Q4 2021 Ra Medical Systems Inc Earnings Call
Good afternoon, and welcome to the ROM Medical Conference call all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Please note this event is being recorded.
I would now like to turn the conference over to Jody Cain. Please go ahead.
This is Jody Cain with L. A J. Thank you for participating in today's call. Joining me for my 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 <unk> 2021 fourth quarter and full year. If you've not received this news release or if you'd like to be added to the company's email distribution list. Please contact L. A J that's free one O 691, 71 hungry and speak.
Look Daniel sure talk you can also sign up for email alerts and access the news releases in the Investor Relations section of the raw medical website at IR Dot raw mat Dot com.
During this call or in response to listen or questions 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 one medical they are forward.
These statements, reflecting the beliefs and expectations of management as of March 'twenty, three 'twenty, 'twenty, two including financial regulatory product development and clinical trial expectations.
You should not place undue reliance on these forward looking statements because they involve known and unknown risks uncertainties and other factors that are in some cases beyond the company's control and could materially affect actual results. In particular, there is significant uncertainty about the duration and contemplated impact.
<unk> of the COVID-19, pandemic and the military actions launched by Russian forces in Ukraine on the business and results of operations, including our supply chain. This means that results could change at any time and the impact of COVID-19, and or the military action in Ukraine, Our RA medical's.
<unk> financial results.
Outlook is the best estimate based on the information for today's discussion.
We're details about these risks please see the company's SEC filings, including Bond Medical's annual report on Form 10-K for the year ended December 31, 2021, which will be filed with the SEC. Shortly and then the other period filings done by the company, including quarterly reports on Form 10-Q , well medical.
<unk> 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 medical believes the non-GAAP financial results to provide investors with useful supplemental information about the financial performance of the business.
Enable the comparison of financial results between periods for certain items may vary independently of business performance and allow for greater transparency with respect to key metrics used by management in operating the business.
non-GAAP financial measures are presented solely for information and comparative purposes, and should not be regarded as a replacement for corresponding GAAP measures 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.
To will Mcguire well.
Yeah.
Thanks, Jody good afternoon, everyone and thank you for joining us.
Today I am pleased to outline key objectives for 2022 and highlight the significant progress we've made on our engineering program.
Clinical study for an atherectomy label.
This was made during an especially challenging period as the pandemic continues to impact our industry's ability to conduct clinical studies and persistent supply chain challenges are affecting engineering project schedules.
Starting with our engineering initiatives last month our team.
Key milestones are following a five 10-K application with the FDA for our next generation Deborah capital with operated over jacket design and a six month shelf life.
Internally, we refer to this catheter as the DARPA to point out.
We believe the depth of two point out it was more of a robust design improves deliverability and kink resistance for the physician.
Obligating tortuous anatomy.
The design overhaul was technically demanding and requiring building and testing hundreds of catheters during the engineering verification and validation testing phase.
We look forward to receiving feedback from the FDA on our 510 application later this year and I want to thank the team at <unk> medical for driving this project to this point, while facing the aforementioned supply chain challenges.
Although the Dabber with two point over a five 10-K following represents a major engineering and regulatory milestone.
A plaque ship commercial capital will be a guidewire compatible version of the tablet to point out, which we referred to as the depth of Rx.
<unk> will incorporate many of the DARPA to point those design improvements intended to create a more robust catheter along with the added feature of Guidewire compatibility.
We believe that we have made great progress toward a design freeze for the Debra Rx following our preclinical study conducted in the fourth quarter of last year with interventional is evaluating its use handling and overall performance.
We anticipate finalizing the design for the <unk> Rx and completing engineering verification and validation testing later this year.
We are also planning to submit a five 10-K application to the FDA seeking regulatory clearance at the end of the year.
And lastly, under engineering accomplishments I want to update you on two additional initiatives.
First we continued to make progress on the laser development front with various upgrades to the Gaba system and we anticipate completing design work for a new CPU over the next few months.
Second we continued to build upon our work that we believe will show that our laser system can be utilized to create shockwaves of sufficient magnitude for fracture calcium and arteries and a procedure known as intra basketball lithotripsy.
Shrink calcium in coronary or peripheral arteries.
Less rigid that's facilitating the ease and safety of subsequent procedures.
We're currently fabricating various prototypes of systems and intend to conduct further preclinical studies in the next few months to advance our initial bench top and preclinical findings.
We anticipate completing design concept selection and initiating a development project in the second half of this year.
