to 3 months out from treatment, which is where the breakthrough or what's called interventional psychiatric treatments come in. So IV/IM ketamine, Spravato, a combination of many interventions and very importantly, dTMS have almost twice as good of outcomes. What's not presented here is durability, how long people stay better, which is also much more improved. And just the rapid-acting nature of these interventions provide you, again, breakthrough outcomes in a smaller window of time compared to maybe years of therapy or kind of a lifetime of medications. Now all of that said, together, this integrated care model does yield the best outcomes and really mixing and matching these modalities that's right for the patient provides both the most effective in the moment outcome as well as keeping people better. So a little bit more about how our care model has and continues to evolve. So in 2024, we provided about 12,000 patient appointments. Now that we're towards the end of the year, I can more or less confidently say, we'll end the year around 85,000 to 90,000 patient appointments. And next year, our budget is to deliver over 120,000 appointments. And within that, over 1/3 of them are interventional in nature. And now importantly, over 60% of the interventional bucket is our revenue generation. So these -- both from a business model and outcomes perspective or care model perspective are kind of the superior modalities and where we're focusing kind of our effort and energy to be market leaders in the markets where we are providing those interventional psychiatry modalities. Within the interventional bucket, for us, dTMS is by far the fastest-growing modality. So as a percentage of the interventional appointments, it was only 8% in '24. 21% so a tremendous amount of growth in '25, and we're expecting that to continue into '26. So prior to our partnership with BrainsWay in Q2 to where we'll end up Q4, we'll have about 100% growth in appointments delivered -- in dTMS appointments delivered. So both by the nature of just continuing to expand dTMS becoming just general awareness, more people know about modality, the accelerated protocols and just the incredible work BrainsWay and Hadar are doing to get this into the marketplace, we're benefiting from those tailwinds and so our patients. Now the last thing I'll end on is our kind of 3-year growth plan. So as we talked about, we've had a tremendous amount of growth through 2025. So we'll have 12 and actually we have 3 sites under LOI. We might end the year with 15 sites, and our goal is to get to 40 within a 3-year span. So we are in the L.A. area, Salt Lake City, Chicago and Boston. Frankly, within those markets, there's room to build 50, 60, 100 locations. So our kind of first step is to densify our market positioning in each of those large MSAs, which will do throughout 2026 and then '27, '28, we'll continue to explore maybe 1 to 2 additional markets, again, with the goal of entering those with a bit of density and continuing to build on that market positioning through de novos and organic growth. And frankly, the biggest lever for our business, both from a revenue, profitability and kind of patient-centric outcomes approach is continuing to further our interventional adoption as maybe we could all appreciate the great majority of people have heard of therapy. They've heard of medication management or SSRIs. Most people still haven't heard of Spravato or dTMS or interventional modality. So as those continue to progress in just general awareness, we're already seeing people coming to us for dTMS, already educated on what that modality can offer that -- those are all tailwinds that benefit people's people with outcomes, but also kind of our business model. So growing our, let's call it, cross referral -- internal cross referral of our gen psych patient from under 15% today to 25%, we're yielding incredible revenue growth for us. And also just within dTMS, which is still kind of our largest growth, however, within interventional as general awareness grows and maybe most excitingly, the accelerated protocol has become more known and reimbursable that's when we expect to see a tremendous amount of continued growth in exponential growth in dTMS. So with that, I will pass it to Dr. Muir to tell us more about these exciting innovations.

