Filing Overview
This summary is based on the provided Form 10-Q for Ra Medical Systems, Inc., not Catheter Precision, Inc. The filing covers the three and nine months ended September 30, 2021, and was filed November 15, 2021. The company operated as a medical-device business focused on the DABRA excimer laser and catheter system for peripheral artery disease.
Business Context and Reporting Period
- The company sold its Pharos dermatology business on August 16, 2021 for $3.7 million in cash proceeds. Its results are presented as discontinued operations for all periods.
- Continuing operations focus on DABRA, including an atherectomy clinical trial and engineering work to improve catheter shelf life, kink resistance, and guidewire compatibility.
- Commercial catheter sales remained paused, other than sales supporting the atherectomy clinical trial.
- As of November 10, 2021, the company had enrolled 85 subjects at seven cleared clinical sites; it could not estimate when enrollment would be completed because of COVID-19-related delays.
Financial Performance and Position
| Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 |
|---|---|---|---|---|
| Continuing-operations revenue | $5 thousand | $68 thousand | $17 thousand | $259 thousand |
| Gross loss | $(241) thousand | $(500) thousand | $(1.196) million | $(1.487) million |
| Operating loss | $(7.394) million | $(7.507) million | $(21.002) million | $(25.175) million |
| Loss from continuing operations | $(7.378) million | $(7.515) million | $(18.974) million | $(25.078) million |
| Net loss | $(4.298) million | $(7.779) million | $(16.783) million | $(25.601) million |
| Adjusted EBITDA | $(6.945) million | $(6.060) million | $(18.615) million | $(20.778) million |
- Continuing-operations gross margins were substantially negative because revenue was minimal and cost of revenue remained significant.
- Research and development expense increased to $2.942 million in Q3 and $8.521 million for nine months, reflecting catheter engineering and clinical-study costs.
- SG&A expense declined to $4.211 million in Q3 and $11.285 million for nine months, primarily due to lower personnel, stock compensation, insurance, public-company, and other costs, partly offset by higher legal expense in Q3.
- The nine-month results included a $2.023 million gain from forgiveness of the PPP promissory note and approximately $3.5 million of gain from the dermatology-business sale within discontinued operations.
- Cash and cash equivalents were $20.616 million at September 30, 2021, compared with $23.906 million at December 31, 2020.
- For the nine months, operating cash use was $21.914 million, investing cash inflow was $3.803 million, financing cash inflow was $14.821 million, and cash declined by $3.290 million.
- The company had $5.530 million of total liabilities, including $2.355 million of operating lease liabilities. The PPP note and equipment-financing obligations were eliminated or paid by September 30, 2021; the filing reports no conventional debt balance at quarter-end.
- Accumulated deficit was $169.985 million, and stockholders’ equity was $21.549 million.
Material Changes Versus Prior Comparable Period
- Revenue fell 93% in Q3 and 93% for the nine-month period, driven by the pause in commercial catheter sales.
- Gross loss improved because of lower catheter volumes and related costs, but the company remained commercially unprofitable.
- R&D increased approximately 27% in Q3 and 54% for nine months as investment shifted toward clinical development and next-generation catheter programs.
- SG&A decreased approximately 10% in Q3 and 38% for nine months, reflecting cost reductions and lower legal and personnel-related spending for the nine-month period.
- The share count increased materially through ATM offerings. The company issued 3.757 million shares during the first nine months and reported 7.042 million shares outstanding at September 30, 2021.
- The company raised approximately $15.1 million of net proceeds from 2021 ATM offerings, including approximately $10.6 million in May and June and $4.4 million in July and August.
Guidance, Outlook, Risks, and Unusual Items
- No quantitative revenue, earnings, or cash-flow guidance was provided.
- Management expects continuing operating losses and negative operating cash flow for the foreseeable future and stated that there is substantial doubt about the company’s ability to continue as a going concern for at least 12 months from issuance of the financial statements.
- Management expects to seek additional equity or debt financing, but financing may not be available on acceptable terms or at all. Additional equity financing could materially dilute existing holders.
- The FDA cleared additional DABRA catheter shelf-life data in July 2021, but commercial sales had not resumed as of the filing. Management was evaluating its commercial catheter strategy.
- The company expected to complete engineering work on a more kink-resistant catheter and finalize a guidewire-compatible catheter in the first quarter of 2022, followed by anticipated FDA submissions.
- COVID-19 continued to delay clinical-site activation and patient enrollment, disrupt component shipments, and potentially impair access to financing. The company also reported difficulty attracting and retaining personnel in a tight labor market.
- After the quarter ended, the company entered into a proposed $10.0 million settlement of the securities class action. The company expects to pay approximately $1.0 million, with insurers paying the balance; court approval was required.
- The company remains subject to a five-year Corporate Integrity Agreement and settlement obligations with the Department of Justice and participating states. Additional payments may be triggered by revenue exceeding specified thresholds or by a change in control.
- Material risks include catheter performance and shelf-life issues, product recalls, FDA and other regulatory requirements, clinical-trial delays, limited commercialization, supply-chain constraints, litigation, compliance obligations, dilution, and possible NYSE American delisting.
Most Important Facts to Verify
- Confirm that the intended issuer is Ra Medical Systems, Inc.; the supplied filing does not identify Catheter Precision, Inc.
- Verify the company’s ability to raise additional capital and its projected cash runway against quarterly operating cash burn.
- Monitor whether commercial DABRA catheter sales resume and whether catheter performance, calibration, shelf-life, and kinking issues are resolved.
- Track atherectomy-trial enrollment, completion timing, results, and FDA clearance for the requested indication.
- Confirm final court approval and funding of the securities-litigation settlement, as well as any remaining derivative or other legal exposure.
- Assess potential dilution from future equity offerings, outstanding warrants, options, and restricted equity awards.
- Review compliance with the Corporate Integrity Agreement, DOJ settlement terms, FDA requirements, and NYSE American listing standards.