Although we're still in the early stages of this project are continued to be quite excited about this application given the potential to create significant shareholder value. If we are able to develop a competitive product in the emerging intravascular lithotripsy market.
One final note before turning to the clinical study, we have announced the granting of a U S. Patent last month for a support catheter for use with a small flexible liquid core catheter for laser ablation.
Of arterial plaque blockages to restore blood flow.
This new patent is the 10th.
U S patents issued to Rob medical under an intellectual property strategy that we believe to be important for maintaining our competitive position, both now and in the future.
Moving to our pivotal clinical study to obtain FDA atherectomy indications, where the debris axon we're laser system.
This continues to be a top priority for our medical and we believe that securing clearance for this indication will significantly expand our addressable market beyond our existing clearance for crossing chronic total occlusions, our cto's cause.
As I have referenced before.
Third Party research group estimates the value of the combined CTO and atherectomy markets in the U S. At approximately 900 million for 2022.
We are pleased that the FDA agreed to a protocol amendment to increase.
Trial enrollment from 100 to 125 subjects. Our primary reason for this request was subject fallout for follow up visits that we believe was due to the COVID-19 pandemic we.
We have enrolled an additional 13 subjects in this study since mid November bringing total enrollment to date to 98 subjects.
This trial is approved for up to 10 clinical sites and we currently have seven sites for enrollment.
Two of these sites have reached their quota for the maximum number of subjects and the remaining five sites are actively screening subjects.
Due to the unpredictable impact the COVID-19 pandemic has had and will continue to have an enrollment in this study we cannot accurately estimate when enrollment will be complete with that being said our goal is to complete study enrollment in Q3 2022 and finished six months follow up in early 2020.
Three.
Now I will turn the call over to Andrew Jackson to review our financial results Andrew.
Thank you will.
As a reminder, we completed the divestiture of our dermatology business in August 2021 .
Transaction that provided immediate cash proceeds to fund our initiatives in the large and growing vascular market.
All reporting 2021 historical operating results and related assets and liabilities of the dermatology business as discontinued operations.
Unless otherwise noted the financial results I'll discuss today relates to continuing operations.
Also please recall that in late 2020, we paused, our commercial shipments of catheters and our earnings supply in Canada to support our atherectomy clinical study, we do however recognize revenue on product used in the clinical study.
Net revenue for the fourth quarter of 2021 consisted of product sales of $5000. This compares with zero net revenue for the fourth quarter of 2020.
Gross loss was <unk> 3 million for the fourth quarter of 2021, compared with <unk> 4 million for the fourth quarter of 2020.
SG&A expenses for the fourth quarter of 2021 were $4 2 million versus $6 4 million for the prior year period.
The 2021 fourth quarter, a decrease of $2 2 million compared to the prior year fourth quarter includes a decrease of $1 2 million in personnel costs and a zero point $6 million decrease in stock based compensation.
SG&A expenses for the fourth quarters of 2021, and 2020 included stock based compensation expense of zero point $2 million and 0.8 million respectively.
R&D expenses for the fourth quarter of 2021, with $3 7 million compared with $3 4 million for the prior year period.
The 'twenty to 'twenty, one fourth quarter reflects an increase of <unk> 3 million in personnel and consulting expenses related to work with our next generation catheters, including increased shelf life and improved deliverability and also progress with the atherectomy clinical studies.
<unk> expenses for each of the fourth quarters of 2021 'twenty 'twenty included stock based compensation expense of 0.1 million.
The GAAP net loss from continuing operations for the fourth quarter of 2021 was $8 3 million or $1 23 per share on $6 7 million weighted average shares outstanding.
This compares with a GAAP net loss from continuing operations for the prior year quarter of $10 2 million or $3 54 per share on $2 9 million weighted average shares outstanding.
Adjusted EBITDA for the fourth quarter of 2021 was negative $7 8 million compared with negative $8 8 million for the prior year period.
Reconciliation of GAAP net loss to non-GAAP . Adjusted EBITDA is included in today's press release.
Turning to our full year financial results net revenue for 'twenty 'twenty. One consisted of product sales of $22000. This compares with net revenue for 2020 of 0.3 million, which primarily consisted of product sales.
Our gross net loss decreased to $1 5 million in 2021 from $1 9 million in 2020.
SG&A expenses for 2020 , one with $15 5 million and this compares with $24 5 million in 2020. The decrease was due primarily to a reduction in legal fees and lower head count.