Thank you so much. I think I get to do the slide advance. Hey, everybody. Welcome investors, analysts, friends, colleagues and readers of my newsletter or viewers of my TikTok channel. To give you a sense of the amount of product market fit, I have 8 million views on TikTok in the last year on videos I've made largely around conversations around insurance coverage of accelerated Transcranial Magnetic Stimulation, which I'm going to focus on. I am the Chief Medical Officer of 2 companies. One is Radial, which I'm a co-founder. That team includes our team members who were previously at Amazon Pharmacy, a little company you may have heard of, and the former Chief Medical Officer of Osmind, Carlene MacMillan, who's another investigator on this accelerated trial I'll be presenting data from. And I'm also the CMO for Neurolief, the other strategic investment BrainsWay made earlier this year in an at-home treatment for treatment-resistant depression. The mental health crisis has a solution, and that solution is to use better and more scalable treatments. And I'm going to tell the story of how big this market is and how much suffering there is. For every person who dies by suicide and this number is tragically going up every single year in the past several years. We also have 4 people who have hospitalizations for suicide attempts. Of that number, we have another 8 who have emergency department visits related to suicide attempts or suicidality, 27 self-reported suicide attempts that never received medical care in a hospital setting and 275 people are walking around seriously considering suicide. This is a crisis by any definition. And the pills that we have to address it, I'm going to be really frank, don't work, right? There was a historical thinking in the field of medicine. If you do nothing, 1/3 of people get better, 1/3 of people stay the same and 1/3 of people die. That was from the era of the ancient Greeks. And if you saw the numbers Gersh presented from their general psychiatry data, patients, about 1/3 are reporting they do better when we give them pills. And that's not good enough. And so we need something that can work dramatically better to keep up with the scale of need. And that was just in suicidality, which, of course, isn't just depression or trauma or anxiety, but all of those contribute to that most severe outcome, which is really only the tip of the iceberg of the suffering and disability from these disorders. The data on those medicines we know from a reanalysis of the largest NIH-funded trial called STAR*D in 2023 is overstated, and that's about 30%. Again, 1/3 we'll get to remission with that first medication we try. And after that, it's really a dog's dinner. We had a large-scale trial just in the past year called ASCERTAIN-TRD published by our colleagues in [ Martin Aarons et al ]. And they found that switch of oral medication or augmentation with [indiscernible] in TRD just didn't change the needle. It wasn't statistically significant, but TMS was. And this is the kind of old school version of once-daily TMS done over 36 days, which is an effective treatment, but it's not an accessible or necessarily scalable treatment. So is there a more scalable version of this technology? And I would argue, Deep Transcranial Magnetic Stimulation may be that tool that gets us to scale fastest. So we looked at data from over 1,700 patients treated in the real world, and you're going to notice that 20 sessions patients did better. And at 30 sessions, patients were in remission more than half the time. And this is a huge deal. It looks even better on clinician-rated scales like the Hamilton Rating Scale for Depression, HDRS, and the self-reported PHQ-9 initially introduced by Pfizer to sell antidepressants, it looks a little bit lower, and that really is just an outcome of the scale. But all of these numbers are better than 30%. And quickly -- so how quickly can this go? And so we looked at a pooling of data from real-world accelerated treatment, and we saw that response getting 50% or more better was happening in 80% of people and remission was happening in 50% of patients in 111 patients in the real world. And Dr. Tendler, looked at this data, [indiscernible] looked at this data. And we said, well, let's pick. What are we going to do the FDA pivotal trial list? And so we chose the 5 times a day because it's a half day of treatment, more scalable for clinics, more easy to deploy, and honestly, just a little bit easier for patients to do because 10 treatments in a day like we see with [ saint ] neuromodulation is a really long day for a patient and a family. And I'll point out that I came to this honestly, I am a psychiatrists but have also been treated with Deep Transcranial Magnetic Stimulation. That's how I know it works, and that's how I knew it should be available to more people faster because when I was a fourth year medical resident, I couldn't take a bunch of days off work. I had a limited number of days available to me, and that was 7. So less than that is what was necessary to kind of get me back to my life. And luckily, it worked. And that's just a little view of me getting the treatment. It's safe. It's noninvasive. It is relatively comfortable, especially with repeated treatments. And so we saw that real-world data. We ran an FDA approval trial, and this is perhaps the best data ever submitted to FDA in the treatment of severe depression. So we took people who had failed