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.

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 Ra Medical, the forward-looking statements reflecting the beliefs and expectations of management as of March 16, 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, 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 of the COVID-19 pandemic.

This means results could change at any time and the contemplated impact of COVID-19 on Ra Medical's operations, financial results and outlook is the best estimate based on information for today's discussion. For details about risks, please see the news release that accompanies this call and the company's SEC filings, including Ra Medical's annual report on Form 10-K for the year ended December 31, 2020, to be filed with the SEC.

Ra 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.

Ra Medical believes the non-GAAP financial results provide investors with useful supplemental information about the financial performance of the business, enables the comparison of financial results between periods for certain items that may vary independently of business performance and allow for greater transparency with respect to key metrics used by management in operating the business. These non-GAAP financial measures are presented solely for informational 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 over to Will McGuire.

Will?

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.

As a reminder, we have FDA clearance for crossing CTOs, and are in progress on a pivotal clinical trial for the atherectomy indication. Today, I will outline our progress to develop a product line we believe has distinct and important competitive advantages and our work to secure the appropriate FDA indication required for market success.

I will begin with an update on our engineering initiatives for the vascular business. We are making great progress with efforts to extend the shelf life of our future catheters as well as our development efforts related to those catheters.

As previously reported, we have identified the root causes of the limited shelf life, namely one, the introduction of unwanted elements into the catheter's core water and two, the degradation of the catheter's inner coating. Our efforts to mitigate both issues include material, process and sterilization changes.

Recent in-house accelerated aging test data are very encouraging and support a shelf life of at least six months. We are continuing our aging test to develop a more robust data set to support an FDA submission and to extend shelf life potentially beyond six months.

Our team also continues to advance the work on our next generation DABRA catheter. As a reminder, this next gen catheter incorporates a braided over jacket to make it more deliverable and kink resistant, but navigating torturous anatomy.

We evaluated prototype designs in late 2020 at a hands-on workshop with cerebral vascular physicians and received constructive feedback concerning the potential improvement and performance of the catheter with its new design. We expect to complete the engineering work for this catheter in the second half of 2021.

And we will subsequently submit for FDA clearance. We are also reporting great progress with an improved DABRA catheter that is compatible with a standard guidewire.

This project leverages the work of the previously described project with the added compatibility design goal. We evaluated several prototypes of this catheter during the hands-on workshop in late 2020 and received positive feedback regarding the usability and performance features we are incorporating in the final catheter design.

We expect to complete the overall design work for the guidewire compatible catheters before the end of 2021. Lastly, on the development front, we have initiated several laser development projects to improve both the Pharos and DABRA laser systems.

Specifically, we have projects underway to upgrade the CPU and extend the gas life. We expect to introduce the initial upgraded laser systems in 2022.

Moving on to our clinical trial to obtain an FDA atherectomy indication for the DABRA platform, we continue to make good progress here as well. The study is approved for up to 10 clinical sites and 100 subjects.

Since our last investor call in mid-November, we have enrolled an additional 17 subjects for a total of 30 subjects enrolled to-date. Currently five sites have been cleared for enrollment in this study and three additional sites are in various stages of the qualification process.

One of these three sites is in the final stages of qualification and we expect it to begin enrolling subjects in the next 90 days. Due to the unpredictable impact of the COVID-19 pandemic on the study, we cannot estimate with precision when enrollment will be completed.

One final note regarding the vascular business. We recently completed a filing to the FDA requesting approval to resume commercial shipments of the current DABRA catheter.

As you may recall, we voluntarily stopped shipments of this catheter in September 2020 due to variations we detected at that time in our internal shelf life data. On our November quarterly call, we stated our belief that we would resolve this issue in the first quarter of 2021.

We met this timeline by submitted the filing to the FDA earlier this month. Turning to our dermatology business, I am pleased to announce that a new commercial leader Jon Bullock joined Ra Medical in Q4.

Jon has 17 years of experience in the dermatology and aesthetics market and a track record of success. His current focus is on executing and refining our commercial strategy for a post COVID-19 environment.

