Ra Medical Systems, Inc.
Q1 2021 Earnings Call Transcript

Published: 16 Mar 2021

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Ra Medical Systems Fourth Quarter 2020 Conference Call. At this time all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. I now would like to turn the call over to Jody Cain. Please go ahead.

[Jody Cain:]

This is Jody Cain with LHA. Thank you for participating in today's call. Joining me from Ra Medical are Will McGuire, Chief Executive Officer; and Andrew Jackson, Chief Financial Officer. Earlier today, Ra Medical issued a news release announcing financial results for the 2020 fourth quarter and full year. If you've not received this news release or you'd like to be added to the company's e-mail distribution list, please contact LHA in New York at 212-838-3777 and speak with Carolyn Curran. You can also sign up for e-mail alerts and access the news release in the Investor Relations section of the Ra Medical Web site at ir.ramed.com.

[Will McGuire:]

Thanks, Jody. Good afternoon everyone and thank you for joining us. I'm pleased to have this opportunity to share our progress and provide an update on our business. We are excited about the opportunity, our differentiated vascular products address in the large and growing market for the treatment of peripheral artery disease, or PAD. We recently obtained updated third-party research estimating the value of the combined chronic total occlusions or CTOs crossing market and the atherectomy market at approximately $900 million for 2021. Atherectomy represents the majority of this figure at more than $750 million.

[Andrew Jackson:]

Thank you, Will. Starting with our Q4 financial results, net revenue for the fourth quarter of 2020 was 1.2 million and consisted of product sales of 0.5 million and service and other revenue of 0.7 million. This compares with net revenue of 1.4 million for the fourth quarter of 2019, which consisted of product sales of 0.6 million and service and other revenue of 0.8 million. Revenue from the vascular segment for the fourth quarter of 2020 was de minimis, compared with 0.2 million for the prior year period. Revenue from the dermatology segment was unchanged at 1.2 million for the fourth quarter of 2020 and 2019. Gross loss decreased to 96,000 in the fourth quarter of 2020 from 360,000 in the fourth quarter of 2019. SG&A expenses for the fourth quarter of 2020 was 6.9 million compared with 8.6 million for the prior year period. SG&A expenses for the fourth quarter of 2020 and 2019 include a stock-based compensation expense of 0.8 million and 1.1 million respectively. R&D expenses for the fourth quarter of 2020 were 3.4 million, compared with 0.8 million for the prior year period. The 2020 quarter included an increase of 2.3 million in personnel, supplies and consulting expenses related to our efforts to remedy the inconsistencies with our DABRA Capita performance and to expand our efforts with the next generation of products. R&D expenses in the fourth quarter of 2020 and 2019, each included stock-based compensation expense of 0.1 million.

[Will McGuire:]

Thank you, Andrew. Before we open the call to your questions. I'd like to welcome our newest Director Susanne Meline. Susanne joined our Board at the end of January. And she brings to Ra Medical extensive and valuable experience in finance, law and corporate governance. This is an expansion of our Board, which now stands at seven directors. So in closing, I'm pleased with the progress of our engineering efforts, we see significant opportunity ahead in two large and growing markets and we are committed to our mission of saving lives and limbs. But these comments, I'd like to open the call for questions. Operator.

[Operator:]

Our first question will come from Anthony Vendetti with Maxim Group.

[Jeremy Pearlman:]

Hi, this is Jeremy Pearlman on the line for Anthony. Just a couple of quick questions. So just want to get some more clarification on the timeline for the improved DABRA catheter. So is it still on schedule? You have all the engineering work done by let's say the middle of 2021?

[Will McGuire:]

Yes. What we said in our script is that we would have the engineering work done sometime in the second half of 2021. We haven't been more specific in that than that. So we complete the engineering and then subsequently be in a position to file with FDA.

[Jeremy Pearlman:]

And that's just for the improved shelf life that's not the guidewire is separate that you hope by the end of 2021 and to file early 2022?

[Will McGuire:]

Good question. So the one that would be the second half of 2021, that would be completion of engineering and then moving towards an FDA filing would be with the improved outer jacket. So it would improve the deliverability and robustness of the catheter. So it is a new catheter, a new outer jacket that would include the extended shelf life. And then as you said, kind of taking that improved catheter and going one step further and making it guidewire compatible, we would complete the design work for that at the back half of the year by the end of 2021. Then, of course after the design, we've move into validation and verification and other things to finish up the engineering.

[Jeremy Pearlman:]

Yes, that's helpful. Just and then what would be best and worst case scenario, once you submit to the FDA, when do you think that would be ready for commercialization, the upgraded catheter?

[Will McGuire:]

We think these will be 90 days submission. Let's say if you wanted to have a base case to plan to, I would add 30 days to that. So around 120 days should give us time for round of questions, 120 to 150 days for round of questions, and then we have FDA approvals. And to be clear, then when we get those FDA approvals, we would be in a position to launch with our CTO crossing indication. And then depending on where we are with the atherectomy study, we may not have the atherectomy indication yet, but we could launch with the crossing indication.

[Jeremy Pearlman:]

Okay. And then I guess you could assume last question, you can see the same timeline would apply for the guidewire catheter once that engineering is finished on that, and then you submit to the FDA the same 120, 150 days, pending, with questions were from the FDA, and then commercialization and then but then hopefully, you might even be able to include the atherectomy, or that's also still questionable.

[Will McGuire:]

It depends on when we file. I think what we have said publicly and maybe in our latest update to the investor deck as we certainly would expect to have the new DABRA catheter as well as the guidewire compatible version of that catheter approved and on the market in 2022. The clinical study could coincide with the guidewire compatible catheter, but we're at this point unable to precisely predict enrollment due to COVID. So what we did say is in 2022, we would certainly expect to have the trial enrollment complete, the six month follow up complete and have an FDA submission in for the atherectomy indication. But we haven't gone as far as to say that we would have that indication received in 2022. We have to give ourselves a little room given COVID and the potential impact there.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to Will McGuire for any closing remarks.

[Will McGuire:]

Thank you again for joining us this afternoon and for your interest in Ra Medical. We look forward to speaking with you again in May when we report first quarter 2021 results. Have a nice afternoon.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.