multiple prior medications. We enrolled them across multiple sites. And by the way, the more sites you add to a trial, but less likely you're going to see a difference. And the study design is crucial here, we compare patients getting once-daily H1 Coil TMS to patients getting 6 days of half a day TMS. That accelerated line, and they were basically the same. They were noninferior. And this is important because it means our trial didn't get stopped early. The same trial was shut down at 15 active patients treated because it would have been unethical to continue to give human subjects sham treatment. So to get to the larger numbers necessary, to convince any payer to pay for anything, we had to make sure this study wouldn't get shut down early, and thus, we used a non-inferiority design as opposed to a double-blind sham-controlled study design, and that was in collaboration with our colleagues at FDA. And it was cleared. We have a 78% remission rate, which frankly stunned us all. This is even better than we were seeing in the real world, and that's the opposite of the pattern you generally expect in that 6-day accelerated treatment with a number of taper sessions thereafter, mostly to preserve the blind from my perspective, but perhaps helping with durability as well. This also similar data sets led to an adolescent label in depression. And I want to highlight the market opportunity here, there is only one other biological treatment that has any evidence and frankly, it's [ scamped ] for adolescent depression and it's Prozac. Every other drug you've ever heard of doesn't work for kids. I'm a child psychiatrist, this matters, but we have one safe and effective treatment that doesn't have an increased risk of suicidal thinking and its TMS. And the Deep TMS product from BrainsWay is not identical to other TMS treatments. It is meaningfully different, and I would argue more scalable, harder to screw up at an individual like variability level. But it works. It works reliably. It works safely. And I got to say kids complain less about this treatment than adults do. So hats off to the young people who got these treatments. We're seeing multiple FDA labels in a single year, and there's more to come. And I want to highlight, it's possible we may be able to get not just this remarkable in-clinic treatment but actually into the home in the very near future, submitted to the FDA for premarket authorization on a breakthrough status. So this will be an FDA approved, not cleared product, is the Relivion -- sorry, that's the migraine product we already have in the market, the Proliv RX device for depression, and this is an external combined trigeminal and occipital afferent nerve stimulator and it worked. It's the best data ever presented to FDA for an adjuvant treatment for depression. So the original TMS trials were done using TMS as a monotherapy, not with the drug. This was done while patients didn't screw around with their drugs. They just kept taking whatever they are taking, and it's harder to show a statistical difference. This treatment had a sham response that was better than the active group in the original nueronetics trial. And we still showed a difference of -- I think it was at 2.63 additional points in the Hamilton, which is a big number, in an at-home treatment. So my hope is we're going to be able to either start people on treatment in this BrainsWay ecosystem. And if they don't remit, well, then we can get them to this more effective accelerated Deep TMS treatment or maybe they're so acute, they need Deep TMS treatment first, but they can't travel back and forth because maybe they live in North Dakota, and we can keep them well at home with the Proliv treatment. But the most important thing about this, maybe that patient app you see in the upper right corner and the cloud database and analytics, it allows because that is clinical insights that is clinical visibility, and it could be used to measure things that aren't just the Proliv device in the future. These are all possibilities. So building that integrated scalable data collecting infrastructure where we can map that, frankly, 7 trillion parameter space of TMS alone, that's a huge deal. And so I think the strategic investment BrainsWay made into Neurolief that's likely to pay off not just for the Neurolief product itself, but for the entire BrainsWay ecosystem and for our patients who need to be well not just a little bit better. And that's the Proliv RX device, which we expect to hear back from the FDA by the end of the year or early next year. To give you a sense of how potent that is in the home setting, we're looking at response rates in the first 8 weeks of the trial, essentially gets better in the second 8 weeks, which we're not presenting here, 31% remission, again, compared to sham of 21% in the first 8 weeks, getting into the 30-plus percent, almost to 40% in the next 8 weeks and clinical improvement in most of the patients. So this is wildly outperforming medications traditionally in a cohort who've already failed oral medication treatment in a small at-home battery-powered device that's using sensory nerve stimulation. It's a massive unlock in scale. And when we put those things together, we have hope for our patients and all of this is in this integrated ecosystem that Hadar and Gersh were describing where we're getting many patients from treatments that don't work to treatments that do. Thank you so much for your time.

