Q1 2021 Ra Medical Systems Inc Earnings Call

Welcome to the raw medical systems first quarter 2021 financial results Conference call.

All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

At this time I'd like to turn the conference call over to Jody Cain. Please go ahead.

This is Jody Cain with L. A J. Thank you for participating on 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 first quarter of 'twenty 'twenty. One if you've not received this news release or you'd like to be added to the company's email distribution list. Please contact L O J and New York of 212, and 38377 and seven and speak with Carolyn.

Current you can also sign up for email alerts and access the news release on the Investor Relations section of the raw medical website at IR from a dot com.

During this call management will be making a number of forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 to the extent the statements made by management are not descriptions of historical facts regarding raw and medical they are forward looking statements, reflecting the beliefs and expectations.

Of management as of May 11th 2021.

You should not place undue reliance on these forward looking statements because they involve known and unknown risks uncertainties and other factors that are and some cases be on the company's control and could materially affect actual results. In particular, there was ex its significant uncertainty around the duration and.

Contemplated impact of the COVID-19 pandemic. This means results could change at any time and the contemplated impact of COVID-19 around medical operations financial results and outlook is the best estimate based on information for today's discussion.

For details about these risks please see the news release that accompanies this call and the company's SEC filings, including Mom Medicals annual report on form 10-K for the year ended December 31, 2020 and form 10-Q for the period ended March 31, 2021 to be filed with the SEC.

Well the medical expressly disclaims any intent or obligation to update forward looking statements, except as required by law.

Today's conference call remarks will include both GAAP and non-GAAP financial results, while the medical believes the non-GAAP financial results to provide investors with the useful supplemental information about the financial performance of the business enables a comparison of financial results between periods for certain items.

And it may vary independently of the business performance and allow for greater transparency with respect to key metrics used by management and operating the business. These non-GAAP financial measures are presented solely for the informational and comparative purposes and should not be regarded as a replacement for corresponding GAAP measure.

The reconciliation between GAAP and non-GAAP financial measures can be found at the end of the financial results news release that was issued earlier today.

With that I'd like to turn the call over the will Mcguire well.

Thanks, Jody good afternoon, everyone and thank you for joining us.

I am pleased to have this opportunity to share our progress on developing the competitive atherectomy product line and targeting.

Targeting the large peripheral artery disease or PID market as well as our work to secure the appropriate FDA atherectomy indication required per market success.

I'll begin with an update on our clinical study to obtain an atherectomy indication for the depth of the platform.

The study is approved for up to 10 clinical sites and 100 subjects.

Currently five sites have been cleared for enrollment in the study and two additional sites alright varying stages of the qualification process.

The third site that wasn't the advanced stages of being qualified as no longer being considered for participation and the study.

Since our last Investor call in mid March we have enrolled an additional 20 subjects and we are now at the halfway point and enrollment with a total of 50 subjects to date and I'm very pleased with our enrollment rate and appreciate the work of our clinical team as well as the clinical investigators for prioritizing this study and their practice.

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Due to the unpredictable impact of the COVID-19 pandemic on the study we are still unable to estimate with precision and enrollment will be completed.

Now I would like to update you on our engineering initiatives for the depth of catheters.

We continue to make great progress with efforts to extend the shelf life of our future catheters as well as with our development efforts to enhance those catheters.

Previously discussed we have identified the root causes of the limited shelf life, and our and the process of implementing mitigation efforts, including material process and sterilization changes.

And I'm pleased to report that we received recently obtained real time agent data to support a six month shelf life of our next generation catheters.

Data confirms previously reported and the house accelerated aging test results and is a significant milestone for our engineering team and for our company.

Our team also continues to execute on our catheter development projects. We now expect to reach the design freeze milestone for our next generation <unk> catheter later this quarter.

As you will recall this next gen catheter incorporate separated over jacket to make it more deliverable and kink resistance when navigating tortuous anatomy.

And our progress and the pending design freeze.

The team to complete all engineering work and for all of the submission with the F. D. A C code and regulatory clearance for this nextgen, Deborah catheter and the fourth quarter of 2021.

The team is also proceeding on schedule to develop and improved Deborah catheter that is compatible with standard Interventional guide wires.

This project Leverages the worth of the previously described Nextgen, Deborah catheter and has the.

Added Guidewire compatibility design goal.

We are planning to evaluate this catheter is performance during another workshop next month with physicians experienced and performing peripheral intervention.

Specifically, we want to confirm the usability and performance features of this catheter.

Allowing physicians the opportunity to use prototypes and stimulated interventional cases.

I look forward to sharing the results with you on our next quarterly call. We continue to expect the overall design work for the Guidewire compatible catheter will be completed by the end of 2021.

Finally on the laser development front, we are advancing various upgrades that would benefit both the pharaohs and Deborah systems and the near term, we anticipate completing design work for a new CPU by the end of 2021.

Turning to our Pharos dermatology business. The commercial team has performed well in the past year, managing the business and overcoming the many challenges posed by COVID-19.

Our first quarter revenue. This year is approaching the pre pandemic revenue of the first quarter of 2020.

As stated in the past we believe there is an opportunity to grow this business and a capital efficient manner and of post COVID-19 environment.

