GlobeNewswire Inc | Nov 18, 2020 07:00AM EST

November 18, 2020

CRESSKILL, N.J. and JERUSALEM, Israel, Nov. 18, 2020 (GLOBE NEWSWIRE) -- BrainsWay Ltd. (NASDAQ & TASE: BWAY) (BrainsWay or the Company), a global leader in the advanced non-invasive treatment of brain disorders, today reported financial results for the quarter ended September 30, 2020, and will provide an operational update.

Recent Financial and Operational Highlights

-- For the three months ended September 30, 2020, revenues were $6.0 million, a 25% increase sequentially from the second quarter of 2020, and a 1% increase from the third quarter of 2019. -- As of September 30, 2020, BrainsWays Deep TMS installed base was 593 total systems, a 22% increase from the same period in 2019. -- Received 510(k) clearance from the U.S. Food and Drug Administration for the Companys Deep TMS system for its use as an aid in short-term smoking cessation in adults. -- Published real-world OCD data in Journal of Psychiatric Research showing 73% reach response at an early stage of Deep TMS treatment, and demonstrating durability of therapeutic effect.

We are very pleased with the solid performance demonstrated in our business during the third quarter, stated Christopher von Jako, Ph.D., President and Chief Executive Officer of BrainsWay. Importantly, the ongoing pandemic has amplified the need to address a vastly underserved, large mental healthcare market, and the large majority of Deep TMS clinics are responding by operating at or near normal levels, with some even experiencing activity above pre-COVID-19 levels. We have a number of tailwinds positively impacting our business, including delivering upon our data-driven approach to penetrating the market through a growing commercial and clinical body of evidence supporting the safety and efficacy of Deep TMS, beneficial reimbursement trends, a recently strengthened U.S. commercial team, emerging growth opportunities, and continued success in our pipeline strategy as evidenced by our recent 510(k) clearance for smoking addiction, our third FDA-cleared indication.

Third quarter 2020 Financial Results

-- Total revenues for the third quarter of 2020 were $6.0 million, compared with $4.8 million in the second quarter of 2020, and $5.9 million in the third quarter of 2019, increases of 25% and 1%, respectively. Quarterly recurring lease revenues were $3.4 million, remaining flat over the third quarter of 2019, and comprising 57% of total revenues. -- Gross margin for the third quarter of 2020 was 75%, a decrease when compared to third quarter 2019 gross margin of 81%, which resulted from an increased recognition of inventory obsolescence. -- Operating expenses for the third quarter totaled $5.1 million, compared with $7.0 million for the third quarter of 2019. The decrease is in-line with the Companys continued efforts to enhance efficiency and to lower operational expenses in light of the financial impact of COVID-19. -- Operating loss for the third quarter was $0.6 million, compared with an operating loss of $2.2 million for the same period in 2019. -- As of September 30, 2020, the Company had cash and short-term investments of approximately $16.0 million, compared with $21.9 million at December 31, 2019, reflecting cash use of $5.9 million for the first nine months of 2020 resulting from operating losses and timing of inventory deliveries from vendors.

Conference Call and WebcastBrainsWays management will host a conference call on Wednesday, November 18, 2020, at 8:30 a.m. Eastern Time to discuss these results and answer questions.

Wednesday, November 18, at 830 AM Eastern Time:

United States: 877-407-3982Israel: 1 809 406 247International: 201-493-6780Conference ID: 13711444Webcast: http://public.viavid.com/index.php?id=141762

To listen to a live webcast, please visit the Investors section of the BrainsWay website at www.BrainsWay.com. Please access the Companys website at least 10 minutes ahead of the conference call to register. The webcast replay will be available on the website for two weeks following the completion of the call.

About BrainsWayBrainsWay is a commercial stage medical device company focused on the development and sale of non-invasive neurostimulation products using the Companys proprietary Deep Transcranial Magnetic Stimulation (Deep TMS) platform technology. The Company received marketing authorization from the U.S. Food and Drug Administration (FDA) for its products for a variety of patient populations, including in 2013 for patients with major depressive disorder (MDD), in 2018 for patients with obsessive-compulsive disorder (OCD), and in 2020 for patients with smoking addiction. BrainsWay is currently conducting clinical trials of Deep TMS in various psychiatric, neurological, and addiction disorders. To learn more, please visit www.brainsway.com.

Forward Looking StatementsThis press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be preceded by the words intends, may, will, plans, expects, anticipates, projects, predicts, estimates, aims, believes, hopes, potential or similar words. These forward-looking statements and their implications are based on the current expectations of the management of the Company only and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: inadequacy of financial resources to meet future capital requirements; changes in technology and market requirements; delays or obstacles in launching and/or successfully completing planned studies and clinical trials; failure to obtain approvals by regulatory agencies on the Companys anticipated timeframe, or at all; inability to retain or attract key employees whose knowledge is essential to the development of Deep TMS products; unforeseen difficulties with Deep TMS products and processes, and/or inability to develop necessary enhancements; unexpected costs related to Deep TMS products; failure to obtain and maintain adequate protection of the Companys intellectual property, including intellectual property licensed to the Company; the potential for product liability; changes in legislation and applicable rules and regulations; unfavorable market perception and acceptance of Deep TMS technology; inadequate or delays in reimbursement from third-party payers, including insurance companies and Medicare; inability to commercialize Deep TMS, including internationally, by the Company or through third-party distributors; product development by competitors; inability to timely develop and introduce new technologies, products and applications, and the effect of the global COVID-19 health pandemic on our business and continued uncertainty and market impact relating thereto.