[Operator Instructions] So our first question comes from Jeff Cohen at Ladenburg.

And thank you all for your time and presentation. I guess a couple of questions from our end. I guess, firstly, Michael, if you could comment on Spravato and ketamine as far as a Venn diagram, if it's being used before, after or in conjunction with dTMS or percent of population gives us a better sense of that use?

Yes, it's a great question. Given some of the challenges with prior authorizations, today, it's typically used not in conjunction with and those are insurance prior auths, if I wasn't clear. It is used either before or for those that are nonresponders on dTMS or TMS after. So let me know if that answers your question. I think there's a lot of exciting opportunity to use those in conjunction with one another. Right now, not done very often just for the practical nature of the hoops we jumped through with insurance carriers.

At the moment, the payers are somewhat reluctant to paying for 2 or 3 and their pushback is leading toward which is your pushback saying TMS should be enough? Or is your pushback saying some of the other treatments may be first line versus dTMS?

Yes. Sorry, if I wasn't clear. Their pushback is not so far the right word. They want a trial of dTMS or a trial with Spravato at the end of which if the patient has not yet kind of seen the clinical results they're hoping for you submit for a prior authorization for the other one. So getting them in conjunction with one another is more difficult and kind of less scalable. So we'll prescribe one or the other, run the patient through the protocol, see how they're feeling, if they are a nonresponder, submit and most often go with the inverse treatment.

Okay. Got it. And as a follow-up for Dr. Muir. I want add some commentary on Proliv, please. And congrats, hopefully, fingers crossed on the [ PMA ] breakthrough coming through in the coming months. But talk about the payers, again, I hate to harp on the payers, but talk about the payers and how they are currently thinking about or how they may be thinking about Proliv and/or dTMS and/or total reimbursement number?

So I'm actually shocked at the positive response I've gotten from my payer colleagues. I was speaking to senior leadership just the other week at both Cigna, Aetna. I had outreach from my colleague at TRICARE West. The outcomes, especially with accelerated TMS and the ability to get better patient adherence to a treatment course because that's already in the market. has the payers, honestly salivating, like I'm shocked to be saying that, but they are to get this in their formularies. And the real blocker right now is the code set. The American Medical Association is, of course, the owner of the product that is current procedural terminology. And so a new code set I would expect to be submitted in 2026. This has been a long-term effort. You may be familiar with the fact that the medically unlikely edit AKA, how many TMS treatments can you do in a day was updated in 2025, thanks to Carlene MacMillan, the insurance committee chair, also full disclosure of my wife and Co-Founder at Radial. And the American Medical Association wants to see an update that pushes to CMS and to thus all other payers around how to reimburse technically in the back end for these services. A lot of the progress you've seen demonstrated that real-world data had to do with my close relationship over many years with Cigna, which has allowed us to gather the data supporting the need to do that accelerated FDA trial, like we had the real-world data first, which is actually very odd. You can't do that in drugs. You can do that in devices. It's a safe way to proceed. And so that's what happened here. We had a really good signal first. And when it comes to the Neurolief device Proliv RX, the price point for that is relatively aggressive in terms of coverage, and we've got no pushback from any of the payers we've talked to on that price point. So obviously, we need an FDA approval before we can bring it to market. But the -- in the margins are great on that product even at that aggressive price point. And so I'd expect it to come in around what we're seeing for oral medication augmentation with drugs like brexpiprazole or caplyta which you saw previously. It's going to be competitively priced with other adjuvant treatments and the pushback around that price point has been 0 in those initial conversations. Maybe that means we're going -- we're being a little too aggressive, we'll find out. The benefit again is these are platform technologies. And so with -- you have Wegovy and Ozempic. They're the same drug, but they can have different product price points for those different indications. And we can do similar things with the BrainsWay ecosystem of technologies because when you get a new indication, you can have a different branding, a different price point, et cetera. Is that helpful, Jeffrey?