We believe we can grow this business in a capital efficient manner by carefully expanding our commercial footprint with both direct hires and contract representatives, but the latter being paid solely on a commission basis. Although our dermatology business continues to be impacted by the COVID-19, as many customers delay the acquisition or purchase of capital equipment, we did experience a sequential quarter growth in dermatology revenue from Q3 2020 to Q4.

As a reminder, our dermatology business generated revenue of roughly $5 million to $6 million a year pre-COVID. On the quality assurance front, during the fourth quarter of 2020, we completed a quality improvement plan that was comprised of 116 items.

The plan addressed a wide range of items within the quality management system with a focus on standard operating procedures, preventive maintenance, equipment status and calibrations and supplier of quality. I'm also pleased to report that we successfully completed a BSI quality system audit in January with no observations.

Finally, as previously disclosed, we entered into a settlement agreement at the end of 2020 that resolved Civil False Claims Act claims asserted by the U.S. Department of Justice an investigation previously disclosed by the company.

In connection with the settlement, the company also reached tentative agreements with the participating states that if executed, resolve previously disclosed related investigations conducted by certain state attorneys general. We fully cooperated with these investigations, starting with the internal investigation that began in the second quarter of 2019.

And I am pleased that settlements have been reached to resolve these matters. We remain committed to meeting the expectations of and cooperate with the federal and various state governments.

We recently hired a compliance officer to oversee our compliance programs going forward. Now, I will turn the call over to Andrew to discuss our financial results.

Andrew?

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. The GAAP net loss for the fourth quarter of 2020 was 10.4 million, or $3.61 per share.

This compares with the GAAP net loss for the prior year quarter of 9.7 million or $18.04 per share. The per share amount reflect the 1-for-25 reverse split that was effective last November.

Adjusted EBITDA for the fourth quarter of 2020 was negative 8.8 million, compared with negative 8.0 million for the prior year period. The reconciliation of GAAP net loss to non-GAAP EBITDA is included in today's press release.

Finally, a few words in general about the continued COVID-19 pandemic. Our manufacturing facility in Carlsbad, California has been operational throughout the pandemic.

We have continued to manufacture lasers and catheters without interruption and our personnel have complied with and continue to comply with state and local guidelines. The full extent to which COVID-19 will impact our business will depend on future developments, which are highly uncertain and cannot be predicted.

Turning to a full year financial results, net revenue for 2020 was 4.4 million, compared with 7.2 million for 2019. Product sales for 2020 were 1.4 million, compared with 3.9 million for 2019.

And service and other revenue for 2020 was 3.0 million, compared with 3.3 million for 2019. Revenue from the vascular segment was 0.3 million for 2020 versus 1.3 million in 2019.

Revenue from the dermatology segment for 2020 was 4.1 million, compared with 5.9 million for 2019. Our gross loss decreased to 1.1 million in 2020 from 1.7 million in 2019.

SG&A expenses for 2020 were 26.0 million compared with 51.5 million in 2019. SG&A expenses in 2020 and 2019 included stock-based compensation of 3.3 million and 20.4 million respectively.

R&D expenses for 2020 were 9.0 million, versus 4.5 million for 2019. R&D expenses in 2020 included an increase of 5.2 million in personnel costs, supplies and consulting expenses to understand the inconsistencies in our DABRA catheter performance and efforts on the next generation of products.

R&D expenses for 2020 and 2019, includes a stock-based compensation of 0.4 million and 1.5 million respectively. The GAAP net loss attributable to common stockholders for 2020 was 36.0 million or $21.22 per share, compared with a GAAP net loss for 2019 of 57 million or $108.28 per share.

Adjusted EBITDA for 2020 was negative 29.6 million, compared with negative 32.4 million for 2019. The per share amounts reflect the 1-for-25 reverse split that was effective last November.

We use 28.3 million in cash to fund operating activities during 2020, which included 2.5 million for legal expenses related to the securities litigation and government investigations and 2.4 million in settlement costs related to the government civil claim. This compares with 33.2 million used to fund operating activities during 2019, which included 4.0 million for legal expenses related to the securities litigation, and our internal and government investigations.

We exited 2020 with cash and cash equivalents of 23.9 million. With that, I'd like to turn the call back over to Will.

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.

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?

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.

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?

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.

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?

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.

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.

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.

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.