With that being said, we are evaluating multiple strategic options for the dermatology business to best position <unk> medical for success and increase shareholder value.

These options include but are not limited to investments and the commercial organization additional.

The additional improvements to the pharos laser system commercial partnerships and alliances or the divestiture of the business. We will update you on this process periodically or as appropriate.

Before turning the call over to Andrew I'd like to thank the entire team and Rob medical for the continued hard work and dedication during a period characterized by significant change at the company we.

We have become a stronger more capable organization debt remains committed to saving lives.

And improving patients' quality of life now.

Now I will turn the call over to Andrew to discuss our financial results Andrew.

Thank you will starting with our Q1 financial results net revenue for the first quarter of 2021 was $1 1 million.

Consisted of product sales of zero point for Millennium and <unk>.

Service and other revenue of 0.7 million.

This compares with net revenue of $1 4 million. The first quarter of 2020, which consisted of product sales of <unk> 6 million and service and other revenue of <unk> 8 million.

Net revenue on the vascular segment for the first quarter of 2021 was de Minimis compared with zero point of 1 million for the prior year period net revenue from the Dermatology segment was $1 1 million for the first quarter of 2021 and one point of 3 million and so the first quarter of 2020.

Gross loss was 255000 and for the first quarter of 2021, compared with 210, thousands and in the first quarter of 2020.

SG&A expenses for the first quarter of 2021 were $4 1 million versus $6 3 million for the prior year period SG&A expenses for the first quarters of 2021 and 2020 included stock based compensation expense of 1.0.

And <unk> 9 million respectively.

R&D expenses for the first quarter of 2021 were $2 8 million compared with $1 3 million for the prior year period for 2020. One quarter included an increase of $1 4 million and personnel supplies and consulting expenses related to our efforts to remedy the inconsistency is without the abra catheter the performance and to expand on.

With the next generation of products.

R&D expenses for the first quarters of 2021 and 2020 each included stock based compensation expense of zero point of $1 million.

The GAAP net loss for the first quarter of 2020, one was $7 2 million or $2.48 per share on $2 9 million weighted average shares outstanding.

This compares with the GAAP net loss for the prior year quarter of $7 7 million or $13 and 98 per share and 0.6 million weighted average shares outstanding.

Adjusted EBITDA for the first quarter of 2021 was negative $6 1 million compared with maybe the negative $6 2 million for the prior year period of.

A reconciliation of GAAP net loss to non-GAAP EBITDA is included in today's press release.

Finally regarding the continued COVID-19 pandemic, while we are encouraged by the increase and dermatology revenue and the fourth quarter of trying to 20 and first quarter of 2020. One the full extent towards COVID-19 will impact our business will depend on future developments, which are highly uncertain and cannot be predicted.

It's $8 1 million and cash to fund the operating activities. During the first quarter of 2021, which included <unk> 7 million for the payments of settlements and legal expenses related to the Securities litigation and government investigations and this compares with 7.0 million used to fund operating activities during the first quarter of 2020, which.

<unk> $1 2 million for legal expenses related to the Securities litigation and our internal and governments investigations. The increase in cash used to fund the operating activities over the prior year period was primarily due to increased spending in R&D compliance and one time employee separation charges we.

We exited the first quarter of 2021 with cash and cash equivalents of 16.0 million.

With that I'd like to turn the call back over to will.

Thank you, Andrew and closing I am pleased with the enrollment uptick and our atherectomy clinical study and our validation of the Dab of shelf life with the real time aging results.

And I said earlier, we are committed to our mission of saving lives and limbs and improving patients' quality of life with that I'll turn the call back over to Jody Cain Jody.

Thanks, well I've compiled a few questions posed by shareholders and I'd now like the management first one of them all of the FDA completed the review of the DAP of catheter with the two month shelf life and while you resumed commercial shipments with the catheter.

Thanks for the question. The FDA is currently reviewing our submission and we would expect the response and the next 60 days.

Not planning of commercial reintroduction of this first gen catheter of other than perhaps making it available to our clinical study sites.

Great. Thanks for that next.

Is your anticipated timeline for the completion of the atherectomy trial and when can we expect FDA review and approval.

Good question.

Given the unpredictable nature of COVID-19, we're unable to provide a precise guidance regarding enrollment of the atherectomy study.

With that being said, we continue to believe that we will enroll of 100 subjects complete the requisite six month follow up for all subjects and submit our application for an atherectomy indication to the FDA by the end of 2020 two.

Great and next what is your goal for the catheter shelf life and do you have and anticipated time for achieving that goal.

Yes, what we will be submitting data that supports our six month shelf life. When we file for approval of the nextgen depth of catheter.

We think this will be sufficient for the initial phases of commercialization.

Ultimately, we would like a 12 months shelf life and the U S but the.

The team will be developing a plan for generating the need of data to obtain of 12 months of 12 month shelf life. Later this year, but I would not anticipate having the necessary data before late 2022.

Okay. Thank you will for those updates.

Please proceed with closing comments.

Thank you again for joining us this afternoon and for your interest and Rob Medical and we look forward to speaking with you in August when we report second quarter 2021 results of a nice afternoon.

Ladies and gentlemen, with that we'll conclude today's conference. We thank you for attending today's presentation. You may now disconnect your lines.