Yes, that's helpful. So would you expect the payers, let's say, that probably is 10% or 20% of TMS treatment. Would you expect that the payers would go for TMS plus Proliv afterwards or do you expect payers to go for Proliv prior to TMS or we expect for payers to push back Proliv instead of dTMS?

I would expect none of those. Keep in mind, Spravato is a $2 billion a year product on a tiny fraction of the total population of TRD patients. The thing they have to deal with is their -- currently, their network insufficiency and their lack of effective treatments. I don't expect them to have any opinion about any of the things you brought up in the beginning. They just want to know, are we including this in the formulary or not. And we're already -- because we have a migraine device in the market at Neurolief already, we're already in the product catalog as a vendor for the VA system. So we expect to essentially go hard at a cohort of individuals who desperately need treatment for their depression but 8 drugs, which is frankly, most people aren't enthusiastic about drugs they just heard of them. and then working on the integrated delivery network, and those are groups like Kaiser Permanente or [indiscernible], which own both a health plan and the care delivery services, the Gunderson Health System in Wisconsin, for example. So that's going to be our initial beachhead, but the enthusiasm from the large commercial payers has been frankly surprising, and we look forward to pulling that thread and bringing that product to market for everybody who needs it. I don't see them even remotely trying to dictate or have an opinion on the sequencing of treatments. That's up to clinicians, and they like working with narrow networks more and more. And so the kind of groups like Stella and like Radial are, we hope, in the position to be those narrow high-performing networks that are going to have preferred relationships with strategic payers.

Our next question comes from Ram Selvaraju at H.C. Wainwright.

Firstly, a question for Michael. I think it would be helpful to understand in your experience at Stella, how product like Deep TMS 360 ultimately could be deployed? And I think this kind of echoes a question that was discussed earlier, if it's going to be preferentially deployed in conjunction with specific genres of pharmacotherapeutic interventions or not? And if it is likely to be deployed in conjunction with specific pharmacotherapies, what are those pharmacotherapies most likely to be? Are they going to be in the psychedelic category, for example, more traditional antidepressant or other neuropsychiatric medications or something else? So that would be very helpful. Also for Dr. Muir, I just wanted to understand what you expect the time line to be to obtain FDA licensure for the Neurolief device? And then lastly, for Hadar, I wanted to see if you could opine on 2 things. One is the circumstances under which BrainsWay might acquire Neurolief, if you can disclose if that would be in the cash or stock transaction or a combination of both, if that is at BrainsWay's discretion or if that's been predefined, what the circumstances of a potential transaction like that would look like? And also, if you can comment on, in terms of the international expansion and the evolution of the installed base, how quickly you expect Deep TMS 360 to sort of percolate across the current customer base and in particular, in the United States versus internationally, what you expect the uptake curve to look like, specifically for the 360 system?

Gersh, maybe you can just jump first and then Dr. Muir and I will jump on my questions later.

Yes, absolutely. So I will answer it from the nonclinician ones, Dr. Muir is uniquely positioned to do that. And I am uniquely positioned not to answer from that same point. I will say we will aggressively pursue. And our job is to be the delivery mechanism and infrastructure to the things that work best and the insurance companies reimburse and patients are excited to pursue. So that's a nonanswer to say anything that reduces the convenience barrier for a patient, which today is typically 36 sessions of D or TMS spaced out over 8 weeks that's inconvenient for patients, generally speaking, that sucks or reduces the catchment area of our sites and reduces our addressable market in our markets. So with kind of the rollout and evolution of these protocols that reduces the barrier on patients to get treatment we have seen compared to some less frequent treatments that we offer meaning more convenient in the way of getting to -- getting in the center and increases your catchment area. So that's to say, I think some of these developments that Hadar will speak to and the 360 and the accelerated kind of protocols and infrastructure are going to reduce the barrier on the patients and help more people actually want to and be able to get into treatment as far as how they interplay with other modalities. I think that's where we're #1, that's a clinician-led conversation in a lot of ways. But that's where the payers, at least from our standpoint, set the rules. And I'd say we play by them. So how that evolves is to a certain extent, outside of our control. But if I had to guess just based on our internally collected data of kind of multimodal treatment, relaxing those standards and mixing and matching, let's say, both general psych and that being therapy medication management and these interventions, allows kind of the clinicians to do what's best by the patients. That said, the payers kind of operate at, let's say, with their own set of data and maybe agendas and more order takers from that standpoint to a certain extent.

