May 25, 2024


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Medical Device Co. Changes Tack to Drive Topline Growth

March 10, 2022 ( Newswire) This medical device company is improving its laser ablation system and working toward U.S. approval for its use in a second application, noted a Ladenburg Thalmann report.

Ra Medical Systems Inc. (RMED:NYSE) is expected to become a commercial entity again, and thus, Ladenburg Thalmann just initiated coverage on it, reported analyst Jeffrey Cohen in a March 9 research note. The financial services firm rates the medical device company Buy and assigns it a $1.10 per share target price. In comparison, Ra Medical’s current share price is $0.38.

“The management team is evaluating the best go-to-market strategy to maximize resources and drive topline expansion,” Cohen commented.

Rather than continue commercializing its device, Cohen highlighted, Ra Medical shifted its focus in two new directions: enhancing its product and getting it approved in the U.S. for a second application.

Ra Medical’s device is the DABRA (Destruction of Arteriosclerotic Blockages by laser Radiation Ablation), comprised of a console and a one-time use catheter. The DABRA is used to treat certain vascular diseases, including peripheral artery disease, which affects about 8.5 million Americans.

Currently, the DABRA is only approved in the U.S. for crossing chronic total occlusions in patients with lower extremity vascular disease. The company is working toward getting the DABRA cleared in the States for atherectomy, too. This procedure, the removal of plaque from arteries, is done in patients with peripheral artery disease (PAD), and roughly 8.5 million Americans suffer from this. (The DABRA is approved for both crossing chronic total occlusions and atherectomy in Europe.)

To achieve this approval goal, Ra Medical is now enrolling 125 patients for a clinical trial in atherectomy that could be completed this year. Enrollment is expected to be done by mid-year and the trial, which includes a six-month follow-up, by year-end. Were the study results positive, Ra Medical would submit a 510(k) application, likely in H1/23, with potential approval to follow in early to mid-2023.

“With proper execution, the company could benefit from leveraging the large market opportunity,” wrote Cohen.

Simultaneously, Cohen pointed out, Ra Medical is tweaking its product. It recently added an overbraided jacket to the DABRA catheter so it pushes and torques better and extended its shelf life to six months from two. The company is awaiting U.S. Food and Drug Administration clearance of this improved catheter for use in crossing chronic total occlusions. Approval could come in Q2/22.

Now, the company’s engineers are working on making the DABRA console compatible with standard guide wires and in H2/22 should lock in a final design. Ra Medical also is working on further extending the catheter’s shelf life, to 12 months.

“Our investment thesis is based on the current engineering progress to date, which includes the continual granting of patents to protect current and future designs and applications and the clinical progress to date,” Cohen wrote.

Also in the works, Cohen noted, Ra Medical’s engineering team is evaluating whether the DABRA catheter can be used for intravascular lithotripsy in patients with PAD.

“If approved, this could provide additional commercial upside,” Cohen wrote.

As for finances, Cohen indicated, Ra Medical is well-positioned with the $12.1 million it raised during its public offering that closed in February 2022.


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Disclosures and Disclaimers, Ladenburg Thalmann & Co. Inc., Ra Medical Systems Inc., March 9, 2022

ANALYST CERTIFICATION: I, Jeffrey S. Cohen, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report, provided, however, that:

The research analyst primarily responsible for the preparation of this research report has or will receive compensation based upon various factors, including the volume of trading at the firm in the subject security, as well as the firm’s total revenues, a portion of which is generated by investment banking activities.

Additional information regarding the contents of this publication will be furnished upon request. Please contact Ladenburg Thalmann, Compliance Department, 640 Fifth Avenue, 4th floor, New York, New York 10019 (or call 212-409-2000) for any information regarding current disclosures, and where applicable, relevant price charts, in regard to companies that are the subject of this research report.

COMPANY BACKGROUND: Ra Medical Systems manufactures the DABRA excimer laser and catheters for the treatment of certain vascular diseases. DABRA has been cleared by the FDA for crossing chronic total occlusions in patients with symptomatic infrainguinal lower extremity vascular disease and has an intended use for ablating a channel in occlusive peripheral vascular disease. In addition, DABRA has been granted CE mark clearance for the endovascular treatment of infrainguinal arteries via atherectomy and for crossing total occlusions.

