Israeli medical devices company Brainsway Ltd. (TASE:BRIN) today announced its first Nasdaq financing round. The company's market cap on the Tel Aviv Stock Exchange (TASE) today was NIS 327 million, following a 9% fall in its share price this year and 65% over the past five years. It is believed that the company will try to raise $30 million at a company value similar to its market cap.
BrainsWay has developed and markets a magnetic helmet for treatment of mental and brain disease through deep magnetic stimulation of the brain. The product is approved for marketing and has been sold for several years for treatment of depression. Last year, the same device was also approved for treatment of obsessive compulsive disorder (OCD).
BrainsWay, which has been listed on the TASE since 2010, tried to hold an offering in the US in 2011, but gave up on its plan after failing to obtain the company value that it sought. The previous attempt was before the company marketed its product and under different management. In retrospect, it appears that this decision was correct.
$6.4 million yearly loss
Between 2011 and today, BrainsWay gained marketing approval and tried to penetrate the US market, but had trouble making headway. The company, which replaced several of its managers and several business models, established itself commercially only recently, according to its most recent financial statements. It was probably preferable for BrainsWay to go through this period in the Israeli capital market and join the US capital market when it was already more mature. BrainsWay currently has $9 million in cash, and burns $1 million a quarter.
Brainsway's revenue totaled $16.3 million in 2018. 46% more than in 2017, and its loss was $6.4 million. According to documents submitted to the US Securities and Exchange Commission (SEC) for the current offering, the company's revenue totaled $4.9-5.2 million in the first quarter of 2019, and its net loss was $1.6-2.1 million, so it appears that the company's growth trend is continuing.
Growth in revenue follows a change in BrainsWay's business model, led by CEO Yaacov Michlin, who was appointed in early 2017. Michlin changed the company's model of selling machines, which produced immediate revenue, to a model based primarily on leasing systems and regular usage fees, which generates less immediate revenue, but much more in the long term.
After a period of decline in revenue following the change in its business model, revenue began climbing again, and now exceeds its level before the change in business model. The company now also has a larger revenue backlog for the future.
In addition to its activity in treatment of depression and OCD, BrainsWay is developing its product for several other brain indications, and is currently conducting a trial of its helmet for recovery from smoking addiction.