Dive Brief:

• One-third of psychiatrists who already own transcranial magnetic stimulation systems plan to buy more of the devices in the next two years, according to a survey of 85 doctors by analysts at William Blair.

• In a report to investors published Wednesday, the medtech analysts said psychiatrists want to purchase additional TMS devices to offer the noninvasive brain stimulation treatment for depression at more locations. 

• Evidence of the planned expansion is a potential positive for BrainsWay and its faltering rival Neuronetics.

Dive Insight:

Shares in Neuronetics have fallen more than 80% over the past year, reflecting investor concern about a sharp deceleration in its reported system sales growth. To gain a better handle on the TMS market and Neuronetics' place in it, William Blair polled 85 psychiatrists.

The 25 psychiatrists in the survey that already own TMS devices expect the number of patients they treat with the technology to double over the next five years. In light of that anticipated growth, one-third of those psychiatrists plan to buy additional TMS systems. The psychiatrists plan to make the device purchases to enter new geographies, expand their TMS offerings and meet patient demand.

William Blair also found evidence of market growth in the responses of the psychiatrists who do not own a TMS device. That cohort expects their referrals of patients for TMS treatment to grow in the double digits over the next five years, although most of them have no interest in owning their own devices. 

The survey suggests psychiatrists typically wait until at least three oral treatments have failed before referring a patient for TMS. Most studies of TMS have tested it in patients who have tried at least one oral antidepressant without success, resulting in what a CMS local coverage determination called a “body of moderate quality evidence” supporting the use of the approach in that population.

The U.K.’s National Institute for Health and Care Excellence reached a similar position in 2015, stating “evidence on its efficacy in the short‑term is adequate, although the clinical response is variable.” Other groups have taken a less positive view. Nonprofit think tank the National Center for Health Research said TMS has “very questionable effectiveness.” 

Psychiatrists polled by William Blair spoke positively of the efficacy of TMS, with half of owners and referring physicians stating more than half of patients enter remission after treatment. The findings are in line with Neuronetics’ real-world outcomes trial, which linked TMS to significant improvements in almost two-thirds of patients. 

The positive picture painted by the survey contrasts with the recent performance of Neuronetics. In the third quarter, Neuronetics reported a 6% fall in units sold and a 10% drop in the average selling price, causing investors to take another chunk out of the company’s stock price.

Having analyzed the survey data, the William Blair analysts contend the declines neither reflect falling demand for TMS therapy nor a shift in market share from Neuronetics to rivals BrainsWay, Magstim, MagVenture and Nexstim.

Rather, the analysts suggest the results are driven by a shift in Neuronetics’ business model, which is more reliant on sales-type leases and monthly fixed payments than in the past.