VALUATION METHODOLOGY: We believe that Ra Medical Systems, Inc. should be valued in comparison with other innovative healthcare companies. The company should be valued more specifically on multiples to revenue at some time in the future. We have assembled a list of other comparable companies and measured their current revenue multiple valuations with anticipated revenues out three years.

Our list of Comparable Companies within the medical technology industries generated average EV/Revenue multiples. Based on this evaluation, we are applying a multiple of 6.0 to our FY-2026 revenue estimate of $18.6 million discounted by 12.0% and 3.0 years yielding a price target of $1.10.

RISKS: In addition to normal economic and market risk factors that impact most all equities, we believe that the primary risks to our recommendation and price target of an investment in Ra Medical Systems shares include, but are not limited to: Management and Board Stability: Significant loss of key personnel could prove to be damaging toward the operational efficiencies and further growth of the company. The departure of key personnel could materially affect the overall performance and strategy of the company going forward. The company is highly dependent on the services of its current management team and board.

Financing: In terms of cash position, RMED completed a public financing in Q1-2022 generating gross proceeds of $12.1 million. This brings the company’s current cash to approximately $25.0 million. It is possible the company will require additional funding to support regulatory and commercial efforts in the future.

Regulatory / Development Risks: Modifications or future iterations of the company’s products are subject to FDA and other regulatory body requirements in the United States and similar agencies in other countries. Products under current development may require extensive testing, studies, data submission and/or clinical evaluation prior to granting of proper licenses to sell in various geographies. If the company fails to comply with applicable regulatory requirements the FDA and other regulatory bodies could deny marketing clearance or approval, withdraw approvals, or impose civil penalties, including fines, product seizures or product recalls and, in extreme cases, criminal sanctions.

Commercialization: There are no assurances that the company will be able to execute a commercial strategy and generate our estimated revenues. There is the possibility that similar products will be developed or sold which could compete with Ra Medical’s current and anticipated offerings and take market share and revenues from our currently anticipated projections.

Competition & Adoption: As is the case within the healthcare industry, there exist various innovative and highly competitive corporations. The company could be negatively impacted by current and future competitive products into the marketplace. There can be no assurances that the existing product candidates will continue to be an attractive product as compared with other potential technologies or drug therapies which exist or are developed. Potential current and future market share and market acceptance of the company’s products will depend on its ability to demonstrate that its products represent an attractive alternative as compared with traditional offerings.

Intellectual Property: It may be possible that the company’s patents be called into question or determined to infringe on their portfolio. Likewise, the company could become engaged in legal disputes among other entities. Any potential litigation could negatively impact the company with regard to their freedom to operate, product limitations and/or could result in costly and lengthy litigation. The future expiration of the existing patents could also pose as a problem for the company’s technology as well as its growth strategies.

COMPANY SPECIFIC DISCLOSURES: Ladenburg Thalmann & Co. Inc. has managed or co-managed a public offering for Ra Medical Systems, Inc., Applied UV, Inc., electroCore, Inc., Helius Medical Technologies, Inc. and STRATA Skin Sciences, Inc. within the past 12 months.

Ladenburg Thalmann & Co. Inc. intends to seek compensation for investment banking and/or advisory services from Ra Medical Systems, Inc., Applied UV, Inc., Helius Medical Technologies, Inc. and STRATA Skin Sciences, Inc. within the next 3 months.

Ladenburg Thalmann & Co. Inc received compensation for investment banking services from Ra Medical Systems, Inc., Applied UV, Inc., electroCore, Inc., Helius Medical Technologies, Inc. and STRATA Skin Sciences, Inc. within the past 12 months.
Ladenburg Thalmann & Co. Inc had an investment banking relationship with Ra Medical Systems, Inc., Applied UV, Inc., electroCore, Inc., Helius Medical Technologies, Inc. and STRATA Skin Sciences, Inc. within the last 12 months.

Ladenburg Thalmann & Co. Inc. makes a market in Applied UV, Inc., electroCore, Inc., Helius Medical Technologies, Inc. and STRATA Skin Sciences, Inc. Ladenburg Thalmann & Co. Inc. acted as Psdlacement Agent in a securities offering for the subject company in the last 12 months. Firm/Employee is a beneficial owner of 1% or more of any class of common equity shares of .the subject company.

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