BrainsWay Ltd. — FY2021 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone quarterly filing; the filing also presents unaudited quarterly results. Financial statements are prepared under IFRS and amounts below are U.S. dollars unless stated otherwise.
Business context
BrainsWay develops and commercializes Deep Transcranial Magnetic Stimulation (Deep TMS) systems for mental health and addiction disorders. Its FDA-authorized indications are major depressive disorder (MDD), including anxious depression, obsessive-compulsive disorder (OCD), and short-term smoking cessation. Revenue comes primarily from system sales and leases; the United States generated 88% of FY2021 revenue.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $29.657 million | $22.057 million |
| Gross profit / gross margin | $23.058 million / 77.8% | $16.999 million / 77.1% |
| Operating loss | $4.999 million | $4.829 million |
| Net loss | $6.462 million | $5.385 million |
| Net loss per share | $0.21 | $0.24 |
| Operating cash flow | $0.884 million provided | $1.436 million used |
- Revenue rose 34%, primarily on higher system sales. Sales revenue increased to $16.208 million from $8.429 million; lease revenue was $13.449 million versus $13.628 million. Sales represented a larger share of revenue than in 2020.
- Operating expenses increased to $28.057 million from $21.828 million. Selling and marketing rose 41% to $15.880 million, R&D increased 10% to $6.393 million, and general and administrative expenses rose 23% to $5.784 million. Management cited commercial expansion, hiring, lower pandemic-related costs in the prior year, and option repricing-related costs.
- Finance expense, net, rose to $1.420 million from $0.319 million, primarily reflecting foreign-exchange differences and higher grant-liability expense.
- At year-end, cash and cash equivalents were $16.921 million and short-term deposits were $40.428 million, totaling $57.349 million. Current assets were $65.447 million and current liabilities $9.067 million.
- Cash flows included $42.216 million used in investing, mainly placement of funds into short-term deposits, and $41.516 million provided by financing. The financing inflow reflected the February 2021 ADS offering, which raised $45.2 million gross and $42.260 million net of issuance costs.
- Total assets were $75.732 million and equity was $57.325 million. The filing reports no outstanding bank loan; liabilities include $0.754 million of lease liabilities and $6.899 million recorded for IIA research-grant royalties. Maximum future royalties payable under the grant arrangements were $12.407 million.
Quarterly context: Q4 2021 revenue was $8.470 million versus $7.066 million in Q4 2020. Quarterly net loss was $1.347 million versus $0.406 million, based on the filing’s unaudited quarterly table.
Material changes and operating developments
- Year-end installed base was approximately 754 systems, including 396 leased and 358 sold; it increased by 125 systems during 2021.
- FDA clearances in 2021 expanded MDD labeling to anxious depression and approved a three-minute Theta Burst depression protocol. BrainsWay also began commercializing smoking cessation and continued expanding OCD commercialization.
- Several payers issued OCD coverage decisions during 2021; the company reported approximately 60 million U.S. covered lives eligible for OCD coverage as of March 2022. A Medicare Administrative Contractor’s final OCD coverage determination became effective in March 2022.
- Shares outstanding increased from 22.251 million at year-end 2020 to 32.911 million at year-end 2021, principally reflecting the public offering.
Outlook, risks, contingencies, and unusual items
- Management expected available cash resources and anticipated product revenue to fund operating and capital requirements for at least 24 months from the report’s date, while also expecting continued operating losses and increased commercialization, R&D, and clinical-trial spending. No specific revenue or earnings guidance was provided.
- Key commercial risks include payer coverage and reimbursement, market acceptance and clinical perceptions of Deep TMS, competition, and the ability to train providers and expand sales. Smoking cessation had no reimbursement coverage at the time described.
- The company relies on third-party suppliers and manufacturers. It reported component shortages, longer lead times, higher electronic-component and freight costs, and a temporary 2021 production halt at a contract manufacturer due to a computer shortage. It increased buffer inventory.
- COVID-19 effects continued to include clinic and distributor disruption, supply delays, and potential impacts on sales and clinical-trial recruitment. The filing also noted that the February 2022 Ukraine war could further aggravate supply-chain risks.
- Core technology depends on licenses from the U.S. Public Health Service and Yeda, with royalty, milestone, and other obligations. Some foundational U.S. patents were due to expire in 2024; later patent families provide additional coverage, but protection and enforceability are uncertain.
- Operations and manufacturing are concentrated in Israel, exposing the company to regional security, labor, and currency risks. Approximately 37% of FY2021 expenses were denominated in NIS; the company did not hedge foreign-exchange exposure.
- The company reported no material legal proceedings. It received $13.3 million of royalty-bearing IIA grants and had paid approximately $3.4 million in royalties through year-end. IIA rules can restrict transfer of funded know-how or manufacturing outside Israel and may require additional payments.
- Management concluded disclosure controls and internal control over financial reporting were effective as of year-end. The independent auditor did not attest to internal control effectiveness because BrainsWay qualified for the emerging-growth-company exemption.
Important facts for investors to verify
- Whether revenue growth and the shift toward system sales can continue while operating expenses and net losses remain elevated.
- How much of reported liquidity is available for operations, given the large short-term-deposit balance and continued investment needs.
- Whether payer coverage for OCD expands and translates into system placements and collections; verify the applicable coverage criteria and effective dates.
- Whether supply constraints, component costs, and freight expenses ease, and whether alternative suppliers can support production reliably.
- The status and economic terms of IIA royalties and restrictions, and the practical impact of the 2024 expiration of foundational U.S. patents.
- Potential dilution from equity awards and future financing; also note that the filing’s risk discussion cites $6.5 million of 2021 losses, while audited statements report $6.462 million.