SG&A expenses in 2021 included stock based compensation of $1 8 million compared with stock based compensation for 2020 of $3 2 million.
R&D expenses for 2021 were $12 3 million versus 9.0 for 2020.
For 2021 expenses included increases of $2 2 million in personnel costs and consulting expenses, <unk> 7 million for supplies and zero point $5 million in other expenses, which includes cost associated with our atherectomy clinical trial.
R&D expenses for 2021 included stock based compensation of <unk> 3 million compared with <unk> 4 million for 'twenty 'twenty.
Income net for 2021 was 2.0 million primarily due to the gain on the forgiveness of the P. P. P promissory notes.
The GAAP net loss from continuing operations for 2021 was $27 3 million or $5 39 per share and $5 1 million weighted average shares outstanding.
This compares with a GAAP net loss from continuing operations for 2020 of $35 3 million or $20 79 per share on $1 7 million weighted average shares outstanding.
Net income from discontinued operations for 2021 was $2 2 million or <unk> 43 per share. This compares with a net loss from discontinued operations.
For 2020 of <unk> 7 million or <unk> 43 per share.
Net income from discontinued operations for 'twenty 'twenty. One included a gain on sale of the dermatology business of $3 5 million.
We used $27 $6 million in cash to fund operating activities for both continuing and discontinued operations. During 'twenty 'twenty. One. This compares with $28 3 million used to fund operating activities for both continuing and discontinued operations during 'twenty 'twenty.
We exited 2021 with cash and cash equivalents of 15.0 million subsequent to the end of the year in February 2022, we completed a public offering resulting in net cash proceeds to Ron medical of $10 7 million.
With that I'd like to open up the call for questions.
Uh huh.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Yeah.
While we're waiting for the first question I want to recognize the hard work by the entire raw medical team as we've come a very long way in developing a competitive product line to address the large and growing market.
We've also made tremendous strides during a global pandemic and advancing our pivotal atherectomy trial with the objective of significantly expanding our addressable market.
Okay, operator, we're ready for the first question.
And the first question comes from Jeffrey Cohen with Ladenburg Thalmann. Please go ahead.
Oh, Hi will and Andrew how are you.
Good thanks.
So firstly could you.
Walk us through how you see all the margins flight kind of work out over the next year or two.
As further development of the.
New over the wire products.
Well the margins will.
This year, it's still in the development phase and.
We expect to be filing the atherectomy submission early next year. So we don't expect any significant margins as we start commercializing we would expect those to come into fruition in the later years.
Got it Okay and do you expect to have any.
Locations are set and it's outside the U S.
Or any filings or over the next two years at all.
Or is that still a bit early.
I'd say, it's a bit early probably the next couple of years, our focus will remain.
In the U S. Jeff and if you look at the the atherectomy market itself. The overwhelming majority of the procedures and and the revenue for atherectomy is in the U S. So there's not a huge incentive to go outside of the U S from a revenue generation perspective.
Okay got it and so it sounds like you're doing some early work there on the lithotripsy side could.
Could you envision in a few years, perhaps horribly having a few.
<unk> products on offer or could you also envision that you may have one product both capable of.
Delivering light energy as well as Shockwave energy.
Yeah, that's a that's a good question Jeff.
That's right now our our.
The atherectomy catheter, if you put it in some sort of medium that absorbs the energy. It does produce the shockwaves. So we're going through a process now of evaluating different design concepts.
Some of the design concepts, we're looking at would involve a catheter.
That's especially made for lithotripsy and only can do lithotripsy, it's not unimaginable, though that you could have a design concept, where the the catheter based Catherine could perform atherectomy our lithotripsy.
Bit more complex and not one that we've spent a lot of time on so far but.
Really try to to get to a point.
The second half of this year, where we can further outline the concept that we're going to pursue and what that looks like and kind of the timeline for it. It's probably you know if you're if you're starting today you should think that we're at least a couple of years I mean, probably three years out from having a lithotripsy product, but yes certainly.
We hope to be.
On the market with a with an atherectomy product lithotripsy product at some point in the future.
Okay got it and then lastly for US could you talk about the.
The current studies and we expect as far as in late this year on U B Goggler capability do you think do you currently have enough generators out in the field.
You run those studies.
The F D, a particular centers or where you have to be.
Producing more generators.
Yes, I mean right now our study where we're.
We're at seven sites were cleared to go up to 10 sites.
