Transcranial magnetic stimulation (TMS) pioneer, Neuronetics (NASDQ:STIM), received reimbursement approval from Japan’s Central Social Insurance Medical Council for its NeuroStar Advanced Therapy for the treatment of major depressive disorder (MDD) in adults, effective around June 1, 2019.
“Obtaining reimbursement approval in Japan, a single-payer healthcare system, is a critical milestone to facilitate psychiatrists and facilities implementing NeuroStar Advanced Therapy into their treatment continuum to provide a much needed and affordable treatment alternative for MDD patients,” Chris Thatcher, president and CEO of Neuronetics, said in a statement.
MDD is a growing public health issue, impacting more than 300 million people worldwide.
Canaccord Genuity analyst, Jason Mills, reiterated his “buy” rating and $25 price target for Neuronetics. The stock was quoted at $15.02, up 27 cents, in afternoon trading on March 28.
Mr. Mills said that while the Japanese approval came earlier than expected, “initial reimbursement rates came in slightly below Neuronetics’ aspirations, but the firm sees an opportunity to drive them higher over the long term.”
Mr. Mills views the Japanese MDD market as a positive growth engine for Neuronetics and thinks the adoption curve in Japan could actually be slightly steeper than the initial ramp in the U.S., given broad transcranial magnetic stimulation awareness in the region, national reimbursement and a high prevalence of MDD.
William Blair analyst, Margaret Kaczor, who rates Neuronetics at “outperform,” said that when the reimbursement code is in effect, the company’s Japanese distributor, Teijin Pharma, is expected to ramp up its commercial efforts, leveraging early work in preparing for a commercial launch over the last year.
“We estimate Japan represents a $1-billion-plus market opportunity (about 750,000 treatment resistant MDD patients) though near-term commercial efforts will be focused on the roughly 150-to-200 centers approved to use the new NeuroStar reimbursement code,” she added.