Any forward-looking statement in this press release speaks only as of the date of this press release. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws. More detailed information about the risks and uncertainties affecting the Company is contained under the heading Risk Factors in the Companys filings with the U.S. Securities and Exchange Commission.

Contacts: BrainsWay: Judy HuberSVP and Chief Financial OfficerJudy.huber@brainsway.com

Investors:Bob YedidLifeSci Advisors646-597-6989Bob@LifeSciAdvisors.com

BRAINSWAY LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

U.S. dollars in thousands (except share and per share data)

September December 30, 31, 2020 2019 Unaudited AuditedASSETS CURRENT ASSETS: Cash and cash equivalents $ 15,792 $ 21,674 Short?term deposits 221 221 Trade receivables, net 6,531 5,507 Other accounts receivable 1,531 1,427 24,075 28,829 NON?CURRENT ASSETS: Long?term deposit 163 168 Leased systems 5,139 5,491 System components and other property and equipment 5,004 4,248 10,306 9,907 $ 34,381 $ 38,736 LIABILITIES AND EQUITY CURRENT LIABILITIES: Trade payables $ 911 $ 1,320 Other accounts payable 3,817 3,379 Deferred revenues 1,184 1,305 Liability in respect of research and development 1,060 714 grants 6,972 6,718 NON?CURRENT LIABILITIES: Deferred revenues and other liabilities 2,178 2,431 Liability in respect of research and development 5,319 5,367 grants 7,497 7,798 EQUITY: Share capital 233 233 Share premium 95,111 93,649 Share?based payment 3,644 4,435 Adjustments arising from translating financial statements from functionalcurrency to presentation currency (2,188 ) (2,188 )Accumulated deficit (76,888 ) (71,909 ) 19,912 24,220 $ 34,381 $ 38,736

BRAINSWAY LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

U.S. dollars in thousands (except share and per share data)

Nine months ended Three months ended September 30, September 30, 2020 2019 2020 2019 UnauditedRevenues $ 14,991 $ 16,809 $ 6,014 $ 5,932 Cost of revenues 3,492 3,687 1,485 1,153 Gross profit 11,499 13,122 4,529 4,779 Research anddevelopment expenses, 4,247 6,067 1,411 1,913 netSelling and marketing 8,284 9,665 2,393 3,549 expensesGeneral andadministrative 3,390 3,875 1,311 1,492 expensesTotal operating 15,921 19,607 5,115 6,954 expensesOperating loss 4,422 6,485 586 2,175 Finance expense, net 80 1,252 210 344 Loss before income 4,502 7,737 796 2,519 taxesIncome taxes 477 275 170 113 Net loss and total $ 4,979 $ 8,012 $ 966 $ 2,632 comprehensive lossBasic and diluted net $ (0.22 ) $ (0.40 ) $ (0.04 ) $ (0.12 )loss per share

BRAINSWAY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands Nine months ended Three months ended September 30, September 30, 2020 2019 2020 2019 Unaudited Cash flows from operating activities:Total comprehensive loss $ (4,979 ) $ (8,012 ) $ (966 ) $ (2,632 )Adjustments to reconcile net loss to netcash used in operating activities:Adjustments to the profit or loss items:Depreciation, amortization and 1,271 1,401 542 408 impairmentDepreciation of leased systems 877 735 292 303 Finance expenses, net 80 1,252 210 344 Cost of share?based payment 671 981 234 289 Income taxes 477 275 170 113 3,376 4,644 1,448 1,457 Changes in asset and liability items:Increase in trade receivables (996 ) (2,165 ) (1,354 ) (637 )Decrease (increase) in other (94 ) 13 (324 ) 127 accounts receivableIncrease (decrease) in trade (422 ) 426 (600 ) (322 )payables

Decrease (increase) in other 320 (257 ) 997 195 accounts payableIncrease (decrease) indeferred revenues and other (27 ) 19 (64 ) (127 )liabilities (1,219 ) (1,964 ) (1,345 ) (764 )Cash paid and received during the period for:Interest paid (59 ) (267 ) (16 ) (27 )Interest received 54 127 4 67 Income taxes paid (249 ) (542 ) (240 ) (161 ) (254 ) (682 ) (252 ) (121 )Net cash used in operating (3,076 ) (6,014 ) (1,115 ) (2,060 )activities Cash flows from investing activities:Purchase of property andequipment and system (2,555 ) (2,973 ) (644 ) (1,193 )componentsInvestment in short?term - (84 ) - (1,031 )deposits, netWithdrawal of (Investment in) long?term deposits, net 5 1,007 (2 ) 1,007 Net cash used in investing (2,550 ) (2,050 ) (646 ) (1,217 )activities Cash flows from financing activities:Repayment of loan from bank, - (3,000 ) - - netReceipt of government grants 42 141 - 16 Repayment of liability in respect ofresearch and development - (275 ) - (275 )grantsRepayment of lease liability (322 ) (311 ) (101 ) (104 )Proceeds from issuance of - 26,333 - - shares, netNet cash provided by (used in)financing activities (280 ) 22,888 (101 ) (363 )Exchange rate differences on cash andcash equivalents 24 (51 ) 41 (32 )Increase (decrease) in cash and cashequivalents (5,882 ) 14,773 (1,821 ) (3,672 )Cash and cash equivalents at thebeginning of the period 21,674 8,968 17,613 27,413 Cash and cash equivalents at the end of $ 15,792 $ 23,741 $ 15,792 $ 23,741 the period (a) Significant non?cash transactions:Purchase of property and equipment $ - $ 189 $ - 112 on credit $