So we have sufficient laser units for the clinical study.
Once we get a an rx.
Got it approved.
It would be you know going into next year, we may decide even if its approved before we have an atherectomy indication we may decide to get some experience with it but I think the experience that we would see would be would be limited and we would have sufficient laser units in house to to place that any sites.
We'd go in the near future.
Okay, and then lastly for us.
Hum.
The obstacles as far as time lines for engineer.
Engineering and catheter production as you head into this.
The studies had further into the studies. This year do you have enough inventory or enough on order with some clear line of sight.
Yeah, I think our I'd say right now our inventory is is good for the for the foreseeable future we will be placing some additional orders to support some of the engineering builds are kind of in the latter half of this year and at this point we think.
We're in good shape, there, but you know that has been a source of concern for us in the past and a source of concern for others in the industry.
With some of the supply chain issues out there. So right now we think we're in good shape, but again until the product is in house, we're not completely in the clear, but if you look at what we're doing now to maybe what we would've done.
Two or three years ago, Jeff, we we will be ordering things further in advance and we can't make carry more inventory now.
To get us through any unforeseen supply issues, so, but so far so good.
Okay perfect it doesn't for us thanks for taking the questions.
Great. Thank you thanks, Jeff.
The next question is from Vernon Bernardino with H C. Wainwright. Please go ahead.
I willing Andrew.
Congrats on the a five 10-K application and the progress with the enrollment in the atherectomy a pivotal study.
I was just wondering as far as enrollments.
Enrollments concerns what kind of challenges are you still seeing perhaps if any and enrollment for that study versus what.
What you saw previously during the let's say the hydro pandemic and what things have you seen that or perhaps hum.
One way to describe that have released.
The focus so that enrollment could actually accelerate.
Yeah. Good question you know if you look at our.
If you just take a look at our enrollment over the past few quarters, our I'm sorry. The past few calls you know this call we announced.
We announced 13 additional subjects enrolled I think the previous call was was 15 and maybe the one before that was 20, we definitely were hurt over the past.
90 days you know since our since early November of last year about the omicron, there yet and you know.
Fewer people were willing to go and get.
Any sort of elective procedure I think it probably not only impacted our clinical study, but it would have impacted probably companies that you guys are covering that are doing procedures out there right now so what was it it was a tough environment that seems to be getting better right now.
And so we're hopeful as we go forward. This year that we will see enrollment accelerate I don't remember the exact numbers, but if you look at our enrollment last year during the pandemic I think January and February are.
Probably January February and then maybe November December were probably that some of the lower months, but last year, we did see an acceleration into April .
May and June and enrollment I don't know if that that'll happen this year, but but right now the pandemic seems to be subsiding at least for the time being and so we'd be hopeful that that ER visits to clinics picked back up and that people are more willing to.
You know sign are informed consent for a clinical study and commit to coming back for the for the 30 day in their six month follow up.
Yeah crossing my fingers as well and if I got this correctly.
Regarding the 510 application.
Do you expect a a stake.
Feedback maybe this year Oh correct.
Hum.
He has made the filing for the 500 10-K, what is the current Hum.
Hey, dynamic are you experiencing as far as FDA feedback and what you have a clean.
Clean from interactions with the F D a.
Any.
Delays or how slowly they're actually processing these all kinds of applications.
That's a good question you know where.
They tried to get you an answer.
I have a final answer if at possible within 90 days I think we actually fall back in February .
I wouldn't say, we've already had some interaction with the F. T. A I don't think we can claim anything either either positive or negative from that interaction other than I think it's positive that we're already getting questions and overall more of a an overall comment you know the F T a S.
Is trying to be much more interactive with a lot of their submissions. So asking questions earlier on versus you know waiting till till the end and starting to ask questions at that point. So we've already had some questions. So we know that theyre looking at the that's a submission or at least part of the submission.
But can't really read anything into it at this point.
Yeah.
Great.
Thank you for answering.
And so my questions are on looking forward to our continued progress.
Great. Thanks, a lot thanks for your questions. Thanks Brennan.
This concludes our question and answer session I would like to turn the conference back over to will Mcguire for any closing remarks.
Thank you again for joining us this afternoon and for your interest in raw medical as discussed today, we're making excellent progress against our strategy to address the large quota and PID market with our advanced excimer laser based technology, putting us on a path to building shareholder value.
And as always we are committed to our mission of saving lives and limbs have a nice afternoon everyone.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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