Ram, thanks for the layup. I appreciate you. So the -- as a long time kind of author both in science and in popular press about this future, what we're seeing with these range of treatments is, we're going to be putting general psychiatry to bed over the next couple of years, and we're not really going to need it because we have remarkably effective treatments in a short time frame. And when you look at payer math, right? If you're on a Medicaid plan, the shortest time on plan in American health care, we're looking at 10.1 months on a health plan. So if you do anything, it's got to have a financial impact that's positive within 10.1 months, and Prozac isn't going to do that. Single-dose psilocybin might. But single dose psilocybin isn't in the market yet. MM-120 isn't in the market yet. The only condensed dosing treatments that exist are accelerated treatments like BrainsWay's accelerated protocol in 6 days, that could possibly have an outcome that changes the cost curve for a payer. And practically, depression is the only condition that's been demonstrated to have treatment meaningfully change the cost curve. That's from data in the Oregon Experiment in Medicaid populations, which are -- I'm using it to as an example because it's the most challenging population in which to make a difference and treating depression works in that Oregon data set from their kind of natural experiment where they essentially inadvertently randomize people getting Medicaid coverage a number of years back and depression was the only condition where it mattered. The Neurolief product, we are on the FDA's time line. There's some uncertainty with the government currently around those time lines, but we have under 90 days on the clock. They may come back with additional questions, but our work with them has been close and collaborative thanks to the breakthrough pathway. So I'd expect end of this year, early next year to be when we have that definitive decision. But again, I don't control what the FDA is doing. I do respect their hard work at all times, and they have been gracious and communicative throughout. The -- briefly on the dTMS 360 product, the rotational field device that I want to highlight is 800% more efficient at 40% lower motor threshold. So it's more comfortable and wildly effective, and I have been waiting with bated breath for literally a decade for that product to come as far as it already has. But we're looking at a game changer in a disorder, alcohol use disorder, which hasn't had any meaningfully effective treatments of any kind. Like you sit together in group therapy and you dry out and detox and we call that good enough and it's not for people who are suffering. And are there other indications like stroke, et cetera, where that may prove a meaningful treatment. And by the way, that's on better rate cards in hospital settings, please god, give me a neurosurgical rate card on which these treatments with its multiplier. We're looking at an entire new area of total addressable market when we're getting into neurology settings. We're getting into hospital settings. At Radial, we're already working with hospital systems to bring these interventional treatments into inpatient, outpatient, residential, et cetera, levels of care. And we look to not just set new standards in what could or should be covered, but to make it a fiduciary duty to cover only the most cost-effective and best outcomes in treatment with the lowest risk.

Great. Dr. Muir you basically stole my thunder on the TMS 360.

I am sorry. This is how long Hadar and I have been working together.

But I'm going to touch on the international market. But it's definitely going to generate demand. Since it's a new modality, it's a new modality and new space, right? Not only in mental health, it's going into a new space like addiction neurology that we're starting to see some good results. And as Dr. Muir said, like 800% more efficient. I do foresee a significant demand. We are speaking -- we're actively speaking with our distributors just to run some pilots in some rehabilitation centers. That we're definitely going to increase the appetite and the market demand outside of the United States. So big, big, big waiting for this technology. And again, it's not just a product. It's the oral ecosystem around this rotational which is, again, all the connectivity with the home care with the data collection with some personalized treatments so the market is really, really looking for this new modality. With regards to Neurolief, so as we published, we have an option to acquire Neurolief based on meeting some certain milestones, the interest is definitely there. So we just need to make sure, first of all, let's make sure that the company is receiving the FDA approval and then some -- they need to hit some milestones around growth and penetration into the market. And if there is a good DNA that is aligned between the companies, there is definitely a big interest. I will not get into the details whether it's going to be cash or stock deal. I mean, I think all the options are on the table, but there is definitely an interest. I do believe in this product. I do believe that it eventually will increase the total addressable market that some of it are not really existing to us today. And most important is as a technology company is data collection. We now being able to collect data online from patients into our clinics, into our labs, I think that will be worth a lot for shaping up the future of mental health and in the future some other conditions.

So Carl Byrnes at Northland Capital Markets submitted his questions. Have you seen changes in workflow attributable to the one accelerate protocol into high remission rate from the study?

Dr. Muir, maybe you can jump on this?

Yes. We're building an entire company around it. So at Radial, we really focus on these accelerated deployments of treatments. And so that's true with the BrainsWay treatment, and we've been doing accelerated treatment since prior to this FDA label. We were a clinical trial site on it, but we built our business around deploying that and we'll be announcing more on the Series A funding of that probably later this week.

Yes. Maybe I can share just from our standpoint, from an infrastructure standpoint, it more and less requires us to have a minimum of 2 chairs in kind of 2 different rooms, given one room is more or less being utilized for a big part of the day. Another is turning patients over much more frequently. So from our standpoint, and maybe I can speak on behalf of the rest of the market, it will require more of Hadar and BrainsWay's great technology.

Great. And his final question, how do you see the accelerated protocol and data supporting great use and access?

So the easiest number to answer that question is the average distance travel to come see our clinicians. It's 600 miles. People are coming from all around the world, just to get access to this treatment. And that says there's product market fit when you add a plane ticket and prior to broad insurance coverage. Imagine what that looks like when you have more local access, you have the ability based on that kind of telehealth infrastructure we built out on the legal side over the course of the pandemic. And now you're deploying it to be able to do those initial evaluations where the patient is, get them to the nearest clinic. And if there isn't enough clinics near you, well then maybe there need to be more. And I would imagine there are more BrainsWay devices that are going to be needed, there's more monitoring technology that's going to be needed to make sure those patients get and stay well over time to retreat them promptly. And in your local hospital does actually can get people well in the time frame of an inpatient admission or even could get started in the emergency setting. Keep in mind, there are ERs for psychiatric patients, they're having patients just sit there in a bed wasting time, money and suffering for 23 days before they're transferred to an inpatient psychiatric setting. In the time they're sitting there, they could be well with this protocol. And so it is a step function improvement in what's possible with depression and other psychiatric disorders just by virtue of being so much faster than we ever imagined possible.

Can I add anything there. Just a catchment area. Today, our average TMS patient trial was 14 minutes driving time. I think this increases that to at least an hour and just makes much more of the market available to every single clinic.

Great. Thank you. So this concludes our Q&A session. I'll hand it back to Hadar for some quick closing remarks.

Yes. Great. First of all, I'm feeling blessed having partners like you guys. So thank you for sharing your view today. My take away from the session today, I think everybody can read the financials of BrainsWay, that's great. But I think all of us are shaping the future of mental health that is evolving in front of our eyes. My take away from some of the comments that you mentioned today, market is growing, is definitely growing, and we want to be there with the best modalities and with the best product. We're speaking about the huge total addressable market, whether it's alternative to pharma treatments or some other modalities. There is much more market awareness due to this minority investment that we're making through our channels. I'm very happy about that. 100% increase in utilization since we launched the program with BrainsWay. Just to mention, by the way, Stella before they switch to BrainsWay, they use to work with the first generation figure-of-8 technology, and I'm really happy and feel proud to share that they continue to. They like the technology, they use the Deep TMS technology, and they see the benefits out of it and accelerate protocol is here and is going to win. We are feeling the increased demand with all the great latest clearance that we received and we're really, really looking for a very, very strong 2026 that is going to be a breakout year for BrainsWay in specific, but I think for the space also in general. So with that, I want to thank for the investors for listening us today. Enjoy the rest